By Michael Wood, Vice President, Education & Workforce
Estimated reading time: 2.5 minutes
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Takeaways
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Following the Texas Legislature’s passage of landmark legislation to transform the state’s community college funding system in 2023, community colleges across Texas are outperforming expectations, signaling that the strategy is successfully advancing student outcomes. Because of that success, however, Texas is short the funding necessary to fully award colleges for their results.
Looking ahead to the 90th Texas Legislative Session in 2027, prioritizing this innovative approach is critical to delivering results for the state’s future workforce.
Community college funding is an essential workforce development strategy
State legislators unanimously supported House Bill 8 (HB 8) during the 88th Texas Legislative Session, investing significantly in Texas community colleges and shifting nearly all the state’s funding toward incentivizing colleges for attaining student outcomes, such as degree completion or transfer to a four-year institution.
The DRC was highly supportive of HB 8, both leading up to and during the legislative session. Throughout 2022, the DRC convened a working group of executives from 11 regional employers to monitor and advise the Texas Commission on Community College Finance, which was preparing recommendations for legislators’ consideration. During session, the DRC advocated strongly for HB 8, mobilizing business leaders from the Dallas Region to testify for the bill in Austin and providing numerous letters of support to the Legislature.
HB 8 was positioned as a direct response to Texas’ statewide strategic plan for higher education, Building a Talent Strong Texas, which aims to equip 60% of all working-age Texans with a postsecondary degree or credential by 2030. In the Dallas Region today, just 26% of students meet this mark within six years of high school graduation.
Community colleges are central to bridging this gap. In North Texas alone, community colleges enroll nearly 250,000 students, from high school students earning dual credit to adult learners seeking to upskill or reskill into a new occupation.
HB 8 is delivering improved academic and workforce outcomes
Three years in, the early results are clear: HB 8 is working. In just the first year of HB 8 implementation, North Texas community colleges posted significant improvements in student outcomes.
Across Collin College, Dallas College, North Central Texas College and Tarrant County College, attainment of high-demand credentials increased by 27% overall. Economically disadvantaged students and adult learners saw even bigger gains, improving 39% and 44% respectively.
Dual credit attainment rose, too. Students earning at least 15 credit hours through dual credit programs at local high schools jumped 26% across North Texas institutions.
Despite investment, community college overperformance creates funding challenges
Not only did HB 8 revolutionize how Texas funds community colleges—it also carried significant new investment for community college systems.
Overall state funding for community colleges is up considerably compared to FY2023, before HB 8 was passed into law. Community colleges in the Dallas Region are generating nearly $36 million in new state revenue today than prior to HB 8.
However, the most recent batch of community college outcomes widely exceeded the state’s projections. Because the Legislature allocated funding based on those projections, available dollars are insufficient to cover the outcomes reported by community colleges. As a result of this overperformance, 42 of 50 community colleges statewide will see a decrease in state revenue from FY2026 to FY2027, despite improving student outcomes.
In the Dallas Region, Dallas College, North Central Texas College and Tarrant County College will each see a decline in state revenue, ranging from a 3% to 7% drop, for FY2027. Collin College, however, is one of a handful of community colleges in the state that will see a funding increase, up 7% compared to FY2026.
What comes next for community college funding
In passing HB 8, Texas positioned itself as a national leader in innovative postsecondary policy. By all accounts, HB 8 is working as intended, as community colleges have quickly improved educational and workforce outcomes across the board.
The present funding challenges are an indicator of that success, but also a sign that additional legislative attention is necessary to right-size the funding incentives provided by HB 8 and stabilize projections for future years.
State legislators dug into this issue during two separate interim hearings on Tuesday, July 28, during which the DRC submitted written testimony to members of the Senate Higher Education Committee, strongly advocating for state action. The Senate Finance Committee also took a look at community college outcomes and the funding shortfall in a hearing focused on higher education funding transparency.
The House Higher Education Committee is expected to conduct its own interim hearing on community college funding in August.
Heading into the 90th Texas Legislative Session, the DRC looks forward to working with legislators to maintain the state’s commitment to this innovative and successful funding model that is driving outcomes for our future workforce.
Interested in learning more about community college funding or how to get engaged before the Legislative Session kicks off in 2027? Send me a note at mwood@dallaschamber.org.