There is a skills gap in Texas’ rapidly changing workforce.
More than 60% of jobs in the state are middle-skill jobs, which require post-secondary training but do not require a four-year degree. Many of these jobs are in high demand and are paid accordingly. However, only one-third of her Texans are properly trained for these positions. Fortunately, the Texas Commission on Community College Finance’s recent recommendations on new funding models could be a step toward closing this skill gap.
The TCCCF recommendations reflect a welcome shift towards performance-based funding that ties state funding to colleges to measurable student outcomes. Recommendations include performance indicators such as “worthy qualifications completed”, “worthy qualifications completed in areas of high demand”, and successful student transfer to four-year degree programs. They also recognize the high cost of educating low-income students.
However, the recommendations are missing one key performance indicator for community colleges. That’s alumni income.
The chosen definition of “worthy qualification” has a dramatic impact on how colleges and universities educate students throughout Texas. For example, new and in-demand skills can take years to appear on state certification lists. Additionally, some qualifications that are in high demand by the college’s local employers rather than statewide may not be included on the list. Neither scenario rewards universities that respond quickly to local industry needs and changes in the job market.
Additionally, completing a program earns a student a piece of paper, which is not a sufficient indicator of educational quality or workforce relevance. Academic indicators can only go so far. Real-world information is needed to determine which institutions need more funding.
Texas already has a worthwhile qualification at the secondary level. It is an industry-recognized qualification and designed with the needs of the labor market in mind. However, in a 2022 study, Matt Giani of the University of Texas at Austin ultimately found that “the differences in job and postsecondary outcomes between students with I found that it can be ignored. In other words, credentials alone are not enough.
Instead, alumni income would be the best performance indicator for Texas Community Colleges. Luckily, the Texas legislature doesn’t have to look for such a model. Texas State Tech University has successfully adopted wage-based performance funding through its “return value” formula since 2014, increasing alumni’s total earnings by he 117%. Year after year, TSTC alumni income and state funding have increased using this funding method. This benefits students and national institutions.
Other states are increasingly using alumni earnings in their performance funding formulas. More recently, Florida’s Rethinking Education and Career Assistance Act transitioned the state’s performance fund for industry-based certificates from completion measures to employment and wage measures. Community college systems in Kansas and California also use alumni earnings in their funding formulas.
In 2023, the Texas Legislature must incorporate alumni earnings into community college performance funds to ensure students receive a strong education and prepare for future success. Texas can lead workforce development policies that create economic opportunities for all residents and encourage new entrants as well. A community college system driven by real metrics of student success paves the way for millions of students, workers and employers to thrive.
Annie Bowers is Director of Education Policy at the Cicero Institute, a nonpartisan policy organization in Austin. Prerita Govil is a research assistant at the Cicero Institute. They wrote this column for his Dallas Morning News.
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