Big changes may be coming to Texas’ community colleges. A commission established by the Texas Legislature in 2021 is set to recommend an overhaul of community college funding, which would alter a complicated allocation system to focus primarily on student performance.

The recommendations, created by the Texas Commission on Community College Finance, center around student outcomes. These include graduation and transfer rates, credentials of value and credentials in high-demand fields.

The commission is also expected to propose an increase in need-based financial aid and expanded partnerships between colleges and local companies.

Commission members, which include state lawmakers and community college leaders, met to discuss the new recommendations Sept. 12.

The current funding system

Every two years, Texas lawmakers designate a specific amount of money to be distributed to individual community colleges. Each district receives a flat sum of approximately $1.3 million, then the state determines additional funding based on enrollment, growth, operational costs and more. According to the commission, state money accounts for less than 25% of funding for community colleges alongside student tuition and local property taxes.

Lawmakers set aside $2.17 billion for community colleges for 2021-22, according to public policy organization Texas 2036. Because only a certain amount of money is available, colleges end up competing for funding.

Renzo Soto, a policy advisor for Texas 2036, told Community Impact that under the current system, a smaller college may improve outcomes and increase enrollment yet still lose funding to a larger school that grew more.

Five thousand Texans participated in a survey conducted by the Texas Higher Education Coordinating Board. THECB Commissioner Harrison Keller said that according to survey results, two-thirds of Texans supported funding community colleges based on student outcomes.

Potential changes

Those Texans may get what they want.

Under the proposed finance system, colleges would no longer compete for funding. Instead, schools would receive money for credentials of value, credentials awarded in high-demand fields and students who transfer to four-year universities, according to the draft recommendations. A credential of value is a postsecondary degree or certificate that prepares a student for economic success.

Funding would also be adjusted to account for the higher costs of educating students who need more support, such as low-income students, “academically underprepared students” and adults who return to school.

Smaller colleges, which typically face higher operating costs, would also receive additional funding. These schools would be expected to participate in “shared services” with other institutions, such as shared online courses and joint workforce education programs.

“Instead of being in competition with every other college across the state ... the funding formula would be designed to keep pace with college’s outcomes,” Keller said at the Sept. 12 meeting.

Keller called the outcomes funding model a “historic shift.” He said the model would guarantee that all community colleges have access to “an adequate amount of funding to be able to offer complemented academic and workforce education programs.”

These recommendations have been backed by educators and workforce leaders across the state as well as all members of the commission. The Texas Association of Community Colleges also supports the commission’s plans.

Funding student success

The recommendations also include increased financial aid and alternative credit programs to support a wider range of students.

Even at community colleges, low-income students have historically been less likely to pursue and complete a postsecondary education, according to Brenda Hellyer. Hellyer is the chancellor of San Jacinto College and spearheaded the student support portion of the recommendations.

Community college students with financial need can receive support through the Texas Educational Opportunity Grant. However, the commission reported that the grant program is expected to serve just 28% of eligible community college students this year.

In response, the commission established a goal of financially supporting at least 70% of Texas’ low-income students at two- and four-year universities.

Hellyer said the TEOG program also needs greater flexibility in order to support nontraditional students. The commission recommends expanding the grant to include more credentials of value, such as noncredit and short-term workforce programs.

The new funding model would also provide financial aid for economically disadvantaged high school students who participate in dual-credit programs. Students who qualify for free and reduced lunch would be eligible for waived tuition and fees for dual-credit courses with the goal of helping more students participate in these courses.

The commission will hold its final meeting Oct. 18, where members will vote on a final report. Once approved, the report must be submitted to the Texas Legislature by Nov. 1.

State lawmakers will then review the commission’s recommendations during the 2023 legislative session, which begins Jan. 10.