Texas now funds community colleges based not on enrollment but for degrees that pay off and on outcomes like enrolling low-income and adult students. ADVERTISEMENT [The Edge Logo]( You can also [read this newsletter on the web](. Or, if you no longer want to receive this newsletter, [unsubscribe](. Iâm Goldie Blumenstyk, a senior writer at The Chronicle covering innovation in and around higher ed. This week I report on a model for community-college funding that is attracting attention for the outcomes it rewards. ADVERTISEMENT SUBSCRIBE TO THE CHRONICLE Enjoying the newsletter? [Subscribe today]( for unlimited access to essential news, analysis, and advice. Why a dozen states are eyeing Texasâ new community-college funding model A funny thing happened on Texasâ way to a new funding formula for its 50 community-college districts. Lawmakers â yes, in Texas â unanimously agreed that those collegesâ traditional degrees in liberal-arts majors like humanities and arts count as âcredentials of value.â At first hearing, I thought that was the formulaâs most notable feature, especially considering all the focus these days on degrees that seem more directly tied to work-force development and an economic payoff. The more I learned, however, the more intrigued I became about the rest of the model. Thatâs because the new law also rewards colleges for a host of other important outcomes, like graduating older students, low-income students, and those who start college needing extra academic help. It rewards colleges for enrolling high-schoolers into dual-enrollment courses and for graduating students into high-demand fields. Starting this academic year, the formula even pays colleges for badges and other nondegree certificates offered in conjunction with programs like [Grow with Google]( or Coursera. Texas officials say those third-party providers are needed, particularly in fields being changed by artificial intelligence, because the colleges donât always have the capacity themselves to stay abreast of developments affecting the economy. After years of funding community colleges based largely on their general enrollment, now nearly all the stateâs funding for community colleges is allocated under this new formula, and the Legislature threw in about 30 percent more in state money to boot. (The [law enacting the new formula]( also sets aside about 5 percent of overall state funding to help equalize support for poorer, smaller, and rural districts.) The basis for Texasâ credential-of-value model is whether the typical wages of people who hold that credential are higher after 10 years than are the typical earnings of a person with only a high-school diploma, after also factoring in the cost of obtaining the degree. Because Texas spent the past 20 years developing one of the nationâs most extensive systems for tracking the income of its residents, itâs able to make those calculations based on actual earnings data, and to update them annually to reflect real-time circumstances. The Texas formula has been [drawing positive attention](. Harrison Keller, the stateâs commissioner of higher education until becoming president of the University of North Texas this month, told me that officials from more than a dozen states â red and blue â have already come to Texas to learn more about the formula, and I heard it mentioned often last week during the policy meeting of the State Higher Education Executive Officers Association, in Washington, D.C. As for my first reaction: I was impressed to learn that [all the existing community-college degrees had passed]( that âminimum value threshold,â but â reality check â of course, deciding to measure value after 10 years, rather than within a shorter time frame, was one reason all the programs passed. Even David Troutman, an official who helped create the formula, allowed that âitâs a pretty low bar.â Troutman, the deputy commissioner for academic affairs at the Texas Higher Education Coordinating Board, and Keller said that particular baseline was a conscious choice, designed to ensure that the state didnât undercut programs that prepare students for careers, like those in early-childhood teaching, that might be low-paying but are still important to society. As with many movements for public-school accountability, Keller said, it was also politically easier to start a performance-based program like this with a baseline that wasnât that difficult to meet. All 50 community-college districts supported the law when it was up for a vote, in May 2023. All of which is not to say that this bill wasnât a tough sell. Keller told me that during the first go-round on the idea with lawmakers, in 2021, he heard a lot of resistance to funding âbullshit credentials,â and the post-Covid decline in community-college enrollment didnât help. âThere were policymakers who said out loud, âMaybe people were voting with their feet,ââ about community colleges, Keller told me. But the more they saw the data showing that the degrees did actually pay off for individuals and the state (albeit faster for IT, say, than education or the arts), the more lawmakers came around. âThis wasnât just about community colleges,â Keller said. It was about âwhat does the state need.â Having those outcomes, he said, âwas the key to success.â I see some lessons and caveats here: - As Keller told me, colleges should âstop being so defensiveâ about the value of liberal-arts programs, although it certainly helps having data to back up any assertions of value.
- Texas enacted this measure without a cap on funding, so the colleges arenât all competing for a limited pool of money. Troutman told me thatâs encouraged collaboration on best practices among the colleges. But not all states will have the luxury of budget surpluses when considering their own plans.
- Iâm also eager to see how the state manages to evaluate the ROI on third-party credentials. Nationally, only about half of all states even fund community colleges for noncredit courses, according to [a report released this week]( by the Association of Community College Trustees, and even among those states, the scope of that funding is often limited. For this year, support for such credentials with third-party content in Texas is still based on enrollment, but for the next academic year, theyâll be assessed on a cost-benefit basis. Given the growing role of such credentials in the education ecosystem â and the growing interest among state leaders in ways to crank them into their funding formulas â many will be watching the Texas experience. Also worth noting, as Troutman told me last week: âThis is just the first step.â Over time, Texas may raise the bar on what counts as a credential of value, or, as he hopes, perhaps give more weight in the funding formula for colleges that enroll students who are parenting and to reward other outcomes. In Texas, and with a group he leads, the [Postsecondary Employment Outcomes Coalition]( that includes nearly 1,000 institutions in more than 30 states, Troutman and colleagues also are exploring the disparities in earnings by gender, race, geography, and other factors. The coalition (not to be confused with the Postsecondary Commission, which is [an aspiring accreditor]( or the [Postsecondary Value Commission]( which is a Gates Foundation-backed effort to define the value of higher ed) has a partnership with the U.S. Census Bureau to highlight the economic and noneconomic value of higher education by linking educational data with federal, state, and local data. The funding formula is an important piece, Troutman said. But understanding the differences in earnings outcomes is the broader and more interesting goal. Join me at the Chronicle Festival next month The Chronicleâs annual ideas festival, [this year focused on âThe Road Ahead to 2035,â]( takes place online September 10-12. As part of the program, Iâll be talking with Eboo Patel, founder of Interfaith America, on how higher ed can prepare students to live and work in our increasingly fragile democracy. Iâm sure weâll cover some of the themes in [his recent Chronicle piece]( about collegesâ needing to prepare for a chaotic fall. If youâve got questions for Patel, [send them my way](mailto:goldie@chronicle.com). The agenda also includes many other terrific guests, with several of my colleagues as moderators. We hope youâll join us for some or all of the programs. Registration is free. Sign up [here]( to watch live or later on demand. Got a tip youâd like to share or a question youâd like me to answer? Let me know, at goldie@chronicle.com. If you have been forwarded this newsletter and would like to see past issues, [find them here](. To receive your own copy, free, register [here](. If you want to follow me on LinkedIn, youâll find me [here](. On X, [@GoldieStandard]( is my handle. On BlueSky Social, itâs [this](. UPCOMING WORKSHOP [The Chronicle's Leadership Transformation Collaborative | Starting in August 2024] Join The Chronicle’s Leadership Transformation Collaborative this fall to not only learn a new set of leadership skills, but to gain a structure for implementing them into your day-to-day work. This 15-week virtual program is designed to help current and aspiring higher-ed leaders instill new practices across the fall semester and beyond through practical tools, community building, and flexible learning. [Learn more and register today!]( Goldie's Picks 'WHAT IS LOST' [The Merger That Spared Mills College May Be Erasing Its Identity]( By Sonel Cutler [STORY IMAGE]( Northeastern University gave the small institution a second life. Now some former students and employees worry no one will remember what their campus used to be. ASK THE RIGHT QUESTIONS [Why This Innovation Expert Looked Beyond the Major When Hiring College Grads]( By Scott Carlson [STORY IMAGE]( A former executive for 3M on the importance of asking questions instead of making statements, and how to build teams that have a little friction. A BOGUS PLEDGE [How Florida A&M Was Tricked by an Entrepreneur With a $237-Million Check]( By J. Brian Charles [STORY IMAGE]( University administrators, eager for a historic donation, ignored several warning signs, according to a new report. CAREER RESOURCES [Finding a New Job] [Read the August collection]( for advice on finding a new job. 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