The Texas Commission on Community College Finance released a near-final draft of recommendations on Sept. 3 that could alter the state funding allocations to Texas’ 50 locally governed community colleges. The proposals would establish an outcomes-based formula centered on student completions and transfers to determine an individual school’s funding versus the current income-based allocation model.

In 2013, the 83rd Texas Legislature approved the use of success points for determining a percentage of state funding that is allocated to community colleges.

These points were accrued based on student milestones, such as specific course completions, semester credit hour completions, earned degrees or certificates and senior-institution transfers.

The new funding proposals would expand on these previously established outcomes-based models and secure higher quantities of state funding for community colleges that show greater student success.

“When the legislature moved to put in student success points and move 10% of community college funding to an outcomes-based model, we as an institution went even further than that,” Dallas College Chancellor Justin Lonon said. “We actually put more incentive than what the state did, focusing on outcomes. So we’ve been going down this road and path for a while.”

Dallas College’s current three-year average graduation rate is at 17%. In 2021, 34% of students transferred to four-year universities, and 73% of attempted courses were completed.

“I think we’ve got room for improvement, quite frankly,” Lonon said. “I think we all recognize that students come to us for multitude of reasons. And state policy has not always aligned or recognized what student success can mean to the individual.”

Funding for Texas community colleges currently comes from three pillars: property taxes, tuition and fees, and money distributed by the state. The state’s system for community college support has not kept up with demand, however, and now accounts for less than 25% of the funding.

The commission’s proposal focuses on the third pillar. Instead of state distribution based on enrollment figures, which could unfairly disadvantage smaller rural schools, allocations would be dependent on the student body’s overall success.

“What it also does is allows institutions to compete with ourselves,” Lonon said. “How are we doing in terms of outcomes versus institutions having to compete against each other for a defined part of an enrollment-driven formula.”

Currently, 35 states tie some amount of public college funding to metrics based on graduation rates or degree production.

Despite strong support from institutional leaders, not all members of the community college community are as confident in this outcomes-based formula.

A 2017 study conducted by Amy Li, an assistant professor of higher education at the University of Northern Colorado, and Alec Kennedy, a doctoral student at the University of Washington, that was published by Community College Review found mixed results.

“We find that, on average, performance funding produces no significant changes in completions of any of the three credentials,” it reads. “Policy types characterized by a greater proportion of funding tied to the base budget, mission differentiation in performance metrics, inclusion of underrepresented student metrics, and longer periods of operating years produce an increase in short-term certificates, no significant change in medium-term certificates, and a decrease in associate’s degrees.”

The Texas Community College Teachers Association has served on the advisory committee to support the commission while they build their draft recommendations and represents faculty perspectives.

“It’s important that we not create a funding structure that makes it difficult to maintain the integrity of our programs,” TCCTA executive director Richard Moore said. “If you’re not careful about how you put together an outcome-based funding model, it could get problematic. If a student isn’t successful in a program and you give you give them a failing grade, for instance, there can be a lot of pressure to not allow that. So, we want to make sure that that doesn’t happen.”

A consensus from all affected groups shows a desire to restructure state funding for Texas’ community colleges.

The commission will hold its final meeting Oct. 18, when members will vote on a final report and submit it to the Texas Legislature no later than Nov. 1. State lawmakers will then review the commission’s recommendations during the 2023 legislative session.

“We’ve got amazing faculty and staff that care deeply about the success of our students,” Lonon said. “I think with some of these institutional shifts and changes we’ve made, along with the direction the state’s going, positions us well.”