The Texas Higher Education Coordinating Board (THECB) officials have recommended that Texas lawmakers should reshape how the state funds public universities by giving them more money when students make progress toward degrees and graduate.
The recommendation came during the same meeting where the THECB reduced similar incentives in existing outcomes- based funding for community colleges, which outperformed what lawmakers had budgeted. The recommendation calls for financing the new incentives primarily with additional state funding but did not recommend a specific amount. Such incentive payouts would supplement, rather than replace, universities’ existing enrollment- based funding. Lawmakers would have to create and finance the model when they return to Austin in 2027. But the call for more funding comes as state leaders want to limit spending. Recently state leaders instructed public universities, colleges and state agencies to request 3% less in baseline state funding, saying they wanted to preserve money for affordability measures and property tax cuts.
THECB cont. on page 2 The THECB proposed a model that bases 40% of the incentive funding on rewarding universities when students remain enrolled and reach certain credit-hour milestones.
The bulk of funding, 60%, would be tied to students earning bachelor’s degrees that provide a financial return. That would be defined as a degree that allows the typical graduate to earn enough within 10 years to recoup the cost of college and surpass the earnings of a typical high school graduate. A THECB committee report notes that all bachelor’s degrees awarded by Texas public universities currently meet that threshold.
Universities could receive additional money for graduating economically or academically disadvantaged students, adult learners or those who returned after leaving college for an extended period of time. Schools would get more funding for graduating students who are federal Pell Grant recipients, which are to those from qualifying low-income families.
Universities could also receive additional funding for awarding degrees in high-demand fields and for helping students graduate with no more than 120% of the credit hours required for their degrees.
Texas currently distributes much of its funding for public universities based on the number and type of courses students take.
The schools also receive institutional enhancement funding, which is flexible state money they can use for academic programs, student services or other operating expenses. Lawmakers decide how much each institution receives individually based largely on their own priorities rather than a uniform formula, and the amounts vary widely. Institutional enhancement funding has been a recurring point of leverage in lawmakers’ disputes with universities.