Community College Finance in Texas Explained

Each biennium, the state legislature appropriates funding from the state to the 50 community colleges in Texas. These appropriations provide funding for items such as instruction, student services, administration, and employee benefits. The 87th legislature appropriated $2.17 billion in funds for the 2021-22 biennium to Texas community colleges.

Community Colleges’ funding is often referred to as a “three-legged stool,” as it is made up of three types of funds: general revenue, tuition and fees, and local tax revenue. 

  • General revenue funds are based on formulas for two-year institutions.
  • Tuition and fees are the revenue colleges receive from the payments students make to enroll at each district, and is determined individually by each local college district. 
  • Local tax revenues are provided through local ad valorem taxes levied by the respective Governing Board of the 50 Texas community college districts for the maintenance and operation of district facilities and repayment of bonds issued for capital projects. More information on local tax revenues is available here

Notably, the proportion of funding each college district receives from each of the three sources listed above varies from district to district.

A funding formula determines more than 98 percent of the direct general revenue funds

appropriations to community colleges. Since the 2014-15 biennium, the Legislature has relied on an outcomes-based model for the formula that includes three funding components: core operations, student success, and contact hours. 

For Core Operations, each community college district receives over $1.3 million in general revenue funds. 

The remaining funds are allocated through two components:

  • The Student Success Point model (10 percent of the remaining funds) measures student completion of 11 metrics calculated by the Texas Higher Education Coordinating Board (THECB), and weighted points are attributed to each of these selected milestones. Community college districts are then rewarded for moving students along various acceleration points. More information on Success Points and the number of points earned for each metric is available here. The appropriation for each district is allocated based on a proportionate share of the total number of success points earned by all districts. For the 2020-2021 biennium, this results in a rate of $214.76 per success point.  
  • The Contact Hour formula (90 percent of remaining funds) is based on THECB’s Report of Fundable Operating Expenses. The report determines the median costs in each of 26 different instruction and administration program areas. The THECB uses the median costs to recommend a per contact hour funding rate for the state legislature to consider. The legislature makes a final decision on the rate based on various factors, such as available funding and enrollment changes. For the 2020-2021 biennium, the contact hour rate was $5.40 per contact hour.

Sources: https://www.lbb.state.tx.us/Documents/Publications/Primer/4909_Financing_Public_Higher_Ed.pdf

https://reportcenter.highered.texas.gov/training-materials/presentations/board-legislation-2019-summary/ 

https://reportcenter.highered.texas.gov/training-materials/presentations/summary-of-higher-education-legislation-87r/