SNEHA DEY/The Texas Tribune - The Texas Tribune
•7/29/2026
Texas community college leaders are bracing for cuts because they’re missing out on millions that the schools earned but the state can’t afford to pay.
The administrators spoke publicly for the first time about the stress that the state funding shortfall puts on their budgets during a Texas Senate committee hearing Tuesday. They said it will be hard to sustain the investments that state officials asked the colleges to make to improve students’ success.
“When I put that (shortfall) into our budget, it turns into faculty salaries. … It’ll definitely affect advising,” said Brenda Hellyer, president of San Jacinto College. “For us, it’s going to be a hard budget year.”
Schools surpassed state projections on student outcomes, which is primarily how community colleges are funded. In response, Texas Higher Education Coordinating Board officials prorated the dollars each college will get to stay within the budget. That contributes to a more than 15% drop in state funding for nearly a dozen colleges.
Colleges don’t have a lot of options to make up for the shortfall, especially since state schools have kept tuition and fees flat in recent years, Hellyer said. She expects to recommend to her board spending more money than the school takes in this year.
Legislators could fund the dollars colleges are owed during the next legislative session. They did that last year when the gap between earnings and payouts for that biennium was nearly $90 million. THECB hasn’t put a price tag on how much the gap is this biennium.
The challenges with the community college funding formula comes three years after House Bill 8 created financial incentives for the schools to get more students to complete certificates or degrees, transfer to a university, and participate in dual credit.
During a separate Senate finance committee meeting on Tuesday, lawmakers questioned how forecasts are so off for the funding model.
“Was that a mistake of your projections?” Sen. Lois Kolkhorst, R-Brenham, asked THECB officials.
“This is a new program, and the growth really vastly exceeded even our pretty significant growth expectations,” responded Andy MacLaurin, assistant commissioner for funding and resource planning for THECB. As Texas gathers more data on community college outcomes, MacLaurin said forecasting will become more accurate.
Until then, the unpredictability of the system threatens the stability of any positions community college leaders hire with the extra money the schools bring in.
North Central Texas College Chancellor Brent Wallace said he must now freeze some positions because of a $4.5 million shortfall. Mario Castillo, the chancellor of the Lone Star College System, avoids funding permanent positions altogether with that money – which he acknowledged was a “privileged” approach he could take as a larger institution.
“If I fund positions on HB 8 money, and then I lose that money, well, then I have to lay off or fire those folks,” Castillo said. “We don’t spend HB 8 money on anything that we couldn’t just cut essentially overnight.”
A new Texas 2036 analysis released the same day suggests tying dollars to outcomes is showing early signs of success, which then directly increases the amount of money schools are owed.
From fiscal year 2023 to fiscal year 2025, students enrolling in dual credit increased by 20%, and students completing credentials, from short-term certificates to associates degrees, increased by about 22%, according to the nonprofit think tank’s findings.
“The first two years show incredible growth in student outcomes,” said Grace Atkins, postsecondary and workforce policy advisor at Texas 2036. “The next phase is ensuring this change reaches more students and that state funding keeps pace with the outcomes colleges earn.”
In a move to lower the amounts colleges are owed, THECB changed the funding formula at a board meeting last week, trimming the incentives that trigger additional dollars when schools educate high-need students. Colleges will now see smaller bonuses for getting low-income students and adult learners to graduation.
The Texas Tribune partners with Open Campus on higher education coverage.
Disclosure: Open Campus, San Jacinto College and Texas 2036 have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in The Texas Tribune’s journalism. Find a complete list of them here.
This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.
