Modeling Costs to Inform Performance-Based Financing of Texas Community Colleges

Policymakers in Texas wanted to understand the funding levels necessary for community colleges to meet their promise of providing an affordable and accessible pathway to a postsecondary certificate or degree. Regional Educational Laboratory (REL) Southwest conducted this study to help leaders at the Texas Higher Education Coordinating Board better understand the extent to which Texas community colleges have adequate funding for reaching the desired levels of student success, as measured by success points milestones used in the state’s performance-based funding system.

AIR and Rutgers University leveraged empirical cost modeling to understand the costs of achieving desired outcomes (e.g., on-time graduation, transfer to a four-year institution) for community college students. The modeling took into consideration the differential costs associated with students' needs and the characteristics of the institutions they attend to better understand the cost of providing equal opportunity to all students. 

The results informed development of a simulator tool that will allow policymakers to create hypothetical funding mechanisms to facilitate policy development. The Texas Higher Education Coordinating Board used the project findings to support policy debate and community college funding reform in Texas.