Five ways a funding overhaul has transformed Texas community colleges

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Community colleges in 2023 celebrated a long-awaited investment from the Texas Legislature, positioning Texas to lead the country in connecting young people to the workforce.

That year, state legislators reimagined how community colleges are financed with House Bill 8. The old funding formula awarded schools based on enrollment. Schools now have to see their students through to graduation to get money: The new formula ties state dollars to degree and certificate completions, transfers to four-year universities and high schoolers’ participation in dual credit courses.

The effort was born out of state leaders’ desire to better prepare young Texans for the workforce. By 2030, at least 60% of jobs in Texas will require a postsecondary credential, and yet, less than 40% of students earn a degree or certificate within six years of graduating high school. For students, a postsecondary credential often leads to higher wages and increased economic and social mobility.

As part of a near-unanimous vote for HB 8, lawmakers poured a historic $683 million into two-year institutions. When the money trickled down to each college in fiscal year 2024, each college saw an influx of dollars that ranged from $70,000 to $2.9 million.

Over a year after the law went into effect, community colleges have been working with unprecedented resources to bring down barriers to completion. Some have introduced free tuition benefits; others have expanded their student advising services. Those efforts are reshaping how schools run and who is taking their classes.

“HB 8, at its heart, was an attempt for the Legislature … to say, ‘What's the most impactful way that we can ensure alignment between educational outcomes and business and industry needs?’” Ray Martinez III, the president of the Texas Association of Community Colleges, said. “That’s why this is so significant … We have seen tremendous outcomes.”

Lawmakers have been fine-tuning funding incentives this session. Rep. Gary VanDeaver, R-New Boston, is shepherding a bill that would give community colleges money for student transfers not only to public universities but also to private schools. Community colleges currently get bonus dollars when students complete credentials of value, or credentials that lead to high-demand, high-wage jobs: VanDeaver’s bill would adjust the definition of a credential of value to include more precise labor market data.

Here are five ways community colleges have transformed because of the new funding formula:

Dual credit boosts enrollment

During the COVID-19 pandemic, young Texans cut community college out of their plans. One in ten students in the state — or about 80,000 students — disappeared from campuses.

Economic uncertainty acutely affected community college students, who often come from lower-income households and have more work and care responsibilities than their peers at four-year institutions. Many left school for low-skill jobs. Others lost the steam to keep going.

Community college leaders have had to find ways to keep students — and one big way has been growing the pool of high school students who get a jump start on college.

HB 8 makes it easier for low-income students to take dual credit courses. Community colleges in the Financial Aid for Swift Transfer program, or FAST, now get extra funding when they allow high school students who qualify for free and reduced-priced lunch to take classes at no cost. Other students get a discount, with a cap on costs at about $55 per credit hour.

Research shows dual credit students are more likely to graduate from high school, enroll in college and finish their degrees faster.

The financial help has prompted an upshoot in enrollment. More than 250,000 students participated in dual credit classes through the FAST program in the 2023-24 school year, according to Sarah Keyton, who was the interim commissioner of the Texas Higher Education Coordinating Board last fall.

Kilgore College in East Texas, for example, saw a 36.5% increase in dual credit enrollment last school year. High schoolers now make up the majority of its student body.

Community colleges don’t have to participate in the FAST program but nearly all have opted in. Colleges got a total of about $80 million in extra funding last academic year, Keyton said.

College leaders are adapting to their schools’ changing identities as dual credit students make up a larger portion of their total student populations. Some faculty now spend more time teaching in high schools than on campus.

Free tuition gains momentum 

As young people increasingly question the value of college, a pair of colleges have come up with a new price tag: free.

In bold pilot programs, Austin Community College and Del Mar College are waiving three years of tuition for local high school graduates.

“‘​​Discount’ doesn’t change people’s perceptions that they can’t afford to go to college,” ACC Chancellor Russell Lowery-Hart told The Texas Tribune. “‘Free’ means something when you’re talking about college affordability.”

The first class of students to benefit from the free tuition program started this year. ACC paid for it with the $6.8 million it received from the state last year through HB 8.

Lowery-Hart wants to use the program to reach students who were not planning to go to college. In a recent survey of ACC prospective students, more than half said they didn’t enroll because of tuition costs.

When glitches in the revamped federal financial aid application delayed award packages, students in the Austin area told the Tribune that ACC’s free tuition program was a much-needed option that eased the uncertainty.

Del Mar College is following ACC’s footsteps, launching a free tuition benefit this fall for recent high school graduates and adult learners in the Corpus Christi area. Students have to enroll full time and maintain at least a 2.0 grade point average to qualify.

In what is known as a “first dollar” program, both Texas colleges are paying for students’ tuition before federal and state aid kicks in. That allows students to use their grants and scholarship money to pay for other needs like housing, food and textbooks.

Students hired as peer mentors

Laredo College has turned nearly 80 students into peer advisers, multiplying its advising crew by seven.

The peer advisers are recent graduates, former students who transferred to a four-year university or current students who are finishing their degree. They help their classmates register for classes and stay on track to graduation.

Many Laredo College students are the first in their families to go to college. Young people in the region often opt not to get a college degree because they don’t know how to go through the process — and there's nobody at home to help them, said Minita Ramirez, the president of Laredo College.

“Whether it's a first-time college student out of high school or … a 70-year-old gentleman who all his life wanted to go to college, …. our hope is that we provide the support … to get that person through the process, to make them feel comfortable in an environment that is completely foreign,” Ramirez said. “And if we can do that, our numbers grow.”

Already, Laredo College has seen 1,500 students switch from part-time to full-time, Ramirez said.

HB 8 has pushed college leaders like Ramirez to fix disjointed advising systems to prevent students from falling through the cracks. Research shows student advising is tied to higher grades and graduation rates.

When students at North Central Texas College register online for a course that won’t count toward their degree, a warning sign now pops up encouraging them to visit an adviser. Chancellor G. Brent Wallace said he wants to make sure students don’t sign up for the wrong course — and save them the time and money that goes along with those decisions.

North Central Texas College also hired about a dozen more staffers so advisers aren’t stretched too thin and students get the academic attention they need, Wallace said.

Growing workforce training

Community colleges have long been a player in helping close workforce gaps, but HB 8 was the push for leaders to strengthen relationships with local employers.

Sherman, for example, has been grappling with its new identity as a semiconductor manufacturing hub. In recent years, giant companies like Texas Instruments and GlobiTech have been constructing multibillion-dollar chipmaking facilities.

Before those facilities could finish construction, Grayson College was already training students so they would be ready to join the industry.

Jeremy McMillen, the president of the college, said the school added programs like electronic and automation certifications with input from those companies. It mimicked the kind of collaboration the state's technical colleges have with employers on curricula.

“We needed to move the needle in terms of building out of the infrastructure,” McMillen said at a Texas Tribune event last month. “Without HB 8 in the background, it's very difficult to imagine that we've been able to do that.”

Schools team up so credits transfer

Students in North Texas are getting more support when they select Dallas College courses they want to count toward a bachelor’s degree.

To ease transfers to local universities, Dallas College teamed up with Texas A&M University-Commerce, Texas Woman’s University and the University of North Texas at Dallas to identify which courses students will get credit for when they transfer. The HB 8 funding model means the community college gets money when students successfully transfer.

Around 80% of students who enroll in community colleges intend to transfer but just 16% do, according to data from The Aspen Institute.

In the fall of 2022, more than 13,000 Texas students who transferred did not receive credit for at least one of the courses they completed, according to the Texas Higher Education Coordinating Board. Students lose time and money when they take classes that don’t end up counting toward their degrees. The setback can discourage them from completing their bachelor’s degree.

The Dallas-area schools launched an online portal in the fall where prospective students can see how their credits would be counted at each school and track their progress toward their bachelor’s degree.

For three areas of study — business, education and health sciences — the universities have already agreed on which Dallas College courses will be counted for credit toward related majors on their campuses.

The Texas Tribune partners with Open Campus on higher education coverage.

Disclosure: Kilgore College, Texas A&M University, Texas Association of Community Colleges, Texas Instruments and University of North Texas have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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