Senate Finance challenges all colleges to consider outcomes-based funding;
Texas State Technical College accepts challenge.
TSTC contracts with economist to recommend viable outcomes-based funding model;
Student employment outcomes recommended as ideal accountability measure.
Budget Rider directs Texas Higher Education Coordinating Board (THECB)
to determine feasibility of recommended formula.
THECB and Texas Comptroller conclude in separate studies
that recommended formula is feasible for TSTC.
THECB reports findings to Legislature; TSTC shifts internal operations from
maximizing contact hours to maximizing student job placements and student salaries.
Budget Rider calls for development of new TSTC formula that rewards
student job placements and earnings, not contact hours.
Mechanics of TSTC’s new formula resolved.
Budget Rider directs use of new Returned-Value Formula for TSTC.
Returned-Value Formula used in base budget bill for the first time;
TSTC streamlines operations to maximize efficiencies.
TSTC grows enrollment by nearly 20 percent and posts record levels for credentials awarded,
students placed in jobs, and student salaries; Student satisfaction at TSTC at all-time high.
For more than 50 years, Texas State Technical College has been purposefully job-focused. Training at TSTC is rigorous, hands-on, and lab-intensive. Programs are designed around high-skilled, high-wage technical jobs.
So why did TSTC accept the challenge in 2007 to transition from the traditional contact-hour funding model to the very innovative, never-been-done-before outcomes-based model?
A sincere desire for better outcomes for students, industry, and Texas.
TSTC’s leadership knew that a funding scheme that incentivized results would naturally drive performance and achieve better outcomes.
Under what has become known as the Returned-Value Formula, TSTC receives funding only after students are in the workforce for five years. The formula pays TSTC a percentage of the economic activity generated for the state by the work effort of former students. Simply put, TSTC is paid a commission based upon student placement and performance in Texas jobs.
In order to operate under a results-only funding stream, TSTC was forced to revamp how it did business. The focus shifted from “student enrollment” to “student completion and placement in high-wage jobs."
The result is that TSTC, today, is a more efficient and nimble institution. TSTC awards (degrees, certificates, and skills badges) are up. First-year earnings for students are up. The economic return to Texas from student earnings is also up.
Each of TSTC's stakeholders has a specific objective:
• Students want skills and jobs sufficient to support their families.
• Industry wants an available, skilled workforce to maximize growth.
• Texas wants both demonstrated results for its appropriated revenues and an economic climate where industry and families flourish.
By measuring and rewarding results, the Returned-Value Formula perfectly aligns the objectives of all three of these stakeholders. When TSTC places job-ready students in well-paid careers, every stakeholder wins!