House Bill 8, which received almost unanimous approval from the state Legislature, will both increase state funding for Texas’ community colleges and tie it to performance-based outcomes.
In short, the bill will invest $683 million more into the state’s community colleges and incentivize them to help students get more credits and certification in high-demand fields, transfer to four-year universities and provide more funding to them for high schoolers who complete dual credit courses through their institution, higher education officials said.
It’s a shift away from the old model, which gives colleges money based on their enrollment and number of hours they are in contact with students, officials said.
“This is the most groundbreaking legislation I’ve seen,” Alvin Community College President Robert Exley said. “It goes right to the heart of our mission.”
Signed into law by Gov. Greg Abbott earlier in June, the bill achieved a “unique” status, said Renzo Soto, policy advisor at Texas 2036, a nonpartisan public policy think tank. Despite being an overhaul of the system, Soto said practically every stakeholder group involved in the bill—legislators, state agencies, public policy experts and all 50 of the state’s community colleges—supports it.
“I have not seen a significant education reform package not only pass, but also move through the process, with this level of unified support,” Soto said.
The goal overall is to help train Texas’ workforce to take jobs that are in high demand, as both now and in the coming years, jobs that require “middle skills” will be needed, Soto said. Those are jobs that require less than a bachelor’s degree, but more than a high school diploma.
Data from the Texas Workforce Commission shows an estimated 54% of jobs in Texas today are middle-skilled with just 45% of Texans having the needed credentials. That 9% difference totals to about 1.4 million people needed for those jobs.
The old model
HB 8 represents the first time the funding model for community colleges in Texas has been significantly updated in 50 years, Lone Star College Chancellor Stephen Head said. Lone Star has eight colleges in the northern Houston area, according to its website.
As part of the Texas Commission on Community College Finance tasked with helping bring the bill forward, Head said for a long time he’s told state officials the old system was not sustainable.
“Community college financing has been at issue for more than a decade,” Head said.
Along with not aligning everyone’s goals in a cohesive direction, the old formula often punished smaller colleges—a system Head described as creating “haves and have nots.”
For example, many rural areas are losing population to larger metro areas, Head said. That makes it difficult for smaller colleges in those places to keep their operations going as enrollment drops.
And sometimes, due to the state having a fixed amount of funds every biennium, even when those colleges do have increases in enrollment, it’s still proportionately lower than the increases larger colleges see, which still results in lost revenue, Soto said.
Adding to this, whereas Lone Star—one of the largest community college systems in Texas—has a $40 million budget for its technology, many smaller, rural colleges are dealing with outdated systems and have no hope of catching up, Head said.
The new model
Beyond just helping all community colleges in Texas find sustainable revenue, the goal of the new bill is to drive more students into high-demand jobs.
For many colleges, such as San Jacinto College, the mission will remain intact, albeit more supported at the state level, Vice Chancellor for Fiscal Affairs Teri Zamora said.
The bill also has a newly placed emphasis on what are called non-credit paths, Soto said. Those are paths that require certification, but are not standardized in the same way other degree programs might be, such as truck driving, electricians, and licensed practical and vocational nurses.
“The state is going to find a way that non-credit education can be credit that stacks,” Soto said. “It’s all for the benefit of students.”
Some of those jobs are high in demand, particularly in Houston, according to data from the Gulf Coast Workforce Board. Statewide, nurses and educators are needed as well.
While community colleges in Houston and around the state are expecting funding to increase as a result of the bill, many of those details still need to be worked out, Zamora said.
However, thanks to a new influx of money of $683 million paired with the bill, many colleges will receive a revenue boost for the 2023-24 school year to help deal with the transition, said Marshall Heins, chief financial officer and senior vice chancellor of finance and administration for Houston Community College.
At ACC, the hope is the bill could add about $4 million per biennium to the college’s coffers, Exley said.
Some other elements of the bill set to receive funding include a scholarship program that covers tuition costs for low-income high school students interested in dual credit classes as well as a need-based program for students at community colleges, said Sarah Keyton, associate commissioner of the Texas Higher Education Coordinating Board.
What comes next?
Typically, bills that overhaul a system to this degree are given years to implement, Zamora said. However, this new funding system will go into effect in September—right at the start of the new fall semester.
As a result, colleges and the state are scrambling to set up their budgets, which go into effect the same day, while an emergency rules session is ongoing for the bill to lay out its parameters, said Zamora, who is part of that committee.
The emergency rules will be issued in July and approved in August, Soto said. Those rules will be in effect for one year and will be followed up with a more permanent set. Those are expected to be more thorough and go through a more rigorous process that includes public hearings.
Zamora said there is a bit of stress going into the new year, but it’s tempered by the expectation that the new system will improve everyone’s financials and their outcomes. The next year also gives everybody a “taste” of what the rules could look like, which will help inform the permanent set next year.
”The speed at which we’ve had to implement this has been challenging,” Zamora said. “But I think everyone is cognizant that this is a great new direction.”
