Jesse Levin and Bruce Baker were co-principal investigators for REL Southwest's An Examination of the Costs of Texas Community Colleges. Dr. Levin is a principal research economist at the American Institutes for Research (AIR), where he studies school finance adequacy and equity. Dr. Baker is a professor at University of Miami and nationally recognized school finance scholar. Jason Lee is a senior researcher at AIR, with expertise in studying postsecondary education.

Texas's current community college funding model includes two primary components. The first, which allocates 82 percent of the state's funding resources, is based on the number of credit hours that students undertake in a year. An additional 12 percent is allocated through the Texas Student Success Points performance-based system, which awards more funding to colleges whose students complete important academic milestones, referred to as "success points milestones."¹ However, research suggests that such performance-based funding arrangements may benefit colleges that serve a more advantaged student population and that are already performing well.² For community college funding systems to be equitable, they must account for the different levels of support and subsequent funding needed to provide students from different backgrounds an equal opportunity to succeed.

Examining the equity and adequacy of funding for Texas community colleges

REL Southwest conducted this study to help leaders at the Texas Higher Education Coordinating Board³ better understand the extent to which Texas community colleges receive adequate funding for reaching desired levels of student outcomes. This study represents the first attempt to apply methods from the K–12 school finance literature to estimate the costs of providing an equal opportunity to succeed for community college students who have different levels of need and attend colleges in different contexts. REL Southwest also developed a simulation tool⁴ that allows policymakers to analyze different scenarios based on assumptions about funding adjustments associated with different student need factors, college enrollment size, and desired outcome levels to generate cost projections.

The study used publicly available data from 2014/15 to 2019/20, as well as institutional-level data on specific student need factors from the Texas Higher Education Coordinating Board, available through the University of Texas at Dallas Education Research Center, to identify student need factors that could help or hinder success in college, and then examined whether institutional spending given student need factors and institutional contextual factors is equitable. The study team then projected the specific levels of per-student spending required for each college to provide their students an equal opportunity to achieve the statewide average success points milestones based upon their unique combination of student needs and enrollment size.

Key findings

The adequacy gap tends to be higher for colleges with higher levels of student needs and lower enrollments. For example, colleges serving the highest shares of first-generation college students spent an average of $10,523 per full-time equivalent student, which was $1,475 less than the average projected adequate cost of $11,998—a 14 percent difference between average projected adequate cost and actual spending (figure 1). In contrast, the colleges serving the lowest shares of first-generation college students had an average adequacy gap of only $405, a 4 percent difference. Similarly, smaller colleges, defined as having 4,000 or fewer students, spent $11,196 per full-time equivalent student, whereas the funding level necessary to achieve adequate outcomes was $13,067 (a difference of $1,871, or 17 percent). The adequacy gaps for colleges with larger enrollments were smaller on average.

Larger differences between projected adequate cost and actual spending were associated with less favorable student outcomes, as measured by the number of success points milestones per full-time equivalent student. Colleges with larger adequacy gaps had fewer success points milestones per full-time equivalent student than colleges with smaller adequacy gaps. The difference between average number of success points milestones per full-time equivalent student across community colleges with the smallest funding gap (colleges in the first quintile) was 0.22 higher than for those with the largest funding gap (colleges in the fifth quintile).

Community colleges with higher percentages of first-generation college students, students who are economically disadvantaged, students older than 24, and English learner students require additional funding to achieve adequate student outcomes, defined as the statewide average number of success points milestones earned per full-time equivalent student. Although spending was progressive (that is, there was a positive association between per-student spending and a given student need factor) for several student need factors, it was not high enough to provide an equal opportunity for students with certain needs to achieve the same level of outcomes as students without those needs. The results suggest it would cost 149 percent more than the base per-student cost for a first-generation college student to have the same opportunity to earn the statewide average level of success points milestones as an otherwise similar student who is not a first-generation college student (table 1).

How can state leaders use the study findings?

Study findings suggest that Texas may want to provide additional funding for community colleges that serve students with higher needs and colleges with smaller enrollment (fewer than 30,000 students). Because this study focuses on student outcomes that are part of the Texas Student Success Points system, state policymakers and leaders at the Texas Higher Education Coordinating Board can use the findings to make decisions about the adequacy of their funding system, and the extent to which colleges are equitably funded to support students from all backgrounds in their postsecondary pursuits. To determine how much additional funding to allocate to community colleges, Texas policymakers can use a simulation tool that the study team developed. The simulation tool allows policymakers to analyze different funding scenarios based on assumptions about student needs, institutional contexts, and desired outcomes to generate cost projections.

It should be noted that the findings may not be generalizable to other state contexts. Although the sample for the study is the population of community colleges in Texas—providing representation of the varied groups of students served and the circumstances under which these institutions operate within this state—the results may be limited in their application to other states. Policymakers, education leaders, and researchers in other states can use this study as an example of estimating the cost of providing an adequate community college education in other contexts.

Endnotes

¹ The remaining 6 percent is comprised of a core operations allocation and other non-formula items.

² Dougherty & Hong, 2006; Hagood, 2019.

³ For more information, see the Texas Higher Education Coordinating Board website: https://www.highered.texas.gov/

⁴ The simulation tool is available upon request from contact.IES@ed.gov.