Policy / Higher Ed Coordinating Board Adopts Rules for Historic Community College Investment

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Higher Ed Coordinating Board Adopts Rules for Historic Community College Investment

Texas House Bill 8, passed unanimously earlier this year, brings historic change to how our state funds community college. Previously, state spending on the Texas community college system had not seen major updates in decades. But the work is far from over just because a new policy has been passed. In fact, the work of implementation has just begun.

Earlier this week at a special called meeting of the Texas Higher Education Coordinating Board (recently named an Exceptional State Agency by the State Higher Education Executive Officers Association), board members adopted emergency rules to immediately implement House Bill 8 for the 2023-24 school year.

This is important because HB 8 creates a dynamic system that is meant to be adjusted annually to respond to changing workforce needs. This means key decisions will be made during the Coordinating Board’s annual rulemaking process, during which Commit will regularly engage.

As Commissioner Harrison Keller noted during his introductory remarks at the special meeting, the new funding model laid out in HB 8 is “student centric” and addresses costs that are outside the control of colleges. Board member Daniel Wong said, “With the new system, colleges will now be… putting the emphasis on making [students] successful.”

Performance Funding

The new funding system is unique among states in that 95 percent of state funding will be based on successful student outcomes. Colleges will be financially rewarded for each student who earns what is called a credential of value, with an emphasis on credentials earned in high demand fields, successful transfers to four-year public universities in Texas, and completion of 15 credit hours through academic or workforce dual credit.

The new rules lay out qualifying credentials of value, a methodology for determining high-demand fields, and amounts colleges will receive for achieving each student outcome. See a full breakdown of the rates and qualifying credentials in our recent memo on HB 8 rulemaking.

Funding Weights Based on Student Needs

HB 8 also calls for outcomes-based funding to be weighted to provide colleges additional resources to support students with specific needs. Community colleges will earn an additional weight of 25 percent for supporting students experiencing economic or academic disadvantage to credential completion or transfer and an additional weight of 50 percent for adult learners age 25 and up. These weights are additive if multiple categories apply to a student.

Weighted funding is already an important part of K-12 school funding, and adding weights to community college funding was a major policy priority for Commit. With tens of thousands of students qualifying as academically and/or economically disadvantaged and 12,000 adult learners at Dallas College alone, the impact of additional weighted funding will be crucial for wraparound support and the success of students in Dallas County.

Foundational Funding

Colleges with relatively low taxable property values will receive supplemental support from the state to fund instruction and operations. This includes weights based on serving students with specific needs as noted above and an additional equitable adjustment for schools serving fewer than 5,000 students to offset the higher cost of operating without economies of scale. Notably, such foundational funding represents only 5 percent of the total appropriations for the community college funding formula.

Financial Aid for Swift Transfer

Financial Aid for Swift Transfer (FAST) is a new opportunity provided by HB 8 that allows Texas high schoolers who qualify for free and reduced price lunch and are dual credit eligible to take dual credit courses at participating community colleges at no cost to their families. This is especially important considering the Texas Commission on Community College Finance recently identified cost as a primary barrier to high school students participating in dual credit coursework.

A maximum tuition rate of $55 per semester credit hour was set for all dual credit courses for colleges participating in FAST. The state will reimburse tuition to institutions for eligible students enrolled in dual credit, but higher education institutions will need to work with local school districts to cover other costs, such as books, materials, fees, access to laptops and hotspots for online courses.

Commit applauds the commissioner, staff and Texas Higher Education Coordinating Board members for their work. Together, these innovations in community college funding offer a model for higher education institutions across the country, and we are excited to continue monitoring the impact on Texas students.

Want to learn more? Read our memo on House Bill 8 emergency rulemaking for a full breakdown on the new rules as adopted.

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