As promised earlier this year, the State of Texas is poised to restructure its current community college funding model. Currently, Texas funds its community college similarly to the way Michigan does. Three components – local property taxes, student tuition, and state funding – provide most Texas community colleges with their annual budgets. That could change if Texas adopts a performance-based funding model.
The Texas state funding is a little tricky because the Legislature allocates a lump sum in the annual budget. Texas’s 63 community colleges then compete for the funds. Factors like increasing or decreasing enrollment can impact the school’s annual budget.
In the past several decades, Texas has experienced a large influx of people. But newcomers tend to gravitate to larger urban areas. That kind of growth does two things: first, it gives urban community colleges a funding advantage via growing enrollment. Second, giving more funds to urban community colleges takes away funds from rural schools.
The new model, which must be complete for review by November 1, eliminates the contention for state funding among all community colleges. Instead, the new system will offer financial compensation for community colleges that increase their graduation rates and transfer rates.
The move mirrors a growing trend toward performance-based funding for higher education. With funding tied to specific outcomes, Texas officials are hopeful that the lure of additional money may be enough to get community colleges on-board.
Performance-based funding is just one in an extensive line of strategies that legislatures around the country are considering. The drive to raise the number of college-educated adults in an area, and the desire to reduce or eliminate deficiencies in the workforce skillset have and will continue to place a significant burden on community colleges.
Performance-based funding will drive state funding
States – like Texas – will turn to performance based funding to identify exactly what they want from the millions of dollars they provide each year. Enrollment will still play a role in funding; but other measures, like graduation rates, transfer rates, employment following graduation, and the student debt-to-earnings ratio will also impact state funding formulations.
Schools like WCC that have gamed the state funding formula by specializing in issuing non-degree certificates, will not fare well if (or when) performance based funding makes its way to Michigan. Texas’s new funding model will financially reward two outcomes – graduations that result in a degree and transfers – to the near exclusion of other results.
Michigan’s community college funding model has rewarded “completions,” which includes the non-degree certificates that may only minimally prepare people for select, limited income positions. With the state’s new focus on credit acquisition (Sixty by ’30) as opposed to “completions,” being the best at churning out meaningless certificates my not be as financially rewarding as it may have been.
Photo Credit: russellstreet, via Flickr
