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Formula Funding

The Big Picture Models and Tools Funding Tiers Frequently Asked Questions

The Big Picture

Through the community college finance (CCF) program, Texas community colleges receive state funding primarily through an outcomes-based model that is aligned with state higher education goals in Building a Talent Strong Texas and regional and state workforce needs. The formula at the heart of this program calculates funding based on measurable, student-focused outcomes and data and other factors.

This innovative financing model is among the first of its kind in the nation, transforming Texas community college funding from a static allocation system tied to a student’s time in the classroom to a dynamic funding formula designed to educate and train Texans for the workforce of the future. By focusing on outcomes, this system rewards colleges for equipping more Texans with the knowledge, skills, and experiences they need to enter the labor market and maintain our state’s economic competitiveness. This model also ensures colleges have access to the resources they need to support their core educational functions while developing new academic and workforce education opportunities. Every college will receive specific Performance Tier funding based on the fundable outcomes achieved by their students; a subset of colleges will be eligible for additional Base Tier funding, which is based on the availability of local resources

For information on high demand fields, click here.

For a glossary of terms relevant to the CCF program, click here.

For a list of FAQs, please visit the FAQ page.

Funding Models and Tools

Formula Funding Runs. Statewide and school-level funding allocations for FY 2025 are available in this file. Access information about total funding, Performance Outcome detail, Base Tier funding detail, and other factors that drive the forecasted allocations. Updated September 10, 2024.

Download FY2025 Formulas Funding Runshyperlink to fast program page

Close-Out Funding Model. The FY 2024 close-out model recalculates FY 2024 funding amounts using the most up-to-date certified data to ensure that the results reflect all necessary updates/corrections and compares the recalculated values to FY 2024 disbursements. The close-out adjustment adds the difference (whether positive or negative) to the October payment of FY 2025 funding. Updated September 9, 2024.

Download FY2025 Close-Out Funding Modelhyperlink to fast program page

Performance Visualization Tool. This Excel dashboard provides insights into the performance outcomes with historical trendlines for each outcome, as well as performance funding for FY25 compared to FY24. Updated September 30, 2024.

Download FY2025 Performance Visualization Toolhyperlink to fast program page

Financial Simulation Tool. This tool assists community colleges in Texas in analyzing the fiscal implications of differences between projected and actual performance outcomes. Updated September 30, 2024.

Download FY2025 Financial Simulation Toolhyperlink to fast program page

Dynamic Structure/Timeline. This timeline illustrates the dynamic structure of the community college finance program, showing when schools can expect payments, data availability, funding adjustments, fiscal year close out, and the schedule for the 89th Texas legislature. (Updated September 9, 2024)

View the timeline of FY25 – FY27 milestones for the CCF Programhyperlink to fast program page

Credential of Value Premium: Threshold Year for FY2023 Awards for FY2025 Funding. Institutions will receive additional performance tier funding for each student who earns a credential of value (COV) and who is projected to achieve a positive return on investment at or before the published target year when most students in comparable programs are projected to reach a positive return on investment. The threshold year can vary by degree type, program area, and year the award was conferred. Refer to Texas Administrative Code Rule 13.556(c) for details on Credential of Value Premium.

View COV Premium Threshold Year for FY2023 Awards hyperlink to fast program page

FY2024 Formula Funding Runs. Calculate funding allocations for all Texas community colleges for FY 2024 and get a high-level overview of the funding formula, complete with a glossary of terms.

Download Full Formulas Funding Runs for FY 2024hyperlink to fast program page

FY2024 Community College Funding Model. A public-facing draft model of FY24 formula and non-formula support funding for public junior colleges. Updated July 14, 2023.

Download the FY24 CC Funding Modelhyperlink to fast program page

FY2024 CC Funding Summary. A PDF of the draft FY24 formula funding runs for public junior colleges extracted from Fy24 CC Funding Model. Updated July 14, 2023.

Download the PDF Summaryhyperlink to fast program page

FY2024 CC Funding Three Pay Schedule. A PDF of the draft FY24 Three-Pay Schedule for public junior colleges extracted from the FY24 CC Funding Model

Download the Schedulehyperlink to fast program page

Funding Tiers

Performance Tier funding is based on the measurable, student-focused outcomes that align with Texas’ strategic plan for higher education and state and regional workforce needs. This funding is calculated based on the number of credentials the college awards, with an emphasis on credentials for high-demand occupations; the number of students who earn at least 15 credit hours and transfer to (or are co-enrolled in) a four-year public university; and the number of high school students who earn at least 15 credit hours through academic and workforce dual credit programs. The amount of funding will differ among credentials and include additional funding for credentials in high-demand fields.

Calculations

Performance Funding = sum across outcomes of: Weighted Outcome Completions*Outcome Funding Rate

Definitions

Weighted Outcome Completions = Outcome Count + (Weight Counts*Weights)

Outcome Count — The number of times an outcome was achieved by students at an institution, for funding purposes.

Weight Count — The number of times an outcome was achieved by students with a weighted characteristic at an institution.

For each outcome, the Outcome Count and Weight Counts are either the projected counts for the fiscal year being funded or the average of that year and the two previous years, whichever yields the greater total of Weighted Outcome Completions.

Outcome Funding Rates — The dollar amounts a college earns for each Weighted Outcome Completion, which are set by THECB within parameters of the General Appropriations Act and in alignment with Building a Talent Strong Texas.

Outcomes

  1. Dual Credit or Dual Enrollment Fundable Outcome: Students who completed 15 semester credit hours (SCHs) of fundable dual credit or dual enrollment (at a single college district) that meets requirements for a degree or workforce credential.
  2. Transfer Fundable Outcome or Structured Co-Enrollment Fundable Outcome: Students who earn at least 15 SCHs or equivalent and a) transfer to a Texas Public University or b) were enrolled in a reported, structured co-enrollment program.
  3. Credentials Awarded
    1. Includes the following:
      1. Bachelor’s degrees
      2. Associate degrees
      3. Certificates (Advanced Technical Certifications, Level 1 or 2 Certificates)
      4. Occupational Skills Awards (OSA)
      5. Institutional Credentials Leading to Licensure or Certification (ICLC)
      6. Opportunity High School Diploma (starting with diplomas awarded in FY 2025)
      7. Third party credentials (starting with awards in FY 2025)
    2. Conditioned on the following additional criteria:
      1. For degrees/certificates: Credentials of value that provide a positive return on investment within 10 years (on average), such that cumulative earnings will exceed students’ initial investments.
      2. For FY 2024-25 for other workforce credentials (ICLC), meets a minimum contact-hour threshold.
    3. With additional funding for credentials awarded in high-demand fields (per Board rules Ch.13T) and for bachelor’s degrees, associate degrees, and certificates that qualify for the credential of value premium.

Outcomes will be weighted by the following student characteristics:

  • Economically disadvantaged students, defined as Pell recipients, receive an additional weight of 25%.
  • Academically disadvantaged students, defined as students who are not Texas Success Initiative (TSI) ready in any subject area, receive an additional weight of 25%.
  • Adult learners, defined as 25 years or older, receive an additional weight of 50%.

A subset of colleges with relatively low taxable property values receive base tier funding. Colleges receive this funding if the costs of their operating needs (Instruction and Operations, or I&O) exceed the amount they can expect to access via $0.05 of tax effort and average tuition and required fees (the local share amount).

Calculations

Base Tier Funding = Greater of [(Instruction & Operations – Local Share), 0]

If I&O is greater than local share, the college receives the difference; otherwise, zero.

Definitions

Instruction & Operations — An estimate of a college’s operating needs based on characteristics of its student body (“basic allotment”) and courses taught (“contact hours”), where the amounts for each are summed.

Basic Allotment Funding — The number of weighted full-time student equivalents (Weighted FTSEs) multiplied by the basic allotment rate, which is a statewide rate established by THECB within parameters set by the General Appropriations Act.

FTSEs will be weighted for the following characteristics: economically disadvantaged, academically disadvantaged, or adult learner. Weights include:

  • Economically disadvantaged students, defined as Pell recipients, receive an additional weight of 25%.
  • Academically disadvantaged students, defined as not TSI ready in any subject area, receive an additional weight of 25%.
  • Adult learners, defined as 25 years or older, receive an additional weight of 50%.

Colleges with less than 5,000 FTSEs receive a Small College Scale Adjustment, which is based on a sliding scale. The difference between 5,000 and the college’s FTSEs is multiplied by 0.4 and added to the Weighted FTSE total.

Contact Hour Funding — Funding based on base-year contact hours, weighted by discipline as determined by the Report on Fundable Operating Expenses (RFOE), then funded at a statewide percentage.

Local Share — A measure of a college’s local resource availability for meeting its I&O needs, which is a function of its tax revenue and enrollment (tuition/fees), where the amounts produced by each are summed.

Tax Revenue — An estimate of the amount that would be raised with a $.05 Maintenance and Operations (M&O) tax rate. This tax revenue estimate is determined by the THECB and does not depend on what colleges raise each year or local tax rate changes.

Tuition/Fees — An estimate of the amount that would be raised from collecting the statewide average in-district tuition/fees from each non-dual credit full-time student equivalent (FTSE) and the FAST rate for each dual credit semester credit hour (SCH).

Please note: this information is intended to provide guidance and has no legal bearing.