The Texas Higher Education Coordinating Board voted unanimously on Wednesday to endorse a report that suggests tying state funding for public four-year universities to student outcomes. The proposal recommends shifting financial support away from enrollment-based models toward a system that rewards degree completion and academic progress.
The board presented the findings during its quarterly meeting in Austin. A committee of university representatives from across the state developed the report after the Texas Legislature commissioned the study last year. The board advised that the Legislature consider this model when drafting the state budget for the 2028-29 fiscal year.
Under the proposed structure, 60 percent of funding would be allocated based on students earning a credential of value. This portion would carry additional weight for master’s and doctoral degrees, as well as degrees in high-demand fields. The remaining 40 percent would be determined by student persistence.
Universities would receive the highest funding rates when a student completes 30 credit hours, with decreasing amounts at the 60- and 90-hour milestones.
The report emphasized that performance-based funding should complement, not replace, current formulas that account for the higher costs of specific programs like engineering or nursing. It also recommended phasing out the existing $423 million institutional enhancement fund over several years, rather than eliminating it immediately at the end of 2027 as some lawmakers had desired.
Texas previously implemented performance-based funding for community colleges in 2023. That model allocates money based on credential attainment or transfer rates. The board suggested a more modest approach for four-year institutions, noting that students are most likely to drop out within the first quarter of their degree.