Diving into Texas community college finance

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The funding formula for Texas’ 50 community college districts has stayed virtually the same since 1973, while the state’s share of two-year schools’ total budgets has steadily declined from nearly two-thirds to less than one-quarter at a time when an ever-greater percentage of employment requires postsecondary education.

And despite the state’s breakneck 16% population growth during the 2010s, more than half of Texas counties (143 out of 254) lost population, affecting local tax bases that fund community colleges, which can vary widely, from as little as 2% to as much as 70% of a college’s total budget.

To attempt to solve this puzzle, the state legislature established the Commission on Community College Finance, comprising 12 community college administrators, business leaders and other stakeholders who are well-grounded in the mission, programs and finances of public two-year schools, including a state House and Senate member from each party.

With a hearty endorsement from the Texas Association of Community Colleges, the commission began its work this fall and will spend the next year looking at trends and data and garnering input, then it will report back in November 2022 with recommendations to help address inequities, particularly for student groups who are underrepresented in higher education. That could be informative for other states as well.

Mission and goals

The commission’s presiding officer is Woody Hunt, senior chair of Hunt Companies, who led an earlier effort called 60X30TX, which set the goal of ensuring that 60% of Texas residents between ages 25 and 34 would have postsecondary credentials by 2030.

“I carry that vision with me in taking on this role,” he says. “Our North Star should be the educational attainment level in terms of postsecondary degrees and certificates, as appropriate and demanded by the workforce. We need to be competitive against other states and other countries.”

Hunt sees three areas of focus for the commission. One is around the institutions and their taxing districts and service districts, touching on issues like shared services and dual credit, the disparities among metro area vs. rural colleges, and how that parallels the concentrated demand of higher-paying jobs in more narrow geographic areas, he says.

The Texas Commission on Community College Finance held its first meeting last month, with Woody Hunt of Hunt Companies serving as its chair. (Photo: Texas Association of Community Colleges)

Secondly, the commission will look at student metrics in a state that’s demographically more diverse than any besides perhaps California, Hunt says.

“That diversity brings a lot of strengths, but it also brings challenges because of the gaps between racial and ethnic groups in terms of postsecondary outcomes. We have a huge economically disadvantaged population that is significantly but not solely of color. Our success there will determine how competitive our workforce will be in the future.”

Thirdly, the commission will focus on employers and the workforce, determining how to better connect demand and supply, so that students graduate and can find employment at a sustainable living wage or better, Hunt says.

“We have the state and local school districts collectively spending somewhere north of $160,000 to take someone from kindergarten through high school. Then the level of public support drops dramatically past the 12th grade,” he says. “That transition, that 13th and 14th year, to deliver someone to the workforce with a monetizable outcome, needs to be considered from a policy and a [funding] support level.”

Funding models

Stephen Head, chancellor of Lone Star College, agrees that the trends of divergent fortunes between metro area and rural colleges and the push for workforce programs that develop “middle skills” like cybersecurity, nursing and truck-driving, are converging to drive the agenda.

“What is an equitable model? That’s No. 1, with smaller colleges having significant financial issues due to lost students and lost assessed [property] value,” he says. “Secondly, there’s the need for credentials and degrees beyond high school, but not up to bachelor’s degree. What we’re seeing with the economy is a lot of focus on those kinds of skills. Those are jobs that pay $75,000 to $125,000 a year. There’s a shortage of qualified people. How does the state incentivize that?”

Schools in metro areas are flush with resources and have the latest equipment and facilities, while other colleges can’t keep up, which could exacerbate economic divisions, Head says.

“The model right now is heavily dependent on [local] growth: if you grow, you get more money,” he says. “But how do you deal with that model? … We’re looking at models in other states.” He adds that he does not favor a “Robin Hood” approach.

Brenda Hellyer, chancellor of San Jacinto College, sees the commission’s ultimate goal as ensuring that sustainability of community colleges in the state is maintained if not increased and that all Texans are well-served. The commission has started with gathering data along with the right mix of voices at the table to clearly identify, flesh out and understand the gamut of issues.

“After several meetings of understanding the data and big issues, the plan then is to break into workgroups,” she says. “The hope is that from the work in subcommittees, recommendations will come forward that have unanimous support. Our funding model for community colleges’ most significant components are more than 50 years old. It does have to be looked at. It’s complicated.”

Anticipated challenges

The major challenges involved will come into focus in the next few meetings when members hear from experts both within and outside the state, and then subcommittees around specific issues take deeper dives, Hunt says. 

Head, who also serves on the board of directors of the American Association of Community Colleges, anticipates challenges focused on philosophical disagreements.

“Some of the smaller colleges think there should be more money coming in to them,” he says. “The real question is, how much should the state be supporting community colleges, and where do you reach the point where you talk about shared services, mergers or dissolution of some of the colleges? … Most of us want to support smaller colleges.”

A second challenge is addressing demographic changes, including the fast-growing Hispanic population, that has resulted in colleges “dealing with under-prepared students who need tutoring, advising and counseling,” Head says.

“How do we sustain all that over the long term? It is a money issue, it is a philosophical issue and it is an operational issue,” he says.

Lastly, the commission will examine how to better serve parts of Texas that do not have a community college.

“Not everybody can get in their car for an hour and drive to college,” Head says. “If you’re a single mom and you’ve got two kids, and you want a nursing program — and you live halfway between here and Beaumont — that’s a problem.”

Online education could be part of the solution, particularly now that everyone is more used to it, but not everyone wants it, and it’s not conducive to workforce programs that require clinicals and/or apprenticeships, Head notes.

“Most of the smaller colleges aren’t equipped to do that,” he says. “Lone Star spends $50 million a year on technology, which is larger than most of the smaller colleges’ budgets by far.”

Hellyer anticipates some of the challenges will revolve around getting data and wrapping heads around them.

“How do these different models change so you can meet students’ needs?” she says. “Dual credit is a significant component — at my college, it’s about 19% [of enrollment]. At large, urban colleges competing for enrollment, we waive part of the tuition and fees. We know it’s the right thing to do to bring that population in, to be good partners with school districts and other entities across the road. But in a rural area, with a smaller budget, they can’t do that. Those students are suffering; they don’t have the same opportunities.”

Political constraint

Any recommendations will be geared toward the 2023 legislative session, with the backdrop that Texas is a fast-growing state that’s in mostly good fiscal shape and is forecasted to have a significant surplus in the next biennium, Hunt says.

“All of those things are positive,” he says. “The political constraint, in a state that’s generally considered to be a low-tax state, that will be where the challenge is. … At some point, we will have to have a reality check on what can be implemented.”

That’s where the legislative representatives will have a role to play, Hunt says.

“We’ll be looking to those members to keep us anchored in what’s doable,” he says. “We hope to come up with recommendations that will be a stretch — we have to stretch if we want to have a competitive workforce. … Policy always ought to lead. It’s hard to argue for more money when we don’t have that in place.”

What other states might learn

Hunt looks to California as a “bellwether” for what might be accomplished in terms of strategic planning, but he sees Texas as a state — because of its size, diversity and growth rate — as a potential national leader.

“For states that are similarly positioned, hopefully, we will come up with recommendations that will help them become more competitive,” he says. “We’re not where we’d like to be in terms of competitiveness of our workforce.”

Head expects that what’s happening in Texas will happen all over the country.

“States and community college systems need to take a look at the long-term stability,” he says. “When the economy goes south, community colleges pick up enrollment, but that’s not sustainable over the long term. You need to have a balanced model” among the state, local tax base, tuition, grants and federal money.

Other states should be similarly strategic and thoughtful, Head says.

“It depends on what state you’re in, how much money you have, [and] who’s in charge politically,” he says. “At the end of the day, there’s only so much money to go around. It’s complicated from a policy standpoint. And then you drop down into the philosophical [question], who should be doing what? And then the operational question, who can afford to be doing what?”

A page from other states

While other states might learn from Texas’ efforts, Hellyer also anticipates Texas will learn from what other states have already done.

“We’ll look at the whole comprehensive model,” she says. “Maybe they have better policies around transfer or workforce that can help us as we do this. Other states will be able to learn from us, how does a state get proactive in addressing competitive advantage needs?”

Community colleges are a significant player in that, Hellyer believes.

“In reality, to do that, there is going to have to be more investment,” she says. “But ultimately, that will pay dividends in our competitive advantage, being able to have the workforce that is needed in Texas. Ultimately, what we do here in Texas impacts the rest of the country and globally. … But the additional investment — what is that? That’s what we’re going to have to decide. And when I say ‘decide,’ I mean make recommendations to the legislature.”

About the Author

Ed Finkel
is an education writer based in Illinois.