Texas’ Community Colleges Seek Significant Investment from Historic Budget Surplus During the 88th Legislative Session

With the new year underway, all eyes are on the Texas Legislature and their plans for a historic budget surplus – roughly $33 billion – during the 88th Legislative Session.

One significant investment opportunity for lawmakers comes from the Texas Commission on Community College Finance, a body created by the 87th Texas Legislature to study the state’s funding model for its community college institutions. The Commission published its final report in December, including recommendations for consideration by the 2023 legislature to reform the way in which Texas’ community colleges are financed.

Community colleges are a significant driver of higher education in Texas, comprising 47% of the state’s postsecondary enrollment, more than any other type of institution. Despite a substantial increase in the number of credentials and degrees awarded by Texas’ community colleges – up nearly 350% between 2000 and 2019 – state funding for these institutions has steadily declined since 1980.

The Commission’s recommendations, then, represent a meaningful opportunity to invest and reform these critical institutions. The proposals in the final report focus on three key areas: state funding for outcomes, affordability for students, and investments in community college capacity.

State Funding for Outcomes

The first set of recommendations would shift the current, input-based funding system to a dynamic funding model based on measurable community college outcomes aligned with regional and statewide workforce needs. Presently, nearly 79% of state funding for community colleges in Texas is tied to student enrollment and course load. Just 17% of community college funding from the state is driven by achievement of academic of workforce outcomes.

Instead, the Commission proposes a funding model that would rebalance this distribution and primarily fund institutions based on the number of students that attain a credential of value, successfully transfer to a four-year university, or complete a sequence of dual-credit courses while in high school. This model, as devised by the Commission, would also recognize and provide funding to cover the additional costs of serving economically and academically disadvantaged students and adult learners.

Affordability for Students

The Commission also recommends investing significantly in affordability for students by ensuring at least 70% of eligible students receive a Texas Educational Opportunity Grant, the state’s principal need-based aid program for community college students. Currently, due to limited dedicated funding, less than 3 out of 10 students who should receive assistance from this program actually receive it. Further, the Commission proposes enhancing financial aid to standardize access to high-school-based dual credit programs throughout the state as well as expand partnerships that provide paid work-based learning opportunities for community college students.

Investments in College Capacity

Lastly, the Commission recommends directing state resources to assist community colleges in standing up training pathways in high-demand fields to meet regional and state workforce needs, with priority given to programs developed in collaboration with employers. The Commission also suggests leveraging the Texas Higher Education Coordinating Board to facilitate shared services partnerships between community college institutions.

Next Steps

Dr. Harrison Keller, Texas’ Commissioner of Higher Education, estimates that full implementation of the Commission’s recommendations would require approximately $650 million in new funding from the state for the upcoming biennium.

“Ultimately, every additional dollar Texas invests in our community colleges can translate into greater opportunities across the state and a higher-performing workforce that will draw new investments and jobs,” the report states. “Strategic investments in community college outcomes, affordability, and capacity will secure our state’s leadership in higher education and workforce development – and elevate Texas families and employers for decades to come.”

Next, the Commission’s recommendations will be drafted into legislation for formal consideration by the Texas Legislature. The 88th Texas Legislative Session began on Tuesday, Jan. 10, and will conclude on Monday, May 29.

For more detail on the Commission’s recommendations or to learn more about opportunities to advocate for these recommendations during the state session, please contact Michael Wood, Managing Director of Education & Workforce, at mwood@dallaschamber.org.