THECB adopts rule changes to community college finance, FAST eligibility and free application week

The Higher Education Coordinating Board voted to adopt a package of rule changes implementing legislative directives including Senate Bill 1786 and related bills, adjusting how community college performance funding is calculated, changing eligibility for the Financial Aid for Swift Transfer (FAST) dual‑credit program, and establishing a waiver of undergraduate application fees during a designated ApplyTexas free application week.

The rules package, presented across seven agenda items, will affect community college finance methodologies for fiscal years 2025 and 2026, data reporting timelines and retention, forecasting methods for performance funding, the definition of “credentials of value,” and the FAST dual‑credit financial aid program. The board approved all items on voice votes.

Charles Cantero Pohls, assistant commissioner for financial aid programs, presented the proposed FAST rule changes that implement provisions of House Bill 120 and Senate Bill 1786. He said the rules "implement the provisions of house bill 120 and senate bill 1786" and noted three main changes: (1) the definition of high school will align to grades 9 through 12; (2) the program will allow students who are educationally disadvantaged in the current year, but were not in any of the prior four years, to enroll in dual credit at no cost under FAST; and (3) eligibility is extended to high school students within the Windham School District. Pohls said the changes are "effective starting with the upcoming school year."

Chris Fernandez, senior director for community college finance and resource planning, presented multiple amendments to chapter 13 rule subchapters affecting data reporting, audit and over‑allocation procedures, performance tier methodology, high‑demand field linkages, forecasting methodology, and a new subchapter to take effect for fiscal year 2026. Fernandez described the data‑reporting amendments as addressing three primary issues: reporting deadlines, record retention, and clarity around when the formal data error process applies. He said the amendments would set a seven‑year record retention aligned to potential recoveries of overallocated funds, limit the period in which corrected data can create additional funding liability to one year after certification, and provide a May 1 correction window for routine corrections used in funding calculations.

On methodology, the board approved keeping FY2025 performance rules active through the FY2025 close‑up and adopting a new subchapter for FY2026 that reflects statutory changes in SB 1786. One substantive change directed by the statute and reflected in the new rules requires that an associate degree meet both a positive return on investment and an individual self‑sufficient wage within five years to qualify as a "credential of value." The wage is calculated using Texas Workforce Commission data. Fernandez said certain education and health‑care associate degrees would continue to be assessed by the current 10‑year ROI test per stakeholder mapping and statutory allowance. The staff noted that six associate degree academic categories would no longer meet the new two‑part test as proposed: arts, agriculture, biology, communications, culinary arts and psychology.

The board also adopted an amendment to how staff link high‑demand occupations to academic fields. Fernandez said the change allows staff to match occupations to academic fields based on functional equivalence when the Bureau of Labor Statistics/National Center for Education Statistics crosswalk is out of date or does not reflect emerging occupational pathways.

On forecasting, the board approved allowing up to three statistical models to be considered for each outcome at each college and selecting the best fit by objective statistical criteria; staff will share the chosen model type and parameters with each college. As Fernandez described it, "We would select the best fit model based strictly on the outcome of a statistical test."

The board also adopted rules establishing a free college application week as required by Senate Bill 2231 and Texas Education Code 61.0731; assistant commissioner Brandon Griggs said the requirement "begins this fall with pre application week occurring October 13 through the nineteenth," and institutions will be required to waive undergraduate admission application fees in ApplyTexas during that week.

Votes at a glance

- Agenda item 3.1 — Adopt proposed amendments to board rules, chapter 13, subchapter Q, sections 13.501 and 13.503 concerning financial aid for the FAST program (implements HB 120 and SB 1786): motion moved by Dr. Daniel Wong, seconded by Mr. Plummer; voice vote; approved.

- Agenda item 3.2 — Adopt proposed amendments to board rules, chapter 13, subchapter R, sections 13.522, 13.524, 13.525 and 13.527–13.529 concerning public junior college finance program reporting, audit and over‑allocation (data reporting and retention changes): motion and second not named in transcript; voice vote; approved.

- Agenda item 3.3 — Adopt proposed amendments to board rules, chapter 13, subchapter S, section 13.564 concerning the community college finance program performance tier methodology for FY2025: motion by Mr. Wilson, seconded by Dr. Wong; voice vote; approved.

- Agenda item 3.4 — Adopt proposed amendments to board rules, chapter 13, subchapter T, section 13.594 concerning high‑demand fields methodology: motion by Mr. Plummer, seconded by Ms. Navarrez; voice vote; approved.

- Agenda item 3.5 — Adopt proposed amendments to board rules, chapter 13, subchapter U, sections 13.623 and 13.624 concerning forecasting methodology and finance policy: motion moved by Dr. Wong, seconded by Ms. Navarrez; voice vote; approved.

- Agenda item 3.6 — Adopt new board rules, chapter 13, new subchapter B, sections 13.640–13.651 concerning the community college finance base and performance tier methodology for FY2026 (implements SB 1786 changes to credentials of value and transfer funding): motion by Mr. Plummer, seconded by Mr. Wilson; voice vote; approved.

- Agenda item 3.7 — Adopt new board rules, chapter 20, subchapter B, sections 20.30–20.34 concerning free college application week (implements SB 2231, Texas Educ. Code 61.0731): motion by Ms. Navarrez, seconded by Mr. Navarrez; voice vote; approved.

What the rules do and what remains the same

- Data reporting and corrections: The amendments clarify the formal data‑error process applies only to data that are direct inputs to the funding model, establish a May 1 correction window for routine corrections after the prior year reporting period, limit new funding liability from corrections to one year after certification, and set a seven‑year retention period for records linked to recoveries of overallocated funds.

- Credentials of value and transfers: For FY2026, the board will require associate degrees to meet both a positive ROI and a wage threshold within five years to be funded as credentials of value, with mapped exceptions that remain on a 10‑year ROI test for certain education and health care fields. The rules also make transfers to independent/private institutions eligible for community college performance funding as required by SB 1786.

- Forecasting and methodology: The agency will use a best‑fit approach from multiple statistical models when projecting performance outcomes; colleges will be informed of the model and parameters used for their forecasts.

- FAST program eligibility and scope: The FAST rule changes align the definition of high school to grades 9–12, extend no‑cost dual credit to certain currently educationally disadvantaged students, extend eligibility to Windham School District students, and implement HB 120 provisions for certain post‑graduate students enrolled in Pathways in Technology Early College High School (P‑TECH/PTEC) or in rural pathway excellence partnership schools.

- Free application week: Institutions must waive undergraduate ApplyTexas application fees during the designated pre‑application week (Oct. 13–19, effective this fall under the adopted rule).

Board members did not request that any item be tabled for further action; staff said some originally proposed changes (for example, an earlier proposal to move certain federal reporting deadlines to Dec. 31) were withdrawn after stakeholder comment. Several board members asked procedural questions about model selection and the timeline for data corrections; staff said selection would be made using published statistical tests and that colleges would receive the model details.

Ending

The board concluded the special call after adopting the rule package. Several staff and board members noted further collaboration with community colleges and standing advisory committees to implement the changes and to provide data and model transparency to colleges ahead of fiscal year 2026.