Texas Senate passes DRC priority bill to transform community college finance

By Michael Wood, Managing Director, Education & Workforce

When the Texas Senate approved House Bill 8 to overhaul the state’s community college finance system Friday, May 19, it marked a transformational shift to emphasize funding for student outcomes and a key legislative win for the Dallas Regional Chamber.

Advocates for HB 8 widely expect that Governor Greg Abbott will sign the bill into law after the legislature adjourns on Monday, May 29. Initial estimates project that North Texas community college systems will receive approximately $70 million in new funding over the next two years as a result of HB 8.

“The continued economic success of the Dallas Region depends on the quality of our local talent pipeline, and our community colleges are a vital contributor to that pipeline,” said Dale Petroskey, President & CEO of the DRC. “HB 8 is a huge win for our region, our community colleges, our employers, and, most importantly, our future workforce. The DRC is proud to have supported this critical legislation.”

The bill’s central provision would shift the majority of state funding for community colleges to a new, dynamic formula that rewards institutions for each student that completes a credential of value, transfers to a four-year institution with at least 15 credit hours, or completes 15 credit hours in an academic or workforce program. Greater funding would be awarded to institutions for adult learners, or academically or economically disadvantaged students that meet these same benchmarks.

“This unprecedented state investment in our community colleges will have an immediate impact on the community college systems in North Texas,” said DRC Senior Vice President of Education & Workforce Jarrad Toussant. “Even better, this funding has the potential to grow exponentially in future years as institutions improve their student outcomes, creating a strong incentive for colleges to partner directly with employers.”

HB 8 has sailed through the 88th Texas Legislature due in large part to planning and advocacy efforts, including those from the DRC, dating back well before the start of the legislative session in January.

In 2021, the 87th Texas Legislature approved the establishment of the Texas Commission on Community College Finance to study and develop recommendations to reform Texas’ community college funding model. The commission was comprised of community college presidents, state lawmakers, and civic leaders including Todd Williams, President and CEO of The Commit Partnership—a Dallas-based education nonprofit—and former DRC Board member.

As the commission met throughout 2022, the DRC saw the need to provide the perspective of the business community in support of the commission’s efforts.

“Dallas-Fort Worth leads the country in job growth, having added 1.3 million new jobs since 2010 and nearly 200,000 over the last three years,” said Tre’ Black, Chair of the DRC’s Education & Workforce Council and President of On-Target Supplies & Logistics. “Despite this economic success, Dallas Region employers are struggling to fill open jobs due to gap in the credentials jobseekers have and those required by high-demand positions. Community colleges are well-positioned to address these gaps.”

The DRC convened a working group of Dallas Region business leaders—including representatives from AT&T, Bank of America, JPMorgan Chase, and Hunt Consolidated—to advocate for the consideration of business-friendly reforms.

After proactive conversations with state and local higher education leaders and members of the commission, the group prepared a letter to the commission with several key funding recommendations, including: reform to the state’s outcomes-based funding mechanism for community colleges, additional supports for high-needs student populations, and targeted funding to expand employer-college partnerships.

When the commission issued its final report in December 2022, several specific reforms were closely aligned with the DRC working group’s recommendations—signaling a shared vision for the way forward amongst state leaders as the 88th Texas Legislature prepared to gavel in and act on the commission’s report.

Gov. Greg Abbott and House Speaker Dade Phelan identified the issue of community college finance as a priority early in the session, and first drafts of the House and Senate budget proposals earmarked $650 million in new funding for community colleges over the next biennium. By the end of February, commission member and House Appropriations Article III Chairman Gary VanDeaver had filed HB 8.

Continuing the DRC’s close involvement and advocacy efforts, Black and Toussant provided testimony in favor of HB 8 before the House Committee on Higher Education in late March, after which the bill received unanimous approval from committee members before receiving full House approval Wednesday, April 12, on 146-1 vote. HB 8 then received unanimous approval from the Senate Education Committee Tuesday, May 16, before proceeding to the Senate floor.

As passed by the Senate, HB 8 largely mirrors the recommendations in the commission’s final report and aligns with the priorities the DRC’s working group identified.

If and when HB 8 is signed by Gov. Abbott, the Texas Higher Education Coordinating Board will undertake rulemaking to determine how to implement the various provisions included in HB 8 ahead of the law’s Sept. 1, 2023, effective date. New funds will reach community colleges at the start of the 2024 state fiscal year, also on Sept. 1 of this year.