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Texas community college funding: Commission urges overhaul

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A plan to tie community college funding directly to student outcomes is now in front of Texas legislators.

The Texas Higher Education Coordinating Board this month published the recommendations, which, if written and passed into law, would overhaul the state funding model and drive at least $600 million more to Texas’ 50 community college districts.

The Legislature is likely to take up the issue after it convenes Jan. 10, and some stakeholders are optimistic that lawmakers will bite – especially because of community colleges’ direct line to the workforce and economy.

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“Texas’ highest priority must be to develop a competitive workforce for the future,” said Woody Hunt, chairman of the Texas Commission on Community College Finance, which drafted the recommendations. “If we can achieve that, it will help us solve the other challenges we will face in the mid-21st century and secure our quality of life into the future for our children and grandchildren.”

Institutional leaders say colleges have outgrown the current system, where they are funded by three sources: property taxes, student tuition and fees, and state dollars.

Poll banners celebrating San Jacinto College 60 years of service are visible on campus.

Kirk Sides / Staff photographer

State dollars used to make up the largest portions of funding for schools, but the shares have changed. Community colleges compete for those amounts, re-allocating them each year from the same, static pie. In the last biennium, the schools shared from a pot of $1.8 billion, according to the commission.

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Bigger districts in urban areas have benefited the most from the current system, because the formula awards the most state dollars to schools with higher numbers of students. A smaller percentage of funds are allocated through success-based measures, as well as a flat amount for core operations.

The model also doesn’t account for the costs of newer educational approaches such as dual credit, meaning colleges have increasingly relied on their taxpayers to fund programs. That can be a problem for smaller colleges in rural areas, which are generally in counties that are losing population.

The proposed new model would dismantle the competition, allowing schools to stand alone and receive funds that reward student success.

The Committee on Community College Finance has envisioned a system that is outcomes-based, with the state readjusting the amount it gives to community colleges each year. It would measure the colleges’ individual number of awarded “credentials of value,” which isn’t limited to degrees and extends to non-credit programs such as workforce training.

It would additionally award money based on the number of those credentials awarded in high-demand fields, transfers to four-year universities, and “dual-credit” courses that allow high school students to obtain college credit.

Incentive based model

Community college leaders intend for the model to be incentive-based, offering more money for degree completions and transfers of economically or educationally disadvantaged students, as well as to progress to degrees or other credentials.

It would also accommodate the smaller schools that are starting out at a disadvantage, giving them a base level of funding. Those funds would not be subject to recapture if revenue from tuition and property taxes exceeds that amount.

The smaller colleges would also be expected to participate in “shared services” – where they outsource technology or teaching resources from other institutions, according to the report.

Another piece of the proposal aims to make community colleges more affordable for lower-income students, especially through increased funding for Texas Educational Opportunity Grants. One recommendation would provide financial aid for tuition and required fees for economically disadvantaged students in dual credit courses, and expand work-based learning opportunities through partnerships with businesses.

The final prong in the recommendations would increase investments in the services colleges can provide, including seed grants for new programs in high-demand fields. More funding would also go towards shared services programs, as well as non-credit programs that are able to be paired with, or converted to, programs that are for credit.

Buy-in from business leaders

Administrators at the biggest districts in Houston have agreed that the system should change, especially to sustain their smaller partners. The recommendations come with buy-in from Texas business leaders, who contend that putting the onus on student success – instead of the number of students served – will incentivize schools to produce results that trickle into local economies.

“By 2030, 62 percent of all Texas jobs will require a postsecondary credential – but Texas businesses are already struggling to find qualified workers with the required training and skills,” said Bob Harvey, CEO of the Greater Houston Partnership. “By enacting these proposals to bolster community colleges into law, we can address the skilled workforce shortage, support our businesses, and ensure more Texans have the opportunity to earn a self-sustaining wage. We need the Texas Legislature to act and make this session the Workforce Session.”

The Texas Commission on Community College Finance convened over the past year after lawmakers passed Senate Bill 1230, which formed the group and charged them with making recommendations on the funding structure.

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