Helping Community Colleges Prepare for the Impact of HB 8

Texas recently initiated significant changes to the way state funding is distributed to community colleges with the enactment of HB 8, which Texas Governor Abbott signed into law on June 6, 2023. State funding will now be tied more directly to student graduation rates and other outcomes. General revenue for community colleges will vary based on student population, operating activities, transfer relationships and other factors.

Change to New State Funding Formulas

Texas community college are funded primarily from three main sources: 

  • State funds. Prior to HB8, community colleges received state funding based on formulas that primarily measured student “contact hours.”
  • Local funds. Local taxes approved by a locally elected governing board.
  • Tuition and fees. Revenue collected from students.

In an effort to increase graduation rates and other performance measures, HB 8 increased state funding while also making significant changes to the way state funding is distributed to community colleges through funding formulas.

State funding will be distributed through two different allotments:

Basic Allotment. Based on student attendance.

Performance Allotment. Based on the number of students who:

  • Received degrees, certificates, and other credentials from credit and non-credit programs identified as a “credential of value” by a coordinating board
  • Earn at least 15 semester credit hours or equivalent and subsequently transfer or are enrolled in a structured co-enrollment program
  • Complete 15 credit hours or equivalent for dual credit courses that apply toward academic or workforce programs at the postsecondary level

Preparing for the Transition

HB 8 will require community colleges to transition to new reporting metrics in order to meet the requirements of these new funding formulas.

To make the most of this transition, community colleges will need to have in place a solid analytics infrastructure. Valuable analytics will include:

  • Student failure rates by educational track, professor, or program to identify areas to improve student graduation
  • Courses with low transferability to other institutions
  • Analyzing funding of student educational resources (e.g. tutoring lab, virtual enablement, etc.) compared to student performance
  • Forecasting success calculations based on student “pipeline”

Much of this data is available in current systems, but it will need to be aggregated and analyzed to project the financial impact of these new metrics.

Additionally, community colleges will need to ensure that their IT systems can produce accurate information to support the new state reporting requirements. 

Weaver offers data analytics and IT support services for community colleges to support this transition. Contact us for information.

© 2023


Dan Graves

Dan Graves

Partner, Risk Advisory Services and Higher Education Industry Co-Leader


Dan Graves, CPA, has more than 15 years of experience in public accounting, including 10 years of internal control…

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