economy

Texas’ Community Colleges:Statewide Overview

Public community colleges serve a vital role in our state’s economy by developing our workforce and preparing students for further academic study. Created specifically to expand access to higher education, the state’s 50 community college districts also play an important role by meeting the specific educational and vocational needs of their service areas (Exhibit 1).

Sources: Texas Comptroller of Public Accounts and Texas Higher Education Coordinating Board

---

Accessibility

In fall 2017, 46 percent of Texas’ higher education students — about 700,000 — were enrolled in community colleges, more than any other type of institution of higher education (IHE). Community college coursework serves two basic purposes.

First, it can serve as a steppingstone to a bachelor’s degree; in 2017, 34 percent of four-year college graduates had transferred at least 30 credit hours from a community college. Secondly, community colleges play an important workforce development role, providing the skills and accreditation needed for specific occupations. Two-year IHEs (including community, technical and vocational colleges) awarded 93 percent of all Texas technical certificates and associate degrees in fiscal 2017.¹ For many students, such options can provide a fast and cost-effective path to a rewarding career.

Affordability

Community colleges are much more affordable than other higher education options, particularly in Texas. In the 2017-18 school year, Texas’ two-year IHEs had the nation’s fourth-lowest tuition and fees, behind only California, New Mexico and Arizona (Exhibit 2), and averaging $2,209 per year compared to a U.S. average of $3,243. Texas’ four-year public IHEs, meanwhile, averaged $8,375 per year. The average student’s debt upon graduation from a community college is about half that of a student graduating from a four-year IHE.

Exhibit 2

National Economic Impact of Community Colleges

In 2014, Emsi partnered with the American Association of Community Colleges to estimate the economic and investment impact of community colleges across the nation. It found that two-year IHEs added more than $800 billion to the U.S. economy in 2012, about 5.4 percent of the U.S. gross domestic product.

U.S. community college students can expect to receive an additional $4.80 in future earnings for every dollar they spend on tuition.² And for every taxpayer dollar invested in community colleges, the public sector sees a return of $6.80, with a present value of more than $300 billion over the course of graduates’ careers. In all, community colleges’ benefits to society — including higher incomes and tax revenue, better health and well-being — are valued at more than $1.1 trillion.³

Community colleges typically focus on the needs of students and businesses in their geographic areas.⁴  According to a 2018 Emsi/Wall Street Journal study, the immediate community benefits most from graduates’ higher skills. The study found that community college graduates stay an average distance of 290 miles from the college, while 61 percent stay within 50 miles.

Statewide Economic Impact

In 2020, the Comptroller’s office requested financial data from Texas’ 50 community college districts and conducted statewide and regional studies of their economic impact. Our analysis predated the COVID-19 crisis and the economic impacts that followed. In all, Texas’ districts reported revenues of more than $5.3 billion in fiscal 2018, which produced $4.5 billion in additional economic activity by businesses and households for a total output of more than $9.8 billion annually. Nearly 78,000 jobs are supported by the colleges’ spending. Under normal economic conditions, every dollar spent by community colleges produces an additional 86 cents of economic activity, while every dollar spent on compensation produces an additional 38 cents of total income to the state economy (Exhibit 3).

Note: Output refers to the intermediate and final economic values of goods and services. Induced impact refers to the jobs, sales/output, and compensation created when new employees spend their wages at local establishments.

Sources: JobsEQ, Texas Comptroller of Public Accounts, Texas Higher Education Coordinating Board and Texas community college data

---

Our model represents a conservative estimate. Other studies, including one conducted by this agency in 2008 and another by Emsi in 2015, have applied a broader view of the economic ripple effects of a community college education in Texas and found considerably greater impact.

Wages by Educational Attainment

By any measure of impact, however, community colleges deliver a good return on the investment of time and tuition. Workers in Texas with some college or associate degrees and with stable jobs (defined as those held with the same firm throughout a calendar quarter) earn an average of $8,393 more annually than high school graduates (Exhibit 4).

 Source: U.S. Census Bureau and JobsEQ

---

The increase in wages alone for those 3.2 million workers adds an additional $27.2 billion in direct compensation to the state economy each year (Exhibit 5) – more than five times the total spending of the state’s community colleges.

Exhibit 5

This boost in wages is particularly notable given the average annual tuition of Texas community colleges of $2,209 and the modest two-year educational commitment required for an associate degree.⁵

The Future of Texas’ Community Colleges

The Texas Legislature has recognized the growing importance of community colleges, increasing the number of grants and other forms of financial support available to their students and allowing some two-year IHEs to offer certain bachelor’s degrees.⁶ Recently, lawmakers made it easier to transfer credits from a two-year to a four-year IHE and streamlined dual-credit programs by improving coordination between high schools and IHEs. ⁷

According to a 2012 study by the Organisation for Economic Co-operation and Development, Texas is experiencing a skills deficit, with companies across the state unable to hire enough skilled workers.⁸ Texas currently ranks 36th in educational attainment in the nation, with 43.5 percent of its 24- to 34-year-olds holding a degree or certificate, and just 38.9 percent holding an associate degree or higher. According to the Texas Higher Education Coordinating Board, at least 60 percent of the state population should hold a degree or certificate to ensure Texas remains competitive in the global market.⁹

During the 2017-18 academic year, the number of degrees and certificates awarded by Texas IHEs in Texas fell well short of market demand. The health professions, for example, faced a shortage of 19,626 Texas workers with two-year degrees and certificates compared to their needs (Exhibit 6).

Source: JobsEQ

---

Community colleges can help to close these gaps by paying particular attention to the needs of the fast-changing economy and job market. Some colleges, for example, have established strong connections with regional employers to identify market needs and close skills gaps within their communities. According to JobsEQ, health care and business vocations dominate the list of degrees awarded by Texas community colleges, along with general studies and liberal arts associate degrees that provide students with a smooth transition to a four-year IHE (Exhibit 7).

Source: JobsEQ

---

Conclusion

Spending by Texas’ 50 community college districts contributes billions of dollars to the state’s economic output and directly and indirectly supports thousands of jobs. Beyond this impact, however, our community colleges play an essential role in workforce development. They provide some Texas students with a low-cost opportunity to learn in-demand skills while preparing others for further education at a four-year university.

---

Questions?

If you have any questions or concerns regarding the material on this page, please contact the Comptroller’s Data Analysis and Transparency Division.