State funding for technical and community colleges will be more closely tied to students’ academic performance and success in the workforce.

For the Texas State Technical College System, funding now will be based on graduates’ abilities to earn above minimum wage salaries.

Two-year schools like McLennan Community College will continue to receive the bulk of their funds based on the total number of hours students spend in class. But a portion of their funding also will be tied to a success points system in which colleges earn funding for students’ academic milestones, such as earning an associate’s degree or transferring to a 
university.

Leaders from the local institutions say the changes likely won’t lower their overall funding in the future, but the new formulas will mean a renewed focus on ensuring that students are moving forward academically and equipped to succeed in their careers.

“Gone are the days when it was just presumed that a dollar spent in education was a good dollar,” TSTC System Chancellor Mike Reeser said.

Since the early 1970s, the Texas Legislature largely based funding for colleges and universities on contact hours, or how many hours students are receiving class instruction.

Schools on a given day each semester would tally up the total number of credit hours students were enrolled in, then multiply that figure by the number of class weeks to calculate the students’ combined class hours.

But in the past decade there has been a national and statewide push to abandon that model out of concern that it does not evaluate whether colleges are succeeding in educating their students and preparing them for careers.

Also, since contact hours are calculated on the 12th class day each semester, schools could receive credit for students who later transfer, drop out, or reduce their courseloads. Students also may not attend all of their classes, thus lowering the true number of instruction hours provided.

New model

Reeser said the Legislature in 2007 asked the TSTC system to develop a new accountability-focused funding model.

After consulting with Baylor University economist Ray Perryman, the system pitched a funding formula based on graduates’ average earnings above minimum wage, arguing that a TSTC education enabled the students to obtain well-paying jobs.

TSTC’s mission is to train and prepare graduates to enter technical trades in Texas. Reeser said about 95 percent of its graduates remain in Texas for work.

For each entering class of students, the Texas Higher Education Coordinating Board and the Texas Workforce Commission will compare students’ Social Security numbers to track when they graduate or leave TSTC and the average salary they earned during their first five years in the workforce.

That data will be used to calculate each class’s average aggregate earnings above minimum wage. TSTC will receive about 
5.1 percent of that total.

Dominic Chavez, a spokesman for the coordinating board, said the two agencies already use a similar procedure as part of a statewide effort launched this year called Compare College Texas. Among other data, the project’s website lists students’ earnings a year after graduation for every public college or university, according to the degree obtained.

Formula flaws

Like the contact hour funding, there are some flaws with the new formula, officials said. Reeser noted that the coordinating board won’t seek a connection between whether a graduate was working in his or her degree field, so TSTC could receive funding credit for students who enter careers unrelated to the college’s offerings.

A drawback for the college is that students who take jobs in other states will not be calculated in the funding allocation. But Reeser said the new model is more closely aligned with the system’s mission to train workers to support the fast-growing manufacturing or technology industries in the state.

“Under our new system, we don’t get a dollar until we’ve made that student successful in the workplace, so the best interests of the institution are actually linked to the best interests of the student,” Reeser said. “It is driving the institution into a new mindset of not just complete a class, but get a job, and get a good job.”

Reeser said the TSTC system already has an 
85 percent to 95 percent job-placement success rate, depending on the campus and the degree.

He believes the system’s overall funding will continue to rise as it transitions to the new model.

He also foresees each campus amping up career development options to ensure continued success with graduates. For example, he would like to see more degree advising as students enter TSTC to help students select programs that match their interests and skills.

He believes stronger collaboration with various Texas industries will also help boost students’ performance and employment success.

“They’ll be even more interested in making sure we have the very latest technologies, that we know the exact skills they’re looking for their high-paying jobs, that the help they provide us in terms of knowing when to abandon a particular technology that is on the wane and adopting instead a new emerging technology,” Reeser said.

“The winner in that is the student, because they’re going to have (a connection) into industry that is stronger that we had before, and in better jobs.”

Academic markers

The new funding formula for community colleges, proposed by the Texas Association of Community Colleges, is simpler. Ninety percent of the formula will be based on combined instruction hours.

But 10 percent will be calculated on a new success points system that rewards colleges for helping students meet various academic markers.

For example, colleges will receive points for students who are awarded a degree or certificate, who complete 15 or 30 credit hours and transfer to a university.

Points also are awarded for students who pass incremental milestones like finishing developmental courses and passing their first college math course, and the colleges can earn bonus points for students who earn science, technology, engineering and math (STEM) degrees.

In addition, all of the colleges will receive $1 million for administrative costs during the biennium, or $500,000 per year. TACC sought that measure as a safeguard for smaller colleges who were more susceptible to financial difficulties during enrollment drops.

MCC President Johnette McKown was one of four community college presidents appointed by TACC to negotiate with a Senate higher education committee and lobby for the plan’s passage.

She said TACC and the higher education coordinating board still have to finalize the monetary value of each point and how many points will be awarded for each milestone.

McKown said it also is possible that success points will account for a larger share of community colleges’ funding in the future.

“I think it’s good to have ways to show what our accountability is, and I think it’s a positive thing,” 
McKown said. “When something is a focus, then you become more cognizant of it and you make sure that you’re tying resources to the areas that are most important.”

MCC already has started new initiatives aimed at boosting student success, partially in preparation for the switch to accountability funding. Last year, the college started its Learning Environment Adaptability Project, a series of programs to improve students’ decision making, conflict resolution, time management and study skills.

For example, first-time MCC students have to take a mandatory learning frameworks course their first semester. The college also hired success coaches to help struggling students overcome academic or personal challenges to remain on track in their classes.

“We believe we will do very well in earning all of our 10 percent, but it’s always a possibility that you won’t,” McKown said.