Texas May Soon Overhaul How It Funds Community Colleges. Here’s What Students Need to Know.

Texas community colleges may soon see their state funding tied to their success rates rather than student credit hours in a bid to improve educational outcomes — and to boost the state’s economy.

The Texas Commission on Community College Finance on Nov. 24 released a report recommending a new funding model. Institutions would be rewarded based on student success metrics, such as the number of degrees and certificates awarded, the number of credentials earned in high-demand fields, transfer rates to four-year universities, and the number of students completing dual-credit courses.

The commission was led by Woody Hunt, chairman of Hunt Companies, Inc., a family-run, Texas-based holding company operating global real estate and infrastructure assets.

Texas has the ninth-largest economy in the world, Hunt wrote in the report, and its economic competitiveness increasingly depends not only on the number of jobs but also the quality of jobs the state creates and attracts.

“This new funding model must empower colleges across the state to support local employers who rely on a talented workforce,” Hunt wrote. “It must also ensure more Texas students enroll in and complete degrees, certificates, and other credentials that translate into value and opportunity in the state’s economy.”

The new funding model ultimately needs the approval of the Texas Legislature, which meets once every two years and is set to begin its regular session in January.

Here’s a breakdown of the recommendations the 88th Texas Legislature will consider.

The commission recommended a finance model that distributes most community college funding based on measurable outcomes.

There would be four categories for funding:

The council recommended that the state ensure foundational-level funding for operations and instruction at colleges with low taxable valuations.

According to the plan, the funding adjusts for higher operating costs associated with support for low-income students, academically unprepared students, and students who want to reskill or upskill.

Funding also adjusts for higher operating costs for smaller colleges. These colleges would participate in shared services or inter-institutional partnerships in return for more funding.

The commission recommended Texas increase funding for the Texas Educational Opportunity Grants and establish a state goal of supporting at least 70% of qualified low-income college students. The state would also provide colleges more flexibility to meet nontraditional students’ needs for accredited, noncredit, and short-term programs.

Texas would also provide financial aid to economically disadvantaged high school students enrolled in dual-credit college courses. Participation would not require an enrollment application. Instead, it would be based on existing information, like the student’s eligibility for the National School Lunch Program.

The commission recommended that Texas expand partnerships between employers and colleges for paid work-based learning opportunities.

If the recommendations are enacted in full, the funding model would also provide seed grants to college programs in high-demand fields and create a system to make noncredit credential programs transferable to credit-bearing programs.

The new funding model is part of a higher education project, Building a Talent Strong Texas, and sets five goals:

The demand for jobs that require postsecondary credentials is highly concentrated in about 10 of Texas’ 254 counties, while the potential workforce to fill these jobs is spread across the state, in urban, rural, and suburban areas, Hunt wrote in the report.

“To solve these challenges,” he wrote, “being incremental is not enough. We need to be bold.”