Texas Legislature passes landmark workforce readiness bill
This week, the Texas Legislature passed one of the session’s most important workforce readiness bills: Senate Bill 1786 by Sen. Brandon Creighton, R-Conroe, and Rep. Gary VanDeaver, R-New Boston. This bill builds on last session’s landmark community college reforms — which are already a national model — and sets Texas up for years of continued economic strength and job growth.
The bill also features some great additions from Sen. Paul Bettencourt, R-Houston, and Rep. Terry Wilson, R-Georgetown, who helped improve the bill as it made its way through the Legislature. Texas 2036 was proud to support this important and impactful legislation.
Here are the five key accomplishments of SB 1786, which now awaits a signature from Gov. Greg Abbott:
- Strengthens the definition of a credential of value;
- Improves the alignment of community college course offerings with local labor market needs;
- Improves state agency coordination of workforce education funding;
- Provides helpful clarifications for FAST scholarship eligibility; and
- Expands transfer eligibility to all universities in Texas.
1. Strengthens Credentials of Value
Last session, House Bill 8 oriented the state’s new outcomes-based funding model for community colleges around three key achievements:
- completion of a credential of value,
- transfer to a four-year university, and
- completion of 15 hours of dual credit for high school students.
But what is a credential of value? SB 1786 creates a three-part test to ensure that colleges are offering programs that lead to good wages and align with in-demand jobs:
- A credential of value should have a wage-related return on investment for the student.
Within a few years of graduation, an individual with an associate degree should be earning higher wages than a comparable Texan with only a high school diploma, even after you factor in the opportunity cost of tuition and time out of the labor market. If the credential’s wage premium can’t cover that increment, it isn’t providing labor market value. - A credential of value should promote economic mobility for the student and lead toward self-sufficiency.
SB 1786 will establish a wage threshold into the credential of value formula. Basically, if an individual who completes a particular credential isn’t earning high enough wages afterward to support him or herself without the need for government assistance, that credential probably isn’t a “credential of value.” This promotes economic mobility and self-sufficiency. The Texas Workforce Commission’s standards for an individual self-sufficient wage can be viewed here. - A credential of value should help Texas address its labor market needs.
SB 1786 also recognizes that there are a few key industry areas where Texas needs more talent, particularly education and health fields. The bill allows the Texas Higher Education Coordinating Board to award outcomes bonuses to credentials in these fields regardless of other requirements.
2. Better Aligns Community College Coursework With Labor Market Needs
SB 1786 makes key improvements to state data infrastructure to allow community colleges to better align their programmatic offerings with local labor market needs.
First, it requires that the TWC provide regionally-tailored labor market projections to every community college so that decisions about which courses to offer can be linked to that community’s local economy, powering statewide economic growth. This will be HUGE for rural Texas and smaller community colleges.
The big, urban community colleges are doing this already after the passage of HB 8 in 2023. And they are already seeing the dividends. A big thanks is owed to Sen. Bettencourt for leading the charge on this by filing SB 1961 earlier this year. This component of the bill will help ensure our community colleges drive a 254-county economic development agenda.
The bill also improves the quality of the data collected by the TWC to inform these labor market analyses. After implementation, we will be able to tailor local labor market analyses to the county level, helping smaller communities grow their economies and allowing better tailoring of workforce training opportunities.
We’ll also learn whether students who study in a particular program actually get jobs doing what we trained them to do. That’ll help understand the true ROI of these important investments, improving efficiency and long-term student outcomes.
3. Improves State Agency Coordination of Workforce Education Funding
SB 1786 provides muscle to the state’s Tri-Agency Workforce Initiative — an effort to align the efforts of the Texas Education Agency, Higher Education Coordinating Board and Workforce Commission around common goals and strategies to achieve college and career readiness. In short, it gets the three agencies to work together in aligning state funding toward higher-value career and technical education (CTE) investments.
What is the Tri-Agency and why does it matter?
Gov. Abbott launched the Tri-Agency initiative in 2015, starting these three state agencies on the path toward greater collaboration and alignment.
In 2021, the Legislature passed (and Gov. Abbott signed) HB 3767 by Rep. Jim Murphy, R-Houston, and Sen. Bettencourt, which statutorily enshrined the Tri-Agency efforts and expanded their remit. Under HB 3767, the agency leaders are required to meet regularly, create common goals, create shared strategies for achieving those goals, and monitor progress.
HB 3767 also required all workforce-related appropriations requests to be aligned with these shared strategies. These were all important incremental steps toward better efficiency and alignment.
SB 1786 builds on this essential groundwork, tasking the Tri-Agency with coordinating grants that fund key joint initiatives around the shared strategies, including: JET Grants, P-TECH Grants, TRUE Initiative funding, and federal CTE funds (including Perkins).
With this coordination, the Tri-Agency will be able to more effectively transition the strategies into action, steering the state’s $100-plus billion per year investments in education and workforce funding toward the greatest possible impact. I’m appreciative of Rep. Wilson for leading on this issue, and filing HB 5476, which has informed this effort.
4. Improves the FAST Scholarship
SB 1786 clarifies eligibility for FAST scholarships — basically, the mechanism the state uses to make dual credit more readily available for high school students. This has been one of the most immediately impactful components of last session’s HB 8 reforms and can serve as a driving force behind Texas leading the way in modernizing the high school experience.
That effort was further bolstered this session by HB 120 by Rep. Keith Bell, R-Forney, and Sen. Charles Schwertner, R-Georgetown, which is another great bill to keep on your radar. As we seek to increase the attainment of workforce credentials in high school, SB 1786 and HB 120 will play key roles in keeping Texas a leader for economic growth.
SB 1786 also provides the helpful clarification that high school students enrolled at Windham School District that will be eligible to participate.
5. Expands Transfer Eligibility to All Texas Universities
Last but not least, SB 1786 closes a gap in the transfer outcome bonus from last session’s HB 8. HB 8 allowed community colleges to receive an outcomes bonus when a student successfully transferred to a Texas public university. Now, after SB 1786, community colleges will receive that bonus regardless of which Texas university the student transfers to.