Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
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Glenn Hegar
Texas Comptroller of Public Accounts
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A Review of the Texas Economy


Higher Education Enrollment Decline Spurs Reform Proposals Number Falls by 66,000 Since 2019; Driven by Community College Drop

By Peggy Fikac Published February 2023

Texas’ booming economy requires highly skilled workers, but higher education enrollment is lagging as the state works to supply qualified employees: About 66,000 fewer students were enrolled in Texas higher education institutions in fall 2022 than before the COVID-19 pandemic, according to the Texas Higher Education Coordinating Board (THECB). The enrollment drop — which occurred as the census showed an increase in the estimated number of high school graduates in Texas’ 18- to 24-year-old population from 2019 to 2021 — is driven by a 10.4 percent decline at public two-year colleges since 2019. Preliminary figures show small increases at public and private four-year universities and a 5 percent increase at health-related institutions (Exhibit 1). As a result, state higher education leaders are recommending significant reforms to increase educational attainment.


Sector Certified 2019 Enrollment Certified 2020 Enrollment Certified 2021 Enrollment Certified 2022 Enrollment Fall 2021 to Fall 2022 Percent Change Fall 2019 to Fall 2022 Percent Change
Public Two-Year Colleges 747,110 673,605 665,364 669,354 0.60% -10.41%
Public Universities 657,985 667,046 665,213 666,322 0.17% 1.27%
Health-Related Institutions 29,735 30,528 31,548 31,246 -0.96% 5.08%
Private Independent Colleges and Universities 125,918 125,373 128,242 127,746 -0.39% 1.45%
Total 1,560,748 1,496,552 1,490,367 1,494,668 0.29% -4.23%

Source: Texas Higher Education Coordinating Board

The Texas Commission on Community College Finance, created by the 87th Legislature in 2021, has proposed dramatic changes for consideration by the 88th Legislature, like tying state funding for the 50 community college districts to student outcomes (such as earning “credentials of value” or transferring to four-year universities) and substantially increasing student financial aid. For universities, THECB in its Building a Talent Strong Texas strategic plan set a goal of increasing federal and private research funding and increasing the number of research doctorates awarded.

At both two- and four-year institutions, THECB is focused on promoting credentials of value in line with workforce demands and higher salaries. The board also has expanded its educational attainment goals, aiming for 60 percent of Texans ages 25-64 to have a degree, certificate or other postsecondary credential of value by 2030. In 2020, 44.9 percent held degrees (Exhibit 2). Its previous goal covered ages 25-34.


Sources: American Community Survey 1-Year Estimates, U.S. Census Bureau;
Texas Higher Education Coordinating Board analysis

Texas Higher Education Commissioner Harrison Keller, who serves at THECB and worked with the community college commission, compares the reform effort following the pandemic’s disruption to the GI Bill® that expanded educational opportunity for veterans after World War II.

“Here’s a once-in-a-generation opportunity to do something that could be transformative for our institutions but, more importantly, for our state,” Keller says.


As Texas higher education enrollments stabilize compared with 2021, differences in ethnicity and gender (PDF) persist as measured by preliminary enrollment figures for fall 2022 (Exhibit 3):


Source: Texas Higher Education Coordinating Board
*Preliminary numbers, the latest available at time of writing, typically are higher than certified numbers.

  • Female enrollment continues to exceed male enrollment. But male enrollment has risen since 2020, while female enrollment has continued to drop. Neither has returned to 2019 levels.
  • Compared with 2019, enrollment is down among students who are Black, Hispanic, white and identified as Hawaiian or other Pacific Islander.
  • Some student groups have seen increases since 2019, including students identified as American Indian or Alaska Native; Asian; international; and multiracial.

(Preliminary enrollment figures, the most recent available for this data at this writing, typically are higher than certified figures.)

It’s important to expand equity as the state works to improve higher education, Keller says. “Over the past decade, Texas added more residents than any other state — nearly 4 million people — and 95 percent of that growth was in communities of color,” he says. “If we do not advance our goals equitably, we cannot achieve our goals.”


Besides differences in ethnicity and gender, enrollment varies by region (Exhibit 4) and type of institution; the drop in community college enrollment has drawn particular attention from leaders.

Reforms recommended by the community college commission — which is composed of lawmakers, community college leaders and experts in policy and workforce issues — would cost an estimated $650 million in state funding over the 2024-25 biennium, Keller says. In the 2022-23 biennium, state formula funding for community colleges is about $1.8 billion, according to the commission report. This funding is composed of state dollars distributed “through an allocation methodology that considers how colleges perform in relation to one another,” the report notes. The formula is based primarily on contact hours (instruction) and is linked to enrollment and the type of courses offered. Another, smaller portion of this state funding, is based on achievement, such as students obtaining certificates; there is a uniform amount that goes to each college, the report states.

One key recommendation from the community college commission would change state funding by providing money to community colleges based on student outcomes. Historic enrollment figures demonstrate the value of aligning funding with goals, Keller says. Dual credit enrollment (in which high school students take college courses, earning credit for both high school and college) increased from 90,374 in fall 2011 to 175,282 in fall 2021 at public community and technical colleges, according to THECB figures. It’s a big jump from 1999, when dual credit enrollment at community colleges totaled only 11,921. Keller says the increase shows the impact of a funding mechanism allowing public schools and higher education institutions to receive state money (PDF) for students in the program. Enrollment in other community and technical college academic and workforce programs, while still much larger than dual credit enrollment, by comparison fell from 662,614 in fall 2011 to 490,082 in fall 2021, according to THECB. (As noted, both dual credit and non-dual credit enrollment fell when comparing 2019 with 2021.)


Source: Texas Higher Education Coordinating Board
Note: Fall 2022 numbers are preliminary and therefore the percent changes shown may be adjusted after certification.

The commission’s report additionally addresses property taxes, which with tuition provide the bulk of funding for community colleges. According to the Texas Association of Community Colleges (TACC), state funding made up 23 percent (PDF) of community college funding in 2021. The commission recommends that the state guarantee that community colleges can raise enough revenue through tuition and an initial portion of their property tax effort to meet a basic funding threshold, which would be linked to the size of the college, needs of the student body and the cost of courses students take. This proposal, similar to a mechanism used in the public school system, would address disparities in property tax bases among colleges. Some colleges can raise as little as $11 per full-time equivalent student per penny of tax effort (per $100 of value), while others can raise more than $1,100, according to the commission’s report. In addition, the commission proposed support for shared services among institutions, such as allowing students at a community college to access other colleges’ online courses.

For financially disadvantaged students, the commission recommends an increase in financial aid, advocating a state goal of serving at least 70 percent of qualified low-income students who are pursuing credentials of value at two- and four-year institutions. The Texas Educational Opportunity Grant program serves only an estimated 28 percent of eligible community college students this year, while the TEXAS (Toward EXcellence, Access, and Success) Grant program helps more than 68 percent of eligible low-income undergraduates at four-year universities.

The most recent drop in community college enrollment stems largely from the availability of entry-level jobs paying as much as $18 an hour without requiring degrees or other credentials, Keller says. Many people put off college enrollment, he says, “especially given how devastating the pandemic was for a lot of families’ financial situations.” With the reforms outlined above, Keller says, “Texas would be in the vanguard for an outcomes-based funding system for community colleges that includes an intentional focus on equity for taxpayers and for students.”

TACC supports the commission’s recommendations, states Ray Martinez III, president and CEO of the association.

“TACC leadership worked hand-in-hand with the commission members to ensure these recommendations equally voiced the concerns of our diverse institutions, big or small, rural or urban,” he says.


Universities also are getting attention in the push for improvement. THECB aims to position all universities to receive an additional $1 billion annually in federally and privately sponsored research funding by 2030. The board also has a goal of increasing the number of research doctorates to 7,500 annually, up from 3,927 in the 2021 academic year. Keller says it is important to look not only at the overall numbers of doctorates but at the diversity of recipients (Exhibit 5), adding, “We have a lot of room for progress.” Strategies to draw the additional funding include recruitment of “world-class innovators” through the Governor’s University Research Initiative and other programs.

The research investment, like other goals, is important not only for higher education institutions but for the communities surrounding them and the state as a whole, Keller says. Robust research universities foster startups and spur other economic activity: “There’s a multiplier effect.”


Along with expanding its targeted population age to 25-64 in its goal for postsecondary educational attainment, THECB aims to have 550,000 students earn postsecondary credentials of value annually. Texans in public and private postsecondary institutions completed 357,855 certificates and degrees in the 2020-21 academic year, as cited in the July 2022 report on the 60x30TX strategic plan, the precursor to Building a Talent Strong Texas. The new goal, however, is not directly comparable because it is focused on credentials of value and thus includes a calculation of long-term earnings weighed against the cost of higher education, according to THECB.

Building a Talent Strong Texas also sets a goal of 95 percent of graduates having either no undergraduate loan debt or only debt that’s manageable due to the graduates’ potential earnings. According to the 60x30TX report, 43.2 percent of students had debt when they graduated in 2021, a decline from 44.1 percent in 2020.


Nationwide, enrollment declined by 0.7 percent in fall 2022 compared with fall 2021, looking at all sectors, and it remains far below pre-pandemic levels, according to the National Student Clearinghouse Research Center. Public four-year university enrollment fell by 1.2 percent in fall 2022, after rising 0.4 percent in 2020 and declining 0.9 percent in 2021. Community college growth was “essentially flat” at 0.4 percent in 2022, after dropping 10.5 percent in 2020 and falling 6.7 percent in 2021.


Source: Texas Higher Education Coordinating Board Accountability System, 2020 and 2021

Compared with fall 2019, total postsecondary enrollment was about 1.1 million lower nationally in fall 2022. Doug Shapiro, executive director of the research center, says “a path back to pre-pandemic enrollment levels is growing further out of reach.” He cites challenges nationally including affordability and access among low-income, disadvantaged and middle-income students, as well as the challenge of engaging with those who either didn’t enroll in college after graduating from high school in 2020 and 2021 or who left college without a credential during the pandemic. A number of the recommendations in Texas, such as revamping funding to reward positive student outcomes, also are being discussed around the nation, Shapiro says, emphasizing the high stakes.

“If undergraduate numbers do not improve, it is likely that larger shares of adults will be left in low-skill, low-wage jobs, and the U.S. will be unable to supply the high-skilled workforce needed to sustain the economy of the future,” he says.


Leaders also see the high stakes in Texas, which attracted businesses even during the pandemic; a state’s workforce is among important factors executives cite in making location decisions, and the opportunity to pursue higher education can give Texans more opportunities to take part in and contribute to an expanding economy.

“As strong as our economy is right now, the two major factors holding the Texas economy back are inflation — hopefully for the short term — and, longer term, educational attainment. So we need to have many, many more people educated to higher standards with more credentials. Those credentials need to be aligned with our current and emerging workforce needs,” Keller says.

The 88th Legislature has an enormous amount of money at its disposal as it writes a budget for the next two years, but advocates seeking additional funding for programs and services will have to advance their causes amid a chorus of other requests and demands. Keller is confident the case can be made for higher education reforms.

“There’s a return on this investment,” he says. “Historically, one of the questions has always been, ‘Well, what’s the return? What does that mean for us in terms of economic opportunity, in terms of what kinds of jobs we’re going to be able to attract and retain?’ There’s a clear line of sight from these recommendations to expanded opportunity.” FN

Learn about saving for a child’s future with the state’s prepaid college savings plan, the Texas Tuition Promise Fund®.