Two years ago, legislators transformed the way that Texas community colleges are funded. With the 89th Legislature set to convene Jan. 14, higher education experts expect lawmakers to make adjustments to House Bill 8, the legislation that overhauled the system.
“HB 8 really was a drastic change for community colleges. The previous formula was tied to enrollment and was pretty unstable, particularly with declining enrollment in rural colleges,” said Grace Atkins, a policy adviser with Texas 2036, a nonpartisan public policy organization. “HB 8 moved to an almost entirely outcomes-based formula.”
Hundreds of millions of dollars are set aside by the state each year to fund rewards for community colleges based on student outcomes.
Community colleges across the state can earn additional funding for students who attain a degree in a high-demand field or where workers with that degree earn higher wages than workers with only a high school diploma. Additional funding is also linked to transferring to a public four-year university and high school students who complete at least 15 hours of college credit in a specific academic or workforce program.
Atkins said that one proposal in the next legislative session would count transfers to private four-year universities as a reward. Right now, only transfers to public universities count. Another proposal would ensure that funding for the law and its incentives are funded each year.
“The formula itself is not automatic, in the sense that there’s not a base level amount that the Legislature allocates automatically every session,” said Atkins. “This is something that the Legislature will need to continue to come back and fund every session.”
Tarrant County College received nearly $64 million in outcomes-based state funding for fiscal year 2024 due to House Bill 8. The allocation for fiscal year 2025 dipped down a few million to around $59.6 million, according to state data.
In most performance measures, the college’s funding allocation decreased in fiscal year 2025 when compared to the previous year. The most significant decrease was for transfers to a four-year institution. In fiscal year 2024, allocation was around $21.2 million while in fiscal year 2025, it decreased to $15.3 million — a nearly $6 million drop. There was around a $3 million decrease in funding, based on the degrees that TCC students were earning.
Rewards for students attaining dual credit shot up, from $4.3 million in fiscal year 2024 to $9.1 million in fiscal year 2025, or a nearly $5 million increase. A TCC spokesperson did not respond to requests for comment on how the new funding model has affected the college system, which enrolls over 47,000 students across six campuses.
How state funding for community colleges in Texas works
- Credential of Value Attainment rewards each credential of value awarded to a community college student. The types of credentials that can be rewarded are expansive, ranging from traditional college degrees to skills-intensive (and often shorter-term) certificates, certifications, licenses, or even digital badges.
- Credential of Value Attainment in a High-Demand Field provides bonus incentives for credentials of value that are associated with high-demand fields based on labor market data.
- Successful Transfer to a Four-Year University rewards the successful enrollment of a community college student in a four-year university for the first time. The student must have earned at least 15 semester credit hours at a community college prior to enrollment in a four-year university.
- Dual Credit Completion rewards high school students who complete at least 15 hours of dual credit in a specific certificate or degree program.
The remainder of community college funding is provided through the “Base Tier” formula. Only certain community colleges can receive funding through this formula by demonstrating that their local tax bases and student bodies do not generate enough revenue through property taxes and tuition and fees, respectively, to pay for their base instructional and operational costs.
Source: Texas 2036
Also offered in the state law is free tuition to low-income high school students who are taking dual-credit classes. After the law’s passage, Tarrant County College extended free tuition to all dual-credit high school students in August 2023.
“Moving forward, we anticipate an increase in the number of high school students taking advantage of educational opportunities at TCC,” Elva LeBlanc, Tarrant County College chancellor, said at the time. “The board’s decision to waive dual credit is a bold move that is beneficial to the entire community.”
Once that free tuition was in place, 26% of Tarrant County College students enrolled in fall 2023 were dual-enrolled high school students. The year before, it was nearly 24%, according to data from the Texas Higher Education Coordinating Board. This year, the number of dual-enrolled students attending the college in fall 2024 is 12,500 — or 26.4% of its enrollment, according to Tarrant County College.
“The bill itself creates a pathway, in the sense that it brings community colleges into high schools through the dual credit, as well as provides students the additional outcome for transferring to a four-year institution,” said Atkins.
State lawmakers and higher education advocates will work in the next legislative session to see that HB 8 is working well to serve the workforce needs of the state.