Big Business Calls For College Competition Through Performance Funding

Competition is good.

That sums up the thinking by two major business groups in endorsing proposals by the Texas Higher Education Coordinating Board to revamp college and university funding and the state’s chief financial aid program.

The Texas Association of Business and the Governor’s Business Council, echoing recommendations last month by the coordinating board, urged state lawmakers to require public colleges and universities to compete for 10 percent of their funding from the Legislature on the basis of graduation rates, course completion and other measures of student success. The business groups also asked lawmakers Tuesday to give priority to low-income students with strong academic credentials over students with weaker academics in allocating the state’s Texas Grants.

Such changes are essential not only to improve the performance of higher education institutions but also to ensure the state’s economic prosperity, said Bill Hammond, president and CEO of the business association.

“For us, it’s about the ability to compete in the future,” Hammond said, noting that just over 30 percent of Texans 25 to 34 years old have at least an associate’s degree, but that nearly half of new jobs are expected to require at least a bachelor’s.

The groups’ support will be important for the coordinating board as it pursues its agenda at a business-friendly Legislature. Higher Education Commissioner Raymund Paredes has said his agency wants to reinvent public higher education in a way that is more cost- efficient and produces better academic results.

The Texas Association of Business represents more than 3,000 employers and 200 chambers of commerce. The Governor’s Business Council is a group of business leaders that, despite its name, has no formal connection with the governor’s office.

The two groups released a report with their recommendations at a conference they sponsored in Austin on Tuesday. Business and higher education leaders alike spoke of the need to “incentivize” course completion and to fund schools for “outputs” such as degrees awarded rather than “inputs” such as enrollment.

The report – “Reforming Higher Education: A Prerequisite for Continued Prosperity” – and various speakers sketched out some improvements as well as daunting challenges in Texas higher education. For example, the number of Hispanics earning degrees and certificates in Texas has increased 85 percent since 2000 but is still below targets to achieve parity with other demographic groups because of rapid growth in the Hispanic population, the report said.

Moreover, the educational pipeline in Texas leaks badly. Of 100 ninth-graders, about 14 earn a postsecondary degree within six years of high school, compared with the national average of about 20 , said Woody Hunt, chairman of the business council.

In the international arena, where a big state must also compete, Texas lags as well. On average, 56 percent of people 25 to 34 years old in Canada, New Zealand, South Korea and other countries with strong education systems hold a college credential, compared with the 30 percent of young Texans who have at least an associate’s degree.

The business groups stopped short of making any recommendations about overall state funding for higher education, although they called for an unspecified amount of state money to match locally raised public and private dollars to help postsecondary schools respond to business and community needs in their respective regions.