Three years after Texas restructured its community college funding model to incentivize graduation rates, these institutions are now facing a financial shortfall. The surge in student achievements has exceeded the budgetary allocations made by state lawmakers.
Officials from the Texas Higher Education Coordinating Board (THECB) are currently working to revise the funding formula. A proposal to be discussed at Wednesday’s board meeting aims to reduce the state incentives linked to increased funding.
As a result of these proposed adjustments, several colleges may experience significant reductions in state funding for the fiscal year 2027. Projections indicate that nearly a dozen colleges could see state funding decrease by at least 15% compared to the previous year. Among the hardest hit will be the Texarkana, Navarro, and McLennan community college systems, which are expected to face declines of at least 20%.
Paris Junior College’s president, Stephen Benson, expressed his concerns in a recent editorial, urging the state to reconcile the disparity between the funding earned by community colleges and what they will actually receive. Despite a 20% increase in enrollment, Paris Junior College could face a $1.4 million funding reduction.
Benson emphasized that “successful colleges should not be penalized for exceeding expectations,” highlighting that the timing is particularly detrimental, as PJC is currently serving record numbers of students and enhancing its workforce programs and partnerships.
THECB officials have not yet responded to inquiries regarding these funding challenges.
In 2023, state lawmakers adopted a revised funding formula for community colleges, which received near-unanimous support, aimed at better preparing students for the workforce. House Bill 8 links funding to the number of students earning industry certificates or associate degrees, transferring to four-year universities, or participating in dual credit programs. Additional bonuses are provided for institutions that support high-need students, including those from economically disadvantaged backgrounds and adult learners.
While community college advocates welcomed this shift from a static, enrollment-based funding model to a more dynamic one, it has also introduced an element of unpredictability that complicates budget planning.
The proposed changes being considered by THECB board members would diminish the incentives for colleges to educate low-income students and adult learners, who are often the most in need of support.
This proposal has drawn criticism from education advocates. Jonathan Feinstein, Texas state director for Education Trust, pointed out that the current funding structure acknowledges that supporting vulnerable student populations requires additional resources.
Feinstein remarked, “These high-need student groups—students from low-income families and those who may not have been fully prepared for college—stand to benefit the most from these resources.” He expressed concerns about establishing a precedent so early in the implementation of the new funding model.
THECB officials noted in their agenda that lawmakers have granted them the flexibility to make necessary adjustments to manage the financial implications of the new funding system.
This year, Texas legislators approved an additional budget request of nearly $90 million after community colleges exceeded their expectations during the previous biennium. THECB officials have the option to submit a similar request this session.
Ray Martinez III, president of the Texas Association of Community Colleges, stated that his organization is collaborating with the coordinating board to ensure that funding aligns with the achievements of students and colleges.
Martinez claimed that community colleges exceeding funding projections demonstrates the success of House Bill 8. He stated, “When the Legislature passed House Bill 8 in 2023, it made a generational commitment—a bold and deliberate policy decision to tie state funding to student outcomes rather than enrollment. Our colleges rose to that challenge, made significant institutional investments, and delivered results that exceeded expectations.”
