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Performance-based funding is on its way

If you thought New Jersey’s gainful employment law for community colleges was harsh, Texas has upped the ante. The Lone Star state’s lawmakers are considering applying a performance-based funding model to community college appropriations.

Currently, Texas funds its community colleges similarly to the way Michigan does – using a combination of local property taxes, state funding and student tuition. Over time, the state’s portion of that model has declined relative to the other two. It has also created an uneven funding model that rewards schools in densely populated area and penalizes rural colleges, where the concentration of poverty is highest.

The Texas Commission on Community College Finance is drafting the recommendations, which they will release in November. According to Ray Martinez, president of the Texas Association of Community Colleges, the legislation would be “transformational.”

Under the new proposal, the state would award funding to its community colleges based on their graduation rates or their students’ transfer rates to four-year institutions. Which is not necessarily great. In theory, the new proposal could provide more funding stability to Texas’s community colleges.

In practice, community colleges have long suffered from low completion rates, due to the challenges that community college students face. Most community college students work at least part-time out of necessity. Part-time attendance poses one of the biggest risks to program completion. The likelihood of dropping out vastly increases when a student attends classes only part-time. According to the University Professional and Continuing Education Association, money is the number one reason students drop out of college. In addition to work, community college students may have other demands on their time (like work and family) that may make class attendance difficult.

Performance-based funding isn’t likely to go away

While the overhaul has the potential to increase funding, performance-based funding also has the potential to reduce funding for those institutions that cannot retain students. Additionally, not all students attend community colleges with the goal of completing a degree.

According to the lawmakers, performance-based funding will encourage community colleges to produce more graduates with skills that the state’s employers want and need. To that end, the commission recommends that the state legislature prioritize funding for community college students with special needs, as well as vastly increasing the amount of need-based financial aid available. The legislators also hope that performance-based funding will encourage schools to prioritize student services like academic counseling to help ensure that students take the right courses at the right times.

Texas currently has a budget surplus of $27B.

Performance-based funding, like gainful employment requirements, are expressions of lawmakers’ desires to quantify their states’ return-on-investment in community colleges. However, both approaches rely on community colleges being extraordinarily successful in areas where – historically- they and their students have fallen short.

Expect more performance requirements from states and other funders (including district taxpayers) as demand for well-educated workers increases amid falling community college enrollment. In the past 60 years, communities have invested far too much money in community colleges to allow their administrators to prioritize non-essential spending while their students flounder.

Photo Credit: Haldean Brown , via Flickr