Texas college system ties its budget to graduates' career outcomes

Formula looks at jobs data, salaries to justify funding requests

The Texas State Technical College System now drafts its state budget requests based on a formula that takes into account job placement rates and the average salary of graduates, the Chronicle of Higher Education reports.

'Will the grads get good jobs?'

Under the formula:

  • The system tracks the salaries and employment status of students with at least nine credits.
  • Then, the formula quantifies the relative success of each program, according to the success of its graduates in the labor market.
  • The college system uses this data to justify requests for funds to the Texas Higher Education Coordinating Board, which makes a budget recommendation to the state legislature.

Before the change, the technical-college system had based curriculum decisions on inputs, says Michael Reeser, the system's chancellor. For example, would they have appropriate faculty available to teach the course? Would students sign up for it? But under the new formula, Reeser explains, administrators focus on one particular outcome: "Will the grads get good jobs that pay well?"

Using performance-based funding to expand, not cut back

According to the Chronicle, the formula places the system at the intersection of two growing trends in higher education: performance-based funding and measurement of labor-market outcomes—with a twist. Instead of using performance metrics to curb the budget trajectory of existing programs, the system uses its formula to proactively make a case for increased funding.

Prepare for performance-based funding 2.0

Two years ago, the formula recommended doubling funding for the system as whole; the coordinating board's final suggestion was approximately two-thirds of that. Susan Brown, assistant commissioner of higher education in Texas, says the coordinating board will ask the legislature for 74% of the formula amount for 2015-2017. Overall, the system receives funding at levels similar to other schools using more traditional, enrollment-based formulas. However, Brown says, lawmakers recognize and appreciate the system's unique rationale.

Satisfying workforce demand

Reeser acknowledges that a strict outcomes-based funding formula is not a good fit for every institution. "The niche that we fill in higher education is narrow," he says, pointing out that the system's mission is to train workers for in-demand jobs.

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Over the long term, it is possible the outcomes-based funding formula could incent the system to restrict enrollment to high-potential students.

But for now, the emphasis on labor market success is driving curricular changes that seem to be benefiting graduates. In response to labor market demand, for example, the system designed a 12-credit, $3,000 course for oil drill tool technicians—who can earn $75,000 in Texas (Blumenstyk, Chronicle of Higher Education [subscription required], 10/15).


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