THECB delves into 'credentials of value' methodology as community college funding shifts

A Texas Higher Education Coordinating Board panel on Jan. 23 gave board members a detailed explanation of the agency's credentials-of-value methodology, the metric the state is using to judge whether postsecondary awards produce an adequate return to students and — under House Bill 8 — whether community colleges receive state funding for particular credentials.

David Troutman, deputy commissioner for academic affairs, and Sarah Keaton, deputy commissioner for administration and operations, led the discussion, which examined the methodology's data inputs, a student-level example and the questions the agency will keep studying, including regional and demographic differences in outcomes.

Troutman said the methodology’s core is straightforward. “The nucleus of our methodology is based on earnings. Full stop,” he told the board, adding that the analysis then places those earnings in context by measuring student investment and foregone wages.

Keaton walked the board through a hypothetical student, “Maria,” to show how the calculation works. The agency counts Maria’s direct costs (tuition, fees, books and room and board), her opportunity cost (foregone wages while enrolled) and her cumulative post‑graduation earnings over a 10‑year window. In the example Keaton presented, Maria’s net cost was $24,000 and her foregone wages were just over $37,000; her 10‑year cumulative earnings after earning an associate degree were roughly $576,000 versus a $261,000 10‑year baseline for a high‑school graduate, and she “broke even” on total investment in year three, Keaton said.

The calculus matters because under House Bill 8, community colleges are funded for specific credentials only when those awards meet the credentials‑of‑value threshold; the coordinating board also added a premium payment this fiscal year for credentials that deliver a faster return on investment. “Community colleges can earn this premium payment for credentials where students are achieving return on their investment even faster,” Keaton said.

Board members pressed staff on limits and tradeoffs. Board member Richard Klemmer asked whether the analysis should weigh return to the state as well as return to the student. Troutman said the agency can run that analysis — noting prior work showed “for every dollar that the state invested, it actually produced $5 of earnings, of taxable earnings for a student” — but he said the credential calculation intentionally foregrounds student costs and foregone earnings so that the measure reflects whether individual students are “better off.”

Troutman and Keaton flagged data limits the agency faces. The board’s work uses wage records from the Texas Workforce Commission; those UI wage records identify industry but do not reliably contain an individual’s occupation, limiting the agency’s ability to explain why earnings gaps exist. The staff also noted measurable disparities by race and gender in some fields: “When a student of color or a woman goes into mathematics, into the field, on average they’re making around $5,000 to $7,000 less a year than a white or Asian male who had received the same credential from the same institution the same year,” Troutman said, adding that in some STEM fields the gap widens over time and can approach $25,000 per year by year 10.

Time to completion emerged as a critical lever. Keaton said the average associate‑degree student takes about five and a half years to finish a credential that nominally is two years, which increases opportunity cost and worsens the student’s return on investment. The staff said that faster completion and cost‑reducing policies — for example, use of open educational resources — are among the most effective ways to improve a program’s credentials‑of‑value outcomes.

The presentation also linked credentials of value to the agency’s student‑facing tools. Keaton and Troutman described My Texas Future and the “career explorer” features the agency uses to surface median earnings and program information to students and families. Keaton said the board will continue to push outreach to counselors, students and families to improve awareness and use of those tools.

The board did not take formal action on the item; staff said they will continue to refine metrics, disaggregate outcomes by demographic and region, and coordinate with the Texas Workforce Commission and legislative partners as the 89th Legislature considers funding and policy changes.

Looking ahead, Troutman and Keaton asked board members to treat credentials of value as an evolving, data‑driven measure: it links state funding to student outcomes, but it requires continued investments in data modernization, accessible reporting for students and additional study of equity gaps and graduate‑level complexity, they said.