Texas community college funding model shows early gains

Texas 2036 says a state shift to outcomes-based funding for community colleges is already producing more credentials, dual credit enrollment and certificates. The findings could shape how lawmakers refine the formula as Texas tries to link higher education spending more directly to workforce outcomes.

Why it matters: - Texas is using a new funding model to tie most community college state dollars to student outcomes instead of enrollment. - Early results suggest the approach is increasing credentials, dual credit participation and short-term certificates linked to workforce demand. - The model could become a template for other states looking to connect higher education spending to economic mobility and job readiness.

What happened: - Texas 2036 released a report, The Texas Model: Rewiring Community College Finance for Student Success, ahead of the Senate Higher Education Committee’s interim hearing on the community college funding model. - The analysis covers the first two fiscal years after formula payments began in August 2023, focusing on FY 2024 and FY 2025. - Texas 2036 found a 22.3% increase in credentials awarded, including a 26% increase in credentials in high-demand fields. - High school dual credit enrollment rose 20%. - Short-term credentials, or certificates, increased 24.2%. - Certificates made up 53% of overall credential growth and 74% of growth in high-demand fields.

The details: - Kilgore College more than doubled dual credit enrollment, from 2,246 students in FY 2023 to 4,848 in FY 2025. - South Plains College and Galveston College each increased dual credit enrollment by about 60%. - The state’s largest community college systems added thousands of students. - Growth in outcomes was highest at small colleges at 6.6%, followed by medium-sized colleges at 4.9%, large colleges at 4.0% and the largest districts at 2.6%. - House Bill 8, passed in 2023, shifted roughly 95% of state formula funding for community colleges to measurable student outcomes rather than enrollment. - HB 8 also created a Base Tier to support colleges serving communities with limited local property wealth. - Senate Bill 1786, passed in 2025, added stronger earnings requirements to the reform framework. - The report says the reforms are designed to fund programs that produce credentials with real workforce value.

Between the lines: - The early gains give lawmakers evidence that colleges are adjusting behavior when funding rewards completions and other outcomes. - The next policy challenge is keeping the formula predictable and sustainable while preserving the incentive to prioritize student success. - Texas 2036 is signaling that the system should keep evolving as colleges generate more of the outcomes the state pays for. - The report also frames HB 8 as more than a funding change, positioning it as a broader economic mobility and workforce strategy.

What’s next: - Lawmakers will use the interim hearing and early data to assess whether the current formula needs further changes. - Texas 2036 says the next phase should expand access to the model’s benefits and ensure state funding keeps pace with outcomes. - Other states are watching Texas closely and may look to replicate the approach. - The full report is available here.

The bottom line: - Texas’ outcomes-based community college funding model is showing early momentum, and the next test is whether policymakers can scale the gains without weakening the formula’s focus on student success.