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5. Texas

Abstract

This chapter provides an overview of the labour market and higher education system in the state of Texas, an assessment of the labour market outcomes of graduates, and a discussion of state policies that contribute to aligning higher education and the labour market. The policy discussion focuses on four policy areas – strategic planning and co-ordination of higher education; funding; educational offerings, student supports and pathways; and information – and includes policy recommendations in each area.

    
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5.1. The labour market and higher education in Texas

The economy and labour market

The economy of Texas is the second largest in the United States, with consistently high growth over the last ten years

In 2018, the Gross Domestic Product (GDP) of Texas was USD 1.8 trillion, which constitutes the tenth largest economy in the world (Perry, 2019[1]). The compound annual growth rate for Texas between 2008 and 2018 was 3%, compared to an annual growth rate of 1.8% for the United States as a whole (U.S. Bureau of Economic Analysis, 2019[2]). Texas is known for its abundance of resources, accounting for about 24% of natural gas production and 37% of production of crude oil in the United States (TXEDC, n.d.[3]). As such, Texas is responsible for about 20% of total exports from the United States (Dallas Federal Reserve, 2020[4]). The United States recently became a net energy exporter due to reduced domestic consumption coupled with continued growth in petroleum and natural gas production. This growth in production was largely driven by the development of tight oil and shale gas resources, led by extraction in the Permian Basin region of Texas (EIA, 2020[5]).

Texas is a key manufacturing hub for the United States, producing 10% of US manufactured goods (Dallas Federal Reserve, 2020[4]). Though petroleum and coal products account for a large portion of the state’s manufactured goods, computer and electronic products, chemicals, and transportation equipment also contribute a substantial share of production and exports (Canas and Gullo, 2019[6]). Because the Texas economy did not contract during the recession of 2008-09, unlike many other states, it has often been referred to as the “Texas Miracle”. However, reliance on the oil and gas sector subjects the economy to a boom and bust cycle triggered by fluctuations in the price of oil. As a result, Texas has continued to diversify its economy by supporting the growth of other industries, including biotechnology and life sciences, aerospace and aviation, as well as wind, solar and other renewable energies (TXEDC, n.d.[3]). Texas also has a well-established automotive manufacturing sector that has continued to grow despite shrinking automotive sectors in many states (TXEDC, n.d.[3]).

With a relatively low cost of living, a competitive tax environment, and over 13 million workers, Texas attracts businesses from around the world and across the United States (CNBC, 2019[7]; TXEDC, n.d.[3]; Dallas Federal Reserve, 2020[4]). Moreover, Texas is a “right-to-work” state, which means that employers can hire non-unionised workers. Texas has a population of over 28 million and is expected to gain 5 million new residents by 2028 (TWC, 2019[8]). Some of the fastest-growing cities in the United States are located in Texas, and part of this growth is fuelled by substantial net in-migration from other states. As described in Box 5.1, population growth in Texas is largest in metropolitan areas and, given current trends, 95% of the state’s future growth is expected to occur in urban, metropolitan counties (White et al., 2017[9]). The six largest metropolitan areas are Dallas-Fort Worth-Arlington, Houston-the Woodlands-Sugar Land, San Antonio-New Braunfels, Austin-Round Rock, McAllen-Edinburg-Mission, and El Paso. Though economic growth tends to be more uneven throughout areas of El Paso and McAllen-Edinburg-Mission, all six metropolitan areas are expected to see overall growth in employment and GDP across a wide range of industries through 2023 (The Perryman Group, 2019[10]).

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Box 5.1. Texas metropolitan areas

Migration drives population growth in the state’s largest metropolitan areas. In metropolitan areas such as Brownsville-Harlingen, El Paso, McAllen-Edinburg-Mission, and Laredo, which are located along the border between Texas and Mexico, urban growth is primarily due to natural increase (greater births than deaths). Other areas, including Longview, Odessa, and Wichita Falls, have been experiencing zero growth or negative growth. Migration tends to favour urban over rural population growth, and population growth in Texas is increasingly linked to urbanisation. Current patterns suggest that “migration is transforming the state’s largest metropolitan areas into urban growth hubs”, while more rural areas see low or negative growth (White et al., 2017, p. 4[9]).

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Metropolitan and non-metropolitan counties in Texas, 2018
Metropolitan and non-metropolitan counties in Texas, 2018

Sources: Map: Texas DSHS (n.d.[11]), Texas Metropolitan Status by County, https://www.dshs.texas.gov/chs/info/current-msa.shtm; Population estimates: Federal Reserve of St. Louis (n.d.[12]), Resident Population by MSAs, 2018 (data from U.S. Census Bureau), https://fred.stlouisfed.org/categories/30907.

The population of Texas is relatively young, which is promising for the state’s future workforce supply. As shown in Table 5.1, the dependency ratio, which represents the share of individuals age 65 and older over the 15-64 population, is 19% in Texas, which is well below both the US (24.5%) and OECD (26.5%) averages. The share of individuals in the population under the age of 18 is comparatively high at 26%. Approximately 61% of the population are Texans from minority backgrounds. Hispanic or Latino individuals comprise the largest minority group in Texas, making up approximately 39% of the state’s population.

Table 5.1 presents an overview of some key contextual indicators for Texas.

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Table 5.1. Texas at a glance

 

Texas

United States

Source

Population

 

Population estimate

28 701 845

327 167 434

U.S. Census Bureau

Dependency ratio (% 65+ over population aged 15-64)

19.0%

24.5%

U.S Census Bureau

Percentage of individuals under the age of 18, 2017

26.0%

22.4%

U.S. Census

Percentage of individuals aged 65 and over, 2017

12.2%

16.0%

U.S. Census

Percentage of Black or African American individuals, 2017

11.8%

13.4%

U.S. Census

Percentage of Hispanic or Latino individuals, 2017

39.4%

18.3%

U.S. Census

Percentage of Asian individuals, 2017

4.8%

5.9%

U.S. Census

Percentage of American Indian or Alaska Native individuals, 2017

0.3%

1.3%

U.S. Census

Percentage of White individuals, 2017

41.9%

60.4%

U.S. Census

Economy and labour market

GDP per capita

USD 59 827

USD 57 052

U.S. Bureau of Economic Analysis

Labour force participation rate (out of civilian population aged 16+)

64.0%

62.9%

U.S. Bureau of Labor Statistics

Unemployment rate (seasonally adjusted)

3.9%

3.9%

U.S. Bureau of Labor Statistics

Median annual earnings for working-age population aged 25-64

USD 48 000

USD 50 000

American Community Survey

Estimated annual wage needed to cover basic expenses for a full-time working adult

USD 24 416

USD 25 297

MIT Living Wage

Calculator

Percentage of population aged 25-64 with an associate’s degree or higher

38.6%

42.5%

American Community Survey

Notes: All numbers are for 2018 unless otherwise noted. Racial and ethnic categories are mutually exclusive. MIT Living Wage annual calculations are based on full-time working hours (2 080 hours per year).

 StatLink https://doi.org/10.1787/888934134939

Employment growth has been strong across a range of sectors, but post-secondary educational attainment may be insufficient to meet the state’s changing skills needs

In 2019, job growth in Texas outpaced growth overall in the United States (Dallas Federal Reserve, 2020[4]). Total nonagricultural employment in Texas grew by almost 11% between 2014 and 2019, compared to 9% for the United States overall, and annual job growth has increased almost continuously since 2016 (TWC, 2019[8]). Employment growth has been widespread across most industries in Texas during the five-year period from 2014-19. The construction industry saw the highest growth during this period (20%), while the mining and logging industry contracted by 18% due to a downward trend in West Texas Intermediate crude oil prices since 2017 (TWC, 2019[8]). Services industries employ the most workers in Texas, including professional and business services, education and health services, and leisure and hospitality, collectively accounting for almost 50% of total nonfarm employment in Texas (TWC, 2019[8]). The government sector represents about 15% of total employment. It is estimated that 2.1 million new jobs will be added to the Texas economy by 2026, and services industries will likely drive the majority of job gains (TWC, 2019[8]; The Perryman Group, 2019[10]).

Prior to the economic crisis unfolding in 2020 as a result of the COVID-19 pandemic, Texas had experienced particularly low rates of unemployment. At 3.9% in January 2019, the unemployment rate in Texas was at its lowest level in several decades, though slightly higher than the national unemployment rate. In 2009, the unemployment rate for Texas ranged between 6.1% in January and 8.3% in December; thus, Texas has seen a significant reduction in unemployment since the recession of 2008-09. In the working-age population, however, the unemployment rate is highest among 25-34 year-olds (TWC, 2019[8]). Unemployment rates also vary widely by region; in the large metropolitan areas, unemployment is typically higher in the San Antonio and Houston areas compared to the areas around Austin and Dallas-Fort Worth. Similar to the rest of the country, the labour force participation in Texas has been in decline since the recession (U.S. Bureau of Labor Statistics, 2016[13]). Figure 5.1 shows the labour force participation rate, wage growth, employment and unemployment rates in a ten-year perspective for Texas.

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Figure 5.1. Trends in key labour market indicators in Texas, 2009-19
Figure 5.1. Trends in key labour market indicators in Texas, 2009-19

Notes: Data in panels A, B and C are seasonally adjusted. The labour force participation rate is defined as the percentage of people who are either employed or unemployed (but looking for jobs) out of the total civilian non-institutional population, which includes all individuals over the age of 16 who are potentially available for work. The employment rate is the percentage of people who are employed out of the total civilian non-institutional population. The unemployment rate is the percentage of people who are unemployed (but looking for jobs) out of all individuals in the labour force (employed or unemployed but looking for jobs). The mean hourly wage is not adjusted for inflation.

Sources: Panels A, B and C: U.S. Bureau of Labor Force Statistics (2019[14]), Labor Force Statistics from the Current Population Survey (database), https://www.bls.gov/cps/tables.htm; Panel D: U.S. Bureau of Labor Statistics (2019[15]), Occupation Employment Statistics (database), https://www.bls.gov/oes/home.htm.

 StatLink https://doi.org/10.1787/888934133761

Texas has also seen a growing polarisation of jobs in the last four decades. Between 1979 and 2014, Texas experienced a 13% increase in lowest wage jobs and a 6% increase in its highest wage jobs (Blum and Groves, 2016[16]). At the same time, Texas saw a 10% decrease in lower middle-wage jobs and an 11% decrease in upper middle-wage jobs (Blum and Groves, 2016[16]). As in the United States as a whole, the decline of middle-wage jobs involving routine tasks and the growing demand for creative task aptitudes and critical thinking skills have occurred at the same time as a rise in post-secondary attainment in Texas (Blum and Groves, 2016[16]; Carnevale, Smith and Strohl, 2013[17]). Thus, in order to qualify for higher wage jobs and achieve a sustainable quality of life, there is a growing need for workers to increase their value in the labour market and seek educational and training opportunities beyond a high school diploma (Blum and Groves, 2016[16]).

However, post-secondary educational attainment levels in Texas are below the national average, and progress is lower than anticipated, as further discussed in Section 5.2. As shown in Figure 5.2, 38.6% of the working-age population (aged 25-64) earned an associate’s degree or higher in 2018, with a relatively low proportion of adults having earned an associate’s degree. The share of adults who have not completed high school is large, which signals challenges early in the education system in Texas. With the inclusion of workforce-relevant certificates, the post-secondary attainment level rises to 43.6% for the working-age population, below the US average of 48.4% (Lumina Foundation, 2019[18]). A potential challenge facing Texas in light of demographic trends is the lower educational attainment of Hispanic students compared to their peers. For example, in 2018, 115 735 Hispanic/Latino students completed certificates or degree programmes, compared to 131 324 White students (THECB, 2019[19]).

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Figure 5.2. Levels of educational attainment for Texas residents aged 25-64, 2018
Figure 5.2. Levels of educational attainment for Texas residents aged 25-64, 2018

Source: U.S. Census Bureau (2019[20]), American Community Survey 2018 (database), https://www.census.gov/programs-surveys/acs/data.html.

 StatLink https://doi.org/10.1787/888934133780

The higher education system

The Texas Higher Education Coordinating Board serves as a regulatory co-ordinating body providing strategic direction for higher education in Texas

The Texas Higher Education Coordinating Board (THECB) serves as a single state-wide co-ordinating body for higher education in Texas. Established in 1965, the Board has nine voting members nominated by the Governor and approved by the State Senate who sit for staggered six-year terms, plus one non-voting student member with a one-year term; the Chair is elected from among the members of the Board. The Board also selects a Commissioner of Higher Education who functions as the organisation’s executive head.

The state Legislature approves appropriations for higher education on a biennial basis. The THECB is responsible for recommending formulas for use by the Governor and Legislative Budget Board in determining legislative appropriations to public higher education institutions, administering state financial assistance programmes for students, setting standards for public community colleges, and authorising elections to create districts that provide funding for public community colleges through property taxes. The THECB also has a statutory mandate to approve all new degree programmes and off-campus activities for public universities as well as community and technical colleges. Institutions defined as private or independent institutions of higher education are exempt from the THECB’s oversight. The THECB authorises other private post-secondary degree-granting institutions to operate in Texas through an application and oversight process.

Higher education governance is shared among the Legislature, Governor, the THECB, higher education systems and institutions, in accordance with the Texas Education Code. Texas has six university systems, governed by boards of regents, and four stand-alone public universities. Public four-year institutions in Texas have shared autonomy with the state government. Since the deregulation of tuition in 2003, the governing boards of universities have been authorised to set their own tuition above an established base tuition level set by the state Legislature. Public universities in Texas have substantial academic autonomy in the development of curricula, but at the same time, the state Legislature can enact policy with respect to admissions, credit transfer and other managerial matters that institutions are required to follow. Quality assurance rests primarily with the regional accrediting body, the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC).

Two-year institutions include the three Lamar State colleges, which are part of the Texas State University System, the Texas State Technical College system, and 50 community college districts with more than 80 sites across the state. Several local district boards govern community colleges in Texas, though the THECB has a role in oversight and capital allocations. Each district board has its own governance system, with many overseeing just a single campus, while six community colleges have five or more campuses. The only exception is the Texas State Technical College System, which is governed by a board of regents as a single state-wide institution with multiple campuses (ECS, 2019[21]).

Higher education and workforce development policy in Texas involves multiple agencies and stakeholder groups across state, regional and local levels

Agencies and stakeholders across both education and workforce policy environments play a role in supporting the alignment between higher education and the labour market in Texas. Numerous associations represent different sectors of higher education in Texas, including the Texas Association of Community Colleges, the Council of Public University Presidents and Chancellors, the Independent Colleges and Universities of Texas (ICUT) and Career Schools and Colleges of Texas (CCST). These organisations support policy advocacy as well as information curation and dissemination to legislative and other audiences. They also serve as convening fora for their members and other stakeholders.

In addition, the Texas Success Center, a member of the national Student Success Center Network, supports the 50 community college districts in the state as they align their work to promote student success. The Texas Success Center supports community colleges in building capacity to implement and scale practices, for example in increasing completions, supporting transfers without loss of credit, and encouraging employment in careers valued in the labour market.

The Texas Workforce Commission (TWC) is the state agency responsible for workforce development. The Commission has three members appointed by the Governor, representing employers, labour and the public, and these commissioners together appoint the Executive Director. The TWC co-ordinates the Texas Workforce Solutions network, which includes the state’s 28 local Workforce Development Boards (WDBs). The WDBs are located in various regions across Texas and act as important intermediaries between educational providers, employers and other stakeholders. They help develop and fund education and training programmes, often in partnership with institutions of higher education. While the TWC is publicly funded, the WDBs are comprised of local business stakeholders. Funding from the federal Workforce Innovation and Opportunity Act (WIOA) accounts for most public workforce development spending in Texas.

The Texas Workforce Investment Council (TWIC) is the state’s Workforce Development Board under the WIOA. The TWIC plays an advisory role on behalf of the Governor and Legislature, assisting in strategic planning and performance evaluation for the workforce development system. Fourteen of the TWIC’s nineteen members are appointed by the Governor to represent various stakeholder groups (business, labour, education and community-based organisations), and the balance are ex-officio representatives from relevant state agencies. Recently, workforce development has provided an organising principle for a number of education-related initiatives. In 2016, Texas established the Tri-Agency Workforce Initiative bringing together three separate agencies: the TWC, the THECB and the Texas Education Agency (TEA), which is responsible for the public K-12 school system. Both the TWC and the TEA also have a strong regional presence, with the 28 regional Workforce Development Boards operating under the authority of the TWC and 20 regional Education Service Centers, which provide assistance to school districts. The Tri-Agency Workforce Initiative, and other related policy initiatives, are discussed in more depth in Section 5.3.

Education Workforce Partnerships aim to improve educational and workforce alignment through programmes such as the Texas Regional STEM Degree Accelerator, Pathways to Prosperity, and Pathways in Technology Early College High Schools (P-TECH). These partnerships are convened by Educate Texas, an initiative of Communities Foundation of Texas, working with multiple stakeholders regionally and state-wide in education and workforce communities. Education Workforce Partnerships also provide a forum for identifying and meeting the needs of industry and engaging with experts. In addition, there are a number of non-profit intermediary organisations at the state and regional levels, such as the Center for Public Policy Priorities, the Texas Association of Institutional Researchers, Educate Texas, Texas Public Policy Foundation, Commit Dallas, and P-16 Councils. These organisations complement the formal responsibilities of the Legislature and the THECB, for example by providing funding to institutions and oversight of programmes, administering state financial aid to students, maintaining state-wide systems for applications, and collecting data.

Texas has a large and diversified system of higher education, characterised by several large sub-systems within the public sector and many small private institutions

The Texas post-secondary education system is large and diverse, enrolling approximately 1.6 million students in 2018 (total headcount). Of these students, the vast majority (88%) were enrolled in public institutions, 8% in private or independent institutions of higher education (which are all not-for-profit institutions), and 4% in private post-secondary institutions, which include both not-for-profit and for-profit institutions operating degree programs under the oversight of the THECB (THECB, n.d.[22]).

Figure 5.3 provides data from the National Center for Education Statistics (NCES) that show enrolment trends for full-time, first-time students over a 15-year period across different institution types in Texas, allowing for comparisons with other states in the study (see Chapters 4, 6 and 7 for Ohio, Virginia and Washington enrolment trends, respectively). The figure shows that enrolments in public four-year and private, not-for-profit institutions have seen a steady increase over time. The trend lines show a decline in enrolment at public two-year institutions since 2012, which is not unusual given that enrolments in community colleges tend to closely mirror trends in the labour market; when the labour market conditions are tight, enrolments typically decline (Hillman and Orians, 2013[23]). However, enrolments at two-year public institutions have resumed growing in recent years, albeit at a slower pace compared to growth in four-year public institutions. Enrolments at private, for-profit institutions in Texas increased substantially during the recession of 2008-09 and have continued to increase, with enrolment growth tapering off in the last five years but remaining at a level that is close to triple the number of enrolments in 2003.

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Figure 5.3. Fall higher education enrolment in Texas, 2003-18
Total number of first-time, full-time equivalent (FTE) students, by institution type
Figure 5.3. Fall higher education enrolment in Texas, 2003-18

Note: Data for 2018 are provisional.

Source: NCES (2019[24]), Integrated Post-secondary Education Data System (database), https://nces.ed.gov/ipeds/use-the-data.

 StatLink https://doi.org/10.1787/888934133799

All public institutions have statutory authority to operate and are accredited by SACSCOC. There are various types of private institutions in Texas, with different legal status and requirements to operate. Private or independent institutions of higher education are not-for-profit institutions that hold accreditation recognised by the THECB and are exempt from obtaining THECB approval to operate. Private post-secondary educational institutions include in-state and out-of-state institutions that offer clinical placements or internships in Texas. These institutions can be not-for-profit or for-profit, and are accredited by recognised accreditors, but need to obtain a Certificate of Authorization from the THECB to operate.

Table 5.2 provides an overview of accredited higher education institutions operating in Texas. In addition, a small number of institutions that are unaccredited are working towards accreditation are permitted to operate in Texas under a Certificate of Authority delivered by the THECB.

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Table 5.2. Accredited, degree-granting institutions of higher education in Texas

Public institutions of higher education

Private or independent institutions of higher education

(not-for-profit institutions)

Private post-secondary educational institutions

(both not-for-profit and for-profit institutions under a Certificate of Authorization)

120 institutions

Including:

37 institutions four-year institutions

83 two-year institutions

39 institutions

193 institutions

Including:

88 not-for-profit institutions

105 for-profit institutions

Notes: According to the Texas Education Code (TEC) provision 61.003(15), a "private or independent institution of higher education" includes only a private or independent college or university that is: (a) organized under the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes); (b) exempt from taxation under Article VIII, Section 2, of the Texas Constitution and Section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. Section 501); and (c) accredited by: (i) the Southern Association of Colleges and Schools Commission on Colleges; (ii) the Liaison Committee on Medical Education; or (iii) the American Bar Association.

According to TEC 31.302(2), "private postsecondary educational institution" means an educational institution which: (a) is not an institution of higher education as defined by Section 61.003; (b) is incorporated under the laws of Texas, maintains a place of business in Texas, has a representative present in Texas, or solicits business in Texas; and (c) furnishes or offers to furnish courses of instruction in person, by electronic media, or by correspondence leading to a degree or providing credits alleged to be applicable to a degree.

Sources: THECB (2019[25]), 2019 Texas Public Higher Education Almanac, http://reportcenter.thecb.state.tx.us/agency-publication/almanac/2019-texas-public-higher-education-almanac; THECB (2020[26]), Private Postsecondary Institutions Authorized to Operate in Texas, http://reportcenter.thecb.state.tx.us/agency-publication/miscellaneous/private-postsecondary-institutions-operating-in-texas/.

 StatLink https://doi.org/10.1787/888934134958

Public four-year institutions

Four-year institutions are those that offer at least a bachelor’s degree (International Standard Classification of Education (ISCED) Level 6). This category of higher education institutions includes research universities, comprehensive universities and colleges offering post-secondary education from ISCED Level 5 to ISCED Level 8 (associate’s degrees, bachelor’s degrees, master’s degrees and doctoral degrees).

There are 37 public four-year institutions in Texas, including four independent institutions and 33 institutions that are part of one of the state’s six multi-campus university systems. These include the Texas A&M System, the Texas Tech University System, the Texas State University System, the University of Texas System, the University of Houston System and the University of North Texas System. Each institution is governed by a Board of Regents that includes nine voting members and a single non-voting student representative.

The University of Texas (UT) system has a total fall enrolment of close to 240 000 students across eight university campuses and six health-related institutions, while the Texas A&M system enrols about 151 000 students across eleven universities and a health science centre (UT System, 2020[27]; TAMUS, n.d.[28]). The main campuses of university systems are typically the largest, as illustrated in Table 5.3

The University of Texas at Austin and Texas A&M College Station are research-intensive universities. While selective and highly ranked nationally, some of the state’s leading universities remain relatively accessible, not only because of their large size, but also because of state policies requiring top institutions to accept top students from every high school. This policy, referred as the “Top 10% law”, was established in 1997 and guarantees admission to any Texas public university to students who graduate in the top decile of their class. This law has been shown to facilitate the entry of Hispanic students and students from high schools where disadvantaged students predominate into the state’s flagship institutions, in particular the University of Texas at Austin and Texas A&M University (Niu and Tienda, 2010[29]). In 2018, about 26% of undergraduate students who enrolled for the first time in a public four-year institution, also called first-time-in-college students, had entered higher education via the Top 10% law (THECB, 2019[25]).

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Table 5.3. Ten largest Texas public institutions by enrolment, 2018

Enrolment

Acceptance rate

Texas A&M – College Station

63 694

66.6%

The University of Texas at Austin

51 684

42.1%

The University of Houston, Houston

46 324

62.8%

The University of Texas at Arlington

42 496

79.5%

Texas State University, San Marcos

38 644

79.2%

University of North Texas, Denton

38 087

79.0%

Texas Tech University, Lubbock

37 845

64.4%

The University of Texas at San Antonio

32 101

79%

The University of Texas at Dallas

28 755

80.8%

The University of Texas Rio Grande Valley

28 489

81.0%

Note: The acceptance rate refers to the number of admitted students divided by the number of applicants.

Source: Background information provided by the THECB (2019[25]), 2019 Public Higher Education Almanac, http://reportcenter.thecb.state.tx.us/agency-publication/almanac/2019-texas-public-higher-education-almanac.

 StatLink https://doi.org/10.1787/888934134977

Public two-year institutions

Public two-year institutions offer post-secondary education primarily at ISCED Levels 4 and 5, awarding associate’s degrees and short- and long-term certificates. The associate’s degree normally requires two years of full-time college work and is designed either to prepare learners for a career (technical programmes), or to transfer to a four-year institution in order to pursue a bachelor’s degree (academic programmes).

A number of districts contain multiple colleges with large total fall enrolments. Both the Dallas County Community College District and the Lone Star College System District (suburban Houston) enrolled more than 60 000 students each in 2018, while the Alamo Community College District (San Antonio), the Houston Community College System and the Tarrant County College District (Fort Worth) enrolled around 50 000 students each. The Austin Community College, the Collin County Community College District (suburban Dallas), the South Texas College, and the San Jacinto College district (north of Houston) each enrolled between 30 000 and 40 000 students. The three Lamar State Colleges enrolled about 7 500 students, and the six campuses of the Technical State College System enrolled more than 12 000 students.

Public two-year institutions provide an entry point to higher education for many students, as more than 70% of all Texas bachelor’s graduates take at least one college course at a public two-year college (THECB, 2019[25]). As shown in Table 5.4, the majority of students in two-year colleges study part-time (almost 77%), a proportion that is the inverse in four-year institutions. About 75% of students in two-year institutions study in academic programmes preparing them for transfer to a four-year institution, while the remaining 25% study in technical programmes preparing them for labour market entry. While the large majority of students in two-year institutions intend to transfer, a minority of them do so successfully: about 23% of the cohort entering public two-year colleges in 2012 had transferred to a university by 2018 (THECB, 2019[25]).

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Table 5.4. Profile of public higher education institutions in Texas, 2018

Public four-year institutions

Public two-year institutions

Total student population (total headcount, fall enrolment 2018)

658 219

758 133

Undergraduate students as a percentage of total enrolment (fall enrolment, 2018)

80%

100%

Percentage of undergraduate students who are Black/African American

12.2%

12.9%

Percentage of undergraduate students who are Hispanic/Latino

37.5%

45.2%

Percentage of undergraduate students who are White

36.3%

31.1%

Percentage of undergraduate students who are Pell Grant recipients

39.4%

30.3%

Percentage of undergraduate students who study full-time

77.2%

23.3%

150% completion rate (full-time, undergraduate students)

61.6%

30.5%

Average tuition and mandatory fees for in-state undergraduate students (USD, 2019/20 academic year)

USD 8 375

USD 2 099

Percentage of undergraduate students graduating with debt in 2017

58.5%

30.6%

Average student debt for undergraduates in 2017 (USD)

USD 30 825

USD 16 414

Note: The 150% graduation rate refers to the percentage of graduates who completed their degree within one and a half times the normal completion time; that is, six years for a four-year degree and three years for a two-year degree.

Source: THECB (2019[25]), 2019 Texas Public Higher Education Almanac, http://reportcenter.thecb.state.tx.us/agency-publication/almanac/2019-texas-public-higher-education-almanac.

 StatLink https://doi.org/10.1787/888934134996

Private institutions

While there are many private institutions in Texas, they constitute a relatively small share of total enrolments in Texas, with about 12% of all students attending a private institution in 2018, or about 192 000 students in total (THECB, n.d.[22]; ICUT, 2018[30]).

Of students in private institutions, about two-thirds were enrolled in four-year private independent institutions of higher education represented by the Independent Colleges and Universities of Texas Association (ICUT). Many of these institutions were originally religious establishments, the largest including Baylor University in Waco, Texas and Southern Methodist University in University Park, Dallas. The only significant non-denominational private, not-for-profit institution is Rice University in Houston. These institutions are very diverse in size, with enrolments ranging from less than 200 undergraduate students to about 14 000, and have seen a large increase in enrolments of students from racial and ethnic minorities over the past decades. Five of these institutions are currently classified as Historically Black Colleges and Universities and sixteen qualify as Hispanic-serving Institutions, with at least 25% Hispanic undergraduate enrolment. While no information is available on the average tuition for this group of institutions, about 30% of undergraduate students receive Pell Grants, and 80% of them receive some form of grant aid. About 48% of students are White in these institutions, while Black/African American and Hispanic students are less represented than in public higher education. Four-year independent institutions have six-year graduate rates that are slightly higher than the average in public four-year institutions, at 64.4% for the cohort entering in 2011 (ICUT, 2018[30]).

The remaining one-third of students in private institutions, approximately 63 000 in 2018, were enrolled in private post-secondary education institutions, which can be either not-for-profit or for-profit and must obtain a Certificate of Authorization from the THECB to operate. Some of these institutions are out-of-state institutions that offer clinical placements or internships in Texas. The majority of these students (about 39 000) were enrolled in four-year institutions. Data from the THECB shows that enrolments in these institutions has declined in recent years, with fall headcount falling by about 19% in four-year institutions between 2017 and 2019, and about 16% in two-year institutions. Black and African American students were overrepresented in these institutions compared to their share in other institution types, representing about 26% of enrolments in four-year institutions and about 21% in two-year institutions. Average tuition is high in these institutions, at USD 15 322 and USD 13 728 in 2018 in four- and two-year institutions respectively, and a large share of students receive Pell Grants (56% and 63% in the four- and two-year sectors respectively). The share of students who graduate within 150% of their programme’s nominal time is high in two-year institutions (close to 63% in 2019), but low in four-year institutions, at 27% (THECB, n.d.[22]).

There are also non-degree private institutions operating under licensure by the Texas Workforce Commission; these institutions do not need accreditation, although some have been accredited.

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5.2. Assessment of labour market outcomes: The alignment between supply and demand of graduate skills in Texas

Alignment of supply and demand

Employment in post-secondary-intensive occupations continues to grow, with strong demand for middle and advanced skills

At the national level, research indicates that the skills intensity within occupations is growing, and that a majority of the new jobs created since the recession of 2008-09 have required post-secondary education (Carnevale, Smith and Strohl, 2013[17]; Deming and Kahn, 2018[31]). Detailed occupational projections conducted by the Georgetown Center on Education and the Workforce indicated that 59% of jobs in Texas would require some form of post-secondary education or training by 2020 (Carnevale and Smith, 2012[32]). While Texas has a lower proportion of post-secondary-intensive jobs compared to the national average, this share has been steadily growing.

As discussed in the previous section, the labour market in Texas has continued to expand since the end of the 2008-09 recession, and long-term projections suggest that employment growth is expected in almost every major sector of the economy, with 2.1 million new jobs to be added by 2026 (TWC, 2019[8]). The professional and business services, educational services, and health care and social services sectors are the fastest-growing industries in Texas – industries which include a substantial share of occupations and jobs that require some form of post-secondary education. Indeed, the 2019 Texas Workforce Report states that, “Texas remains driven by a continued economic shift towards high-skilled jobs in the professional and business services sector, while the state’s rapid population growth and aging baby-boomer population increases demand for service sector jobs, primarily in education and health services” (TWC, 2019, p. 26[8]).

Figure 5.4 shows long-term employment projections in Texas for occupations that require a post-secondary degree. As shown, employment of post-secondary graduates in education and health care occupations is high and expected to continue growing. High-demand, high-wage professions within these occupational groups include nurse practitioners, registered nurses, physical therapists, post-secondary teachers in health specialities, and education and health care management. Other high-demand, high-wage professions include software developers, civil engineers, and management analysts (TWC, 2019[8]). The largest growth in employment requiring post-secondary education is expected in community and social services occupations, which are projected to double by 2026 compared to 2018.

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Figure 5.4. Projected employment growth in occupations that typically require some form of post-secondary education, 2018-26
Total number of jobs, based on long-term occupational projections for Texas
Figure 5.4. Projected employment growth in occupations that typically require some form of post-secondary education, 2018-26

Note: Occupational groups correspond to major groups 11-0000 to 29-0000 of the Standard Occupation Classification (SOC) system. The educational requirement for each occupation is the minimum level of education needed for entry into an occupation, based on U.S. Bureau of Labor Statistics occupational information.

Source: Adapted from TWC (2019[33]), Texas Labor Analysis, https://texaslaboranalysis.com/GapAnalysis.

 StatLink https://doi.org/10.1787/888934133818

In Texas, jobs requiring education and training in science, technology, engineering and mathematics (STEM) fields are primarily concentrated in engineering, computer, and mathematical occupations. While STEM jobs do not represent a large proportion of jobs in Texas, they are expected to grow as a proportion of total employment (Carnevale and Smith, 2012[32]). Moreover, STEM skills are in high demand across different fields and occupations, and are often associated with higher earnings.

Middle-skill jobs – defined as those that require some post-secondary education but less than a bachelor’s degree – make up a relatively large proportion of employment in Texas. According to an analysis by the National Skills Coalition (NSC), about 56% of all jobs in Texas were defined as middle-skill jobs in 2015 (National Skills Coalition, 2017[34]). Good jobs at the middle skill level are becoming less attainable for workers with only a high school diploma, thus increasing the importance of the associate’s degree and other post-secondary training, including certificates (Carnevale et al., 2018[35]; Carnevale, Smith and Strohl, 2013[17]). The Georgetown University Center on Education and the Workforce (CEW) has defined good jobs as those with minimum annual earnings of USD 35 000 for individuals under the age of 45 and USD 45 000 for those above 45. In Texas, the CEW has estimated that the share of good jobs held by workers with associate’s degrees increased by 10 percentage points between 1991 and 2015. In the same time period, the share of good jobs held by workers with only a high school diploma decreased by five percentage points (Carnevale, Strohl and Ridley, 2017[36]).

The NSC has pointed to a middle-skills gap in Texas because the supply of middle-skill workers has not been keeping pace with middle-skill job openings, partly due to the fact that many jobs previously requiring a high school degree now require some post-secondary education or training. The NSC argues further that that many low-skilled individuals may not be participating in the labour force despite low unemployment due to the gap between their skills and the requirements of middle-skilled jobs (National Skills Coalition, 2018[37]). Based on projections for the period 2014-24, the NSC estimates that the demand for middle skills in Texas will remain strong, with about half of all job openings requiring middle skills (National Skills Coalition, 2017[34]).

Skills misalignment is observed in certain fields and in some regions

Labour gap analyses in Texas point to state-wide shortages in some healthcare and education professions (TWC, 2019[33]). Shortages have been reported specifically in nursing, teaching (including post-secondary faculty in healthcare fields), engineering, and information and communications technology (ICT) fields. According to the Texas Workforce Commission, there is a critical shortage of elementary school teachers and teacher assistants. Five teacher shortage areas were identified for the 2019/20 school year to receive federal support for loan forgiveness programmes (TEA, 2019[38]). Furthermore, shortages in regulated professions such as nursing and other healthcare specialties may be exacerbated by a complex system of third-party licensing and certification requirements, creating additional barriers to employment or career progression (OECD, 2018[39]).

Domestic and international migration of skilled workers into key occupations or fields can alleviate labour shortages. However, current statistical tools at the state level do not allow for labour gap analyses that take into account migration patterns, thus making it difficult to estimate the impact of migration on the supply of skilled workers state-wide and by occupational group. In recent years, Texas has attracted skilled workers from out of state and around the world. Between 2014 and 2017, Texas experienced net domestic in-migration from other states; however, out-migration of young degree holders (aged 25-34) has steadily increased while international in-migration has remained stagnant, thus reducing net total in-migration (THECB, 2019[19]).

At the regional level, migration patterns differ. Based on data from LinkedIn, the Austin area gained the most workers between 2018 and 2019, compared to the Dallas and Houston metropolitan areas (LinkedIn, 2019[40]). However, the most migration activity was observed between (to and from) these three metro areas, indicating strong competition for skilled workers between these regional economies (LinkedIn, 2019[41]; LinkedIn, 2019[42]). Graduates typically gravitate towards cities and regions with higher earnings and better career opportunities, but individual mobility depends on multiple factors. Furthermore, labour market needs may change rapidly due to entry or exit of different industries in a particular region.

The THECB previously set a state-wide goal to increase the number of degrees produced in STEM fields. The goal was to increase the number of baccalaureate and sub-baccalaureate STEM degrees conferred by public higher education institutions to a total of 29 000 degrees in 2015 (THECB, 2016[43]). However, at 23 679 total STEM degrees in 2015, this goal was not met, with the slowest growth in computer science fields. Similarly, the state-wide goal for completions of teacher education certifications fell short, and the number of initial teacher certifications in 2015 only reached about 50% of the state-wide target. According to data from the National Center for Education Statistics (NCES), the number of bachelor’s degrees conferred in education declined between 2008 and 2017 in Texas, while the number of master’s degrees increased. The growth in master’s degree completions may be associated with the rise in dual credit delivery, as high school teachers are required to have a master’s degree to teach dual credit courses. State-wide targets for degree completion in allied health and nursing fields were met in 2015, but have evidently not been enough to meet nursing shortages in the state.

At a more granular level, data from LinkedIn allow for a rudimentary skills gap analysis using self-reported information from individual profiles and comparing this to skill demand extracted from online job postings. The top reported skill shortages between 2018 and 2019 were remarkably similar in Austin, Houston and Dallas-Fort Worth (LinkedIn, 2019[40]; LinkedIn, 2019[41]; LinkedIn, 2019[42]). About half of the top ten skills reported as shortages in all three regions were so-called “soft” skills (typically transversal skills), including oral communication, leadership and people management. Technical skills such as business management, data storage technologies and data science were also reported as top skill shortages. OECD interviews with employers in Texas confirmed that, while the quality of the skills of Texas graduates were generally seen to be positive, employers saw a need for stronger social and emotional skills such as communication, punctuality and resilience.

At the same time, employers’ skills needs and hiring choices are complex and vary over time. During OECD interviews, some employers in Texas reported a reluctance to hire graduates with associate’s degrees even when a job does not strictly require a baccalaureate degree. Employers met by the study team often reported a preference for candidates with bachelor’s degrees, also for middle-skill jobs, reflecting a stronger signalling effect of the baccalaureate degree, which may be based on either the real or perceived quality of skills associated with bachelor’s degree graduates. While national research has shown that good jobs are becoming increasingly unattainable for workers without some form of post-secondary education or training (Carnevale, Smith and Strohl, 2013[17]), there is also some evidence of over-qualification or so-called “credential inflation”, particularly at the sub-baccalaureate level (Fuller et al., 2017[44]; Rose, 2017[45]). This may result in fewer opportunities for workers with less than a bachelor’s degree, and others being employed in jobs for which they are over-qualified.

Without further data on in-field job placement rates for Texas graduates, it is difficult to ascertain the extent, if any, of mismatch or over-qualification. It is clear that the baccalaureate degree holds significant value for employers in the Texas labour market; however, on average, associate’s degree holders in Texas do reasonably well in terms of labour market outcomes, which are on par with the US average. This will be explored further in the next section.

Post-secondary attainment rates are below the national average and degree completions per year are not increasing rapidly enough to reach state-wide targets

As of 2017, 38% of Texas residents aged 25-64 have an associate’s degree or higher. In addition, an estimated 5% of Texans have earned a workforce-relevant certificate, bringing the average total attainment rate for the state to 43% (Lumina Foundation, 2019[18]). This is lower than the national average of 47.6%. Because Texas is such a large and diverse state, educational attainment rates vary widely across counties and regions, reflecting, to some extent, differing labour market and economic needs across the state. Of the six largest metropolitan areas in Texas, the Austin-Round Rock region has the highest post-secondary attainment rate of 50.4% (Lumina Foundation, 2018[46]). As seen in Table 5.5, the largest region, Dallas-Fort Worth-Arlington – with a population of about 7.4 million – has an attainment rate of 41.6%. Out of the 100 most populous metropolitan areas in the United States, the Dallas-Fort Worth-Arlington region ranks 59th in terms of post-secondary attainment, despite being the fourth largest metropolitan area in the country. As the fifth largest metropolitan area in the country, the Houston-Woodlands-Sugar Land region ranks only 76th in terms of post-secondary attainment.

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Table 5.5. Degree attainment rates in Texas by metropolitan area, 2017
Share of adults aged 25-64 with at least an associate’s degree in the six largest metropolitan areas (MSAs) in Texas, relative to population size and rank among the 100 most populous MSAs in the United States

Metropolitan Statistical Area (MSA)

Population estimate

Degree attainment rate

Population rank

(of 100 MSAs nationwide)

Attainment rank

(of 100 MSAs nationwide)

Dallas-Fort Worth-Arlington

7 399 662

41.6%

4

59

Houston-The Woodlands-Sugar Land

6 892 427

39.4%

5

76

San Antonio-New Braunfels

2 473 974

36.4%

24

86

Austin-Round Rock

2 115 827

50.4%

31

14

McAllen-Edinburg-Mission

860 661

24.2%

66

99

El Paso

844 818

32.4%

69

93

Source: Lumina Foundation (2019[18]), A Stronger Nation: Texas Report 2019, https://luminafoundation.org/stronger-nation/report/2020/#nation.

 StatLink https://doi.org/10.1787/888934135015

Attainment rates in Texas also vary widely by race and ethnic group. Despite representing around 40% of the state’s population, only 20% of Hispanic adults in Texas have an associate’s degree or higher, which is also lower than the average post-secondary attainment rate for Hispanics nation-wide (Lumina Foundation, 2019[18]). This represents an untapped potential in the workforce. While Texas attracts skilled workers from around the country and the world, boosting the supply of skilled workers through the Texas higher education system can serve to fill shortages in certain fields and strengthen Texas residents’ capacity for re-skilling and up-skilling, especially in certain regions and for under-represented populations. In order to keep pace with the growing demand for middle and advanced skills, the Texas Higher Education Coordinating Board (THECB) has set a state-wide goal to achieve 60% post-secondary attainment by 2030 among young adults aged 25-34. In 2018, 43.7% of 25-34 year-olds in Texas had a post-secondary degree or certificate. Because this is at the same level of attainment as for the working-age population as a whole, this could pose a problem in ensuring a sufficiently skilled workforce in the future.

Post-secondary attainment rates for 25-34 year-olds in Texas have been steadily increasing since 2014. The THECB had expected that the state would reach its attainment goal by 2030. However, most recent data indicate that attainment in 2018 has increased by 0.1 percentage point from the previous year, far below the annual increase needed to stay on track (THECB, 2019[19]). Progress on higher education attainment depends on a number of factors, including a sufficient number of high school students transitioning into higher education, improved completion rates within higher education, and a continued flow of skilled workers from out of state and internationally. More importantly, increasing the supply of graduates from Texas higher education institutions will be critical in order to boost overall attainment rates. When it comes to the number of credentials completed, however, the rate of progress in completions from 2015-17 has been much slower compared to the increasing attainment rate for the population, which may have indicated a strong reliance on out-of-state workers. In Texas’ current higher education plan, the THECB aims to increase completions (up to and including master’s degrees) by 3.9% per year.

Figure 5.5 shows the number of credentials completed at Texas post-secondary institutions between 2015 and 2019 (THECB, 2019[19]). The number of completions increased by an average of 3.1% annually between 2015 and 2018, and by 1.9% between 2018 and 2019. Recent data show the number of certificates, associate’s, bachelor’s and master’s degrees dropping from 341 307 in 2018 to 322 800 in 2019 (THECB, n.d.[22]). This appears to be largely driven by a decrease in production of certificates and associate’s degrees. Reaching the state-wide target for 2020 requires a 16% increase in degree production from 2019, which is much higher than current rates of production. Even without a decline in completions in 2019, yearly rates of increase in the past five years have not been high enough to meet the state’s goals.

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Figure 5.5. Certificate and degree completions in Texas, 2015-19
Total numbers for 2015-19 and targeted numbers for 2020, 2025 and 2030
Figure 5.5. Certificate and degree completions in Texas, 2015-19

Notes: Figures for 2015-19 include certificate and degree completions at public, private independent, and private career institutions in Texas. Figures for 2020, 2025 and 2030 are targets. Certificates in Texas are formal awards granted by an institution of higher education and are of different levels. Certificates counted by the THECB includes Level I (15-42 hours of instruction), Level II (30-51 hours) and Advanced Technical Certificates (16-50 hours). Advanced Technical Certificates also require the previous award of an associate’s degree, a bachelor’s degree, or “junior status” towards a baccalaureate (meaning having completed 60-89 credit hours). Shorter certificates and industry certifications are excluded from the count (for further detail on certificates in Texas, see TEA, THECB and TWC (n.d.[47])).

Source: THECB (2019[19]), 60x30TX Progress Report, http://www.60x30tx.com/media/1518/2019-60x30tx-progress-report.pdf.

 StatLink https://doi.org/10.1787/888934133837

Post-secondary enrolment and completion rates

Texas’ population growth is contributing to increased higher education participation, but the share of the population enrolled in higher education has remained stable in past decades

Texas has experienced significant growth in higher education enrolments over the past two decades. The number of students enrolled in higher education has grown by 40% in public four-year institutions, and by 55% in public two-year institutions over 2002-18 (THECB, 2019[25]). Total enrolments peaked in 2012 after the financial crisis, declining slightly for two-year institutions in the following years, but overall higher than pre-crisis due to growth in enrolments at four-year institutions. This absolute increase in enrolments represents a major success according to the key participation target set in Texas’ 2000-15 Closing the Gaps higher education plan.

However, this growth has been uneven among population groups; the state fell short on the post-secondary enrolment targets for Whites and Hispanics, as well as for men, set in the Closing the Gaps plan (THECB, 2016[43]). The gender gap remains important, with men being under-represented, especially among African Americans. In addition, this strong post-secondary enrolment growth largely reflects demographic trends in Texas, the population of which is younger and faster-growing than most states in the country. When looking at post-secondary enrolments in public institutions as a share of the total population, the enrolment rate has remained stable over time, as shown in Figure 5.6.

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Figure 5.6. Annual enrolment in public higher education institutions, 2001-18
Individuals enrolled (12-month enrolment) as a share of the total Texas population
Figure 5.6. Annual enrolment in public higher education institutions, 2001-18

Note: 12-month enrolment includes all individuals enrolled in post-secondary education for a 12-month period regardless of their age.

Sources: Enrolment: NCES (2019[24]), Integrated Post-secondary Education Data System (database), https://nces.ed.gov/ipeds/use-the-data (Public 2-year and Public 4-year institutions); Population: Texas Demographic Center (2018[48]), Texas Population Estimates Program (TPEP), https://demographics.texas.gov/Data/TPEPP/estimates.

 StatLink https://doi.org/10.1787/888934133856

Ensuring access to higher education for all Texans regardless of their ethnic, racial or socio-economic background is a key concern in Texas. Despite efforts to ensure affordable higher education, especially in the two-year sector, the transition rate to post-secondary education within one year of high school graduation has not increased over the past 16 years. Instead, the transition rate has decreased slightly from 52.2% in 2002 to 51.6% in 2018, with variations in the intervening years and a high point of 56.3% in 2009 (THECB, 2016[43]; THECB, 2019[25]).

Recent cohort data show large gaps between students of differing socio-economic status in Texas. Of all high school students who completed 8th grade in 2002, about 64% of the economically advantaged had enrolled in higher education in 2013, but only 37% of students from a disadvantaged background had done so (THECB, 2013[49]). Most recent data suggest the gap has reduced, although it remains substantial: of all high school students who completed 8th grade in 2007, about 65% of economically advantaged students entered higher education in 2018, compared to 44% of those who were economically disadvantaged (Figure 5.7).

A range of factors underpins these divergent trajectories. Insufficient academic readiness is one key factor identified by the THECB as requiring joint work with the K-12 education system (THECB, 2019[25]). While Texas has relatively affordable tuition and fees in the public higher education sector, particularly at the two-year level, other financial and non-financial barriers appear to limit the ability and motivation of high school graduates to pursue higher education. Understanding what those barriers may be – such as insufficient or ineffective information, or a lack of “wrap-around” supports for disadvantaged students – will be important to address this challenge.

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Figure 5.7. Progression within the education system of students enrolled in 8th grade in fall 2007
Total number of students and shares of students enrolled in 8th grade in 2007
Figure 5.7. Progression within the education system of students enrolled in 8th grade in fall 2007

Notes: The left axis indicates the total number of students in each group (not economically disadvantaged and economically disadvantaged). Economically disadvantaged students are students who qualify for free or reduced-price lunch. The percentages indicate the share of students in each group who were enrolled in grade 8 in 2007 (100% of both groups), who then graduated from high school, enrolled in higher education and received a higher education degree or certificate. Data are based on a longitudinal study tracking 8th grade students into higher education.

Source: THECB (2019[25]), Texas Public Higher Education Almanac, http://reportcenter.thecb.state.tx.us/agency-publication/almanac/2019-texas-public-higher-education-almanac.

 StatLink https://doi.org/10.1787/888934133875

Non-completion and low graduation rates continue to be a challenge

In Texas, as across the United States, a large share of post-secondary education entrants drop out before completing their programme. This population, along with individuals who hold a post-secondary certificate, is typically identified in census surveys such as the American Community Survey as having “some college, no degree”. The size of this population is large in Texas. According to 2018 estimates from the American Community Survey, there were 3.9 million Texans aged 25 and older with some college and no degree.

Importantly, a sizeable share of individuals with “some college, no degree” hold a post-secondary certificate. Estimates suggest that about 735 000 Texans aged 25-64 hold a high-quality post-secondary certificate, defined as providing an earnings premium of at least 20% compared to having only completed high school (Lumina Foundation, 2019[18]; CEW, 2019[50]). However, the majority of individuals with some college and no degree are non-completers, who face penalties in the labour market, often compounded by student debt they incurred before dropping out, as discussed later in this section. From the employer perspective, non-completers represent a population whose skills are viewed are either insufficient or difficult to ascertain. Thus, the non-completion challenge remains critical in Texas.

Four-year graduation rates at Texas institutions remain relatively low in a national perspective. For the cohort entering in 2012, 53.7% of first-time, full-time degree-seeking students enrolled in four-year institutions graduated within six years in Texas, below the national average of 60.2% (NCES, 2019[24]). However, in public four-year institutions, state data suggest that graduation rates have improved by close to three percentage points for the cohort graduating in 2019, compared to the cohort graduating in 2017 (THECB, n.d.[51]). As elsewhere in the country, graduation rates are lower at two-year colleges in Texas than they are at four-year institutions. The 150% completion rate at public two-year colleges in Texas was 21.3% in 2017, compared to 27.4 in Ohio, 28.7% in Virginia and 35.8% in Washington (see Chapter 3). It should be noted, however, that national graduation rates exclude students who have transferred between institutions, study part-time or complete credentials that are not degrees. Texas data take into account part-time students in two-year institutions and measures the graduation rates over a six-year period (200% of a two-year programme’s normal length). These data show that six-year graduation rates in public two-year institutions have remained around or slightly above 30% over the past decade, with little improvement over time (THECB, 2016[43]; THECB, 2019[25]).

College-ready students are significantly more likely to graduate than those who are not. For the entering cohort of 2012, 44.2% of college-ready students graduated within six years at Texas public two-year institutions, which is double the share of those who were not ready. While a much smaller share of non-ready students enrol in four-year institutions, a similar graduation gap exists between ready and non-ready students. This is a particular challenge in Texas given the lower-than-average student performance at the end of high school. The scores of high school students on standardised tests widely used in the United States as part of the higher education admissions process, the ACT and SAT, illustrate this challenge. Texas ranks around the middle of the 50-state distribution on ACT scores, and 42nd in the SAT writing and math mean. About 40% of students entering public post-secondary education in Texas do not meet state readiness standards, with the large majority of unprepared students attending two-year institutions (THECB, 2019[25]).

Data on the “some college no degree” population in Texas suggest a relatively large proportion of individuals who have completed some post-secondary credits then re-enrol in an educational programme. Following on the status of individuals found to have some college but no degree in 2013, 16% had re-enrolled in post-secondary education in 2018, compared to 13% on average in the country, and 4% had completed, compared to a national average of about 3% (National Student Clearinghouse, 2019[52]). This suggests that efforts to re-engage adults with some post-secondary credits may contribute to raising the state’s attainment levels.

An increasing number of post-secondary students choose programmes linked to high-demand, high-earning occupations

Over the past decade, Texas students appear to have responded to the labour market signals, shifting increasingly towards high-demand, high-earning study fields. Figure 5.8 relies on national data, which allow comparison of the enrolment in high-demand fields in the states participating in the study (see Chapter 3). The figure shows that, between 2008 and 2018, the total number of bachelor’s degrees awarded in engineering and computer and information science quadrupled in Texas, whereas it increased more slowly in health-related professions, and remained stable in education. With respect to shorter credentials, there has been a limited but steady growth in the production of associate’s degrees across the four fields, though it has been much larger in computer and information science. The number of certificates awarded has been robust in computer and information science, but stable in the three other fields.

Changes in student choices are particularly visible when considering, at different levels of study, which field they choose to pursue. At the bachelor’s level, degrees awarded in STEM fields, namely those related to biological and physical sciences, mathematics, computer and information sciences and engineering, represented 14.7% in 2007/08, growing to 20.1% of all bachelor’s degrees awarded in 2017/18. The share of bachelor’s degrees awarded in health fields has grown faster, from 6.5% to 12.6%, over the same period. By contrast, in the field of education, bachelor’s degrees awarded declined from 2.2% to 1.1% of all bachelor’s degrees awarded.

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Figure 5.8. Trends in the production of certificates and degrees in high-demand fields, 2008-18
Number of certificates and degrees awarded annually
Figure 5.8. Trends in the production of certificates and degrees in high-demand fields, 2008-18

Source: NCES (2019[24]), Integrated Post-secondary Education Data System (database), https://nces.ed.gov/ipeds/use-the-data.

 StatLink https://doi.org/10.1787/888934133894

Regarding short programmes such as certificates, trends differ by fields. For instance, certificates of less than one year in length awarded in computer science have grown from 4.6% to 6.8% of all certificates awarded of that duration from 2007/08 to 2017/18. By contrast, short certificates of less than one year awarded in health-related fields have fallen as a share of total certificates of less than one year, from 59.0% to 24.1% over the same period (NCES, 2019[24]). As will be discussed further, expected earnings may explain these choices, which may be less connected to the length of the certificate, but rather to the field of study, whether the certificate holder works in their field of study after graduation, and gender

While Texas students have, on average, shown strong responsiveness to labour market signals, not all students pursue high-earning fields or attend selective institutions whose graduates generally enjoy stronger labour market outcomes. Figure 5.9 shows degrees awarded in select fields of study in 2018 as a share of total degrees awarded to key ethnic and racial groups and to each gender. The figure illustrates that Asian students receive a larger share of degrees in high-earning fields – close to 16% of all degrees awarded to this group were in engineering, engineering technologies, computer science or mathematics, compared to about 9% for Whites, 8% for Hispanics and 5% for Black/African Americans. It is also noteworthy that almost half of international students in Texas institutions have obtained degrees in these high-earning fields. By contrast, degrees awarded in lower-earning fields, including social sciences, liberal arts, education and psychology, represented around 34% of all degrees awarded to Black/African Americans and Hispanics, compared to 27% of degrees awarded to Whites and 23% of degrees awarded to Asian students.

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Figure 5.9. Degrees awarded by race/ethnicity or gender and field in Texas, 2018
As a share of all degrees awarded to each demographic group
Figure 5.9. Degrees awarded by race/ethnicity or gender and field in Texas, 2018

Notes: Fields of study are ordered from highest- to lowest-earning. The figure shows for each racial/ethnic group and for each gender the share of degrees awarded in each field as a share of all degrees received by that ethnic/racial group or gender. For example, more than 5% of all degrees awarded to Asian students were in engineering, and 25% of all degrees awarded to women were in health professions and related programmes. The field of study reflected is that of the degree awarded during the year considered: a student with a bachelor’s degree in engineering, who is then awarded a PhD in computer sciences is recorded as "computer sciences".

Source: NCES (2019[24]), Integrated Post-secondary Education Data System (database), https://nces.ed.gov/ipeds/use-the-data.

 StatLink https://doi.org/10.1787/888934133913

From a gender perspective, a similar imbalance exists. Close to 20% of degrees awarded to men in 2018 were in engineering, engineering technologies, computer science, or mathematics; whereas fewer than 4% of degrees awarded to women were in these high-earning fields. By contrast, 25% of all degrees awarded to women were in health professions and related programmes, an area which includes both high- and lower-earning professions, and 15% were in liberal arts and sciences or general studies and humanities, which command lower earnings compared to other study fields.

Enrolments according to institution type also show some notable differences in ethnic and racial profile as noted in Section 5.1. While approximately 48.7% of Asians and 44.4% of Whites were enrolled in public four-year institutions, this figure was only 39.7% and 33.3% among Hispanics and African Americans, respectively. By contrast, while the share of Hispanics and Africans Americans enrolled in private two-year institutions, which are largely for-profit institutions, remains small overall, at 2.2% and 3.2% respectively, it is much larger than that of Whites or Asians, at 1.1% and 0.6% respectively (NCES, 2019[24]).

Students’ choices in terms of fields of study raise two issues. One relates to areas of critical shortages such as teaching and some health-related professions, which command low earnings and often difficult working conditions. Another relates to the ability of graduates in various fields, and especially in highly technical and specialised fields, to develop transversal skills that will allow them to adapt to new demands. For instance, as short-term certificates in high-earning fields may be an increasingly attractive option for some students looking to secure income within a short period of time and low financial investment, these students would need to have opportunities to add to their skill sets as they move through their careers. Ensuring that graduates can continue to obtain the skills they need over time requires the provision of a solid foundation of both specific and transversal skills across levels and fields of post-secondary study, discussed in Section 5.3. It also requires a transparent and flexible higher education system with effective pathways between programmes to allow individuals at various points in their careers to upgrade their skills.

Return on investment of higher education

Despite very low unemployment across the state, the share of graduates employed in Texas within one year of graduation has declined in recent years

As elsewhere in the country and across the OECD, higher education graduates in Texas enjoy higher labour market participation and employment rates and higher earnings than those who have completed upper secondary education. A smaller share of Texas adults aged 25-34 with a high school diploma were either working or looking for work than on average in the United States, at around 74% versus 77%. Their employment rates are also slightly lower on average, at 69% versus 71%, respectively (U.S. Census Bureau, 2019[20]). Thus, the advantage provided by completing a degree in terms of labour market participation and employment is greater in Texas than on average in the United States.

However, when compared to their peers with a degree nationally, the labour market participation and employment rates of Texas graduates could be better. While graduates with a bachelor’s degree have similar, albeit slightly lower, participation and employment rates as their peers nationally, associate’s degree holders experience poorer outcomes than on average in the United States. Their labour market participation rate is two percentage points below the national average, at 85.1%, and their employment rates are 2.5 percentage points below the national average, at 81.1% (U.S. Census Bureau, 2019[20]) (see comparative scorecard in Chapter 3).

State data matching higher education and Unemployment Insurance (UI) records permit the tracking of graduates employed in Texas within one year of graduation. It should be noted that UI records exclude self-employed individuals, or federal or military employees, and that Texas has a high share of federal employees compared to other states (U.S. Office of Personnel Management, 2017[53]). These data show that between 2007 and 2018, the share of Texas higher education graduates who were found working in the state within one year of graduation has declined (Figure 5.10). The share of graduates found working, whether they are also enrolled in further study or not, declined for university graduates by 4.2 percentage points for undergraduates and by 5.9 percentage points for post-graduates. Similarly, in the community and technical college sector, the share of graduates found working over the period has declined by 4.3 percentage points for academic stream graduates and by 2.9 percentage points in the technical stream.

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Figure 5.10. Share of graduates who are employed in Texas within one year of graduation, 2007-18
Including graduates who are still enrolled in education
Figure 5.10. Share of graduates who are employed in Texas within one year of graduation, 2007-18

Notes: The horizontal axis represents the year in which graduates were found working in Texas (the 2018 figures correspond to the 2017 exit cohort). The data include graduates who are working only, or who are working and enrolled. It does not include graduates who are enrolled only.

Source: THECB and TWC (2019[54]), Exit Cohort Reports CBM001 and CBM009 http://www.txhighereddata.org/reports/performance/ctcasalf/exitcohorts/

 StatLink https://doi.org/10.1787/888934133932

Importantly, there has been a steady increase over the past decade in the share of graduates from community and technical colleges who choose to enrol in further study within one year of graduation. In the academic stream – the stream designed to prepare students to transfer to universities – the share of students enrolled in further study within one year after graduation increased from 19.7% to 23.9% between 2006 and 2017. Interestingly, those graduating from the technical stream have also been a larger share to enrol after graduation, from 7.5% in 2006 to 10.9% in 2017 (THECB and TWC, 2019[54]). This may point to a perception by graduates that a two-year degree, even if designed for labour market entry, may not be sufficient to find good employment. By contrast, the share of university graduates found enrolled within one year of graduation has stayed stable since 2006.

The factors behind the decline in the share of graduates found working in Texas have not been investigated to date. However, they are of interest particularly in a context of very low unemployment, combined with recruitment challenges in some sectors – from engineering to health or finance – which lead employers to recruit nationally or internationally. The competition for talent across US states may provide one explanation: while Texas continues to be a net importer of degree holders (see Section 5.2), the share of Texans aged 25-34 with a degree who have left the state has increased by more than 30% over the period 2014-18 (U.S. Census Bureau, 2019[20]). Figure 5.11 shows that in areas of important labour market demand, such as healthcare and education, both in- and out-migration flows are substantial. Further, research suggests that outward mobility is skewed towards those with the highest levels of qualifications, which can perpetuate shortages for highly qualified or specialised workers (Foote and Stange, 2019[55]).

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Figure 5.11. Net domestic migration by occupation, Texas, 2017
Difference between the number of degree holders in Texas who reported residing in another US state in 2016 and the number of US degree holders outside of Texas who reported residing in Texas in 2016
Figure 5.11. Net domestic migration by occupation, Texas, 2017

Notes: The figure was computed using data from the American Community Survey and following the approach to estimate net migration used by the THECB (2019[19]). The ten occupational groups correspond to major groups 11-0000 to 29-0000 of the Standard Occupation Classification (SOC) system, which typically require post-secondary qualifications.

Source: U.S. Census Bureau (2019[20]), American Community Survey (database), https://www.census.gov/programs-surveys/acs/data.html.

 StatLink https://doi.org/10.1787/888934133951

Data produced by the Post-Secondary Employment Outcomes project, a partnership between the U.S. Census Bureau and several states and post-secondary institutions, also underscore the importance of outward mobility. This project sheds light on graduates’ trajectories after graduation for the period 2001-16 and aims to fill key information gaps by tracking students who work outside of the state in which they study, and by providing information about the employer’s industry sector and geographic location (Foote et al., 2019[56]). For Texas, data are only available at this time for institutions that compose the University of Texas (UT) system, and suggest that a large share of students leave Texas to work in other states at various points post-graduation. Looking at all cohorts for whom data is available, the share of UT graduates who leave the state was 38% within one year of graduation, 44% after 5 years and 42% after 10 years (U.S. Census Bureau, 2019[57]).

On average, the bachelor’s degree remains the entry point to higher earnings in Texas, but shorter credentials in some fields of study also deliver good outcomes

Completing higher education in Texas is associated with a strong earnings advantage at the bachelor’s and graduate level. For the 25-34 age group, the annual median earnings of bachelor’s degree holders in Texas are USD 2 000 higher than the national average. By comparison, associate’s degree holders earn slightly more (USD 400) than the national average (U.S. Census Bureau, 2019[20]) (see comparative scorecard in Chapter 3), and the median wage of upper secondary graduates in Texas is the same as on average in the United States.

State data on the earnings trajectories of graduates from 1-10 years post-graduation suggest that these differences grow over time (Figure 5.12). While graduates with a certificate or associate’s degree experience slower earnings growth at year 5 post-graduation, and relatively flat earnings from years 5-10, the earnings of bachelor’s degree holders continue to grow, albeit slower after year 5, which is more in line with the patterns observed for holders of advanced degrees.

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Figure 5.12. Earnings trajectory of the 2008 cohort of higher education graduates in Texas, 1-10 years after graduation
Pre-tax annual earnings in current USD (not adjusted for inflation), by education level
Figure 5.12. Earnings trajectory of the 2008 cohort of higher education graduates in Texas, 1-10 years after graduation

Note: Public institutions only.

Source: THECB (2019[25]), Texas Public Higher Education Almanac, http://reportcenter.thecb.state.tx.us/agency-publication/almanac/2019-texas-public-higher-education-almanac.

 StatLink https://doi.org/10.1787/888934133970

These general patterns are consistent with research that shows the long-term benefits of general education compared to vocational education (Hanushek et al., 2017[58]) and with research suggesting the premium for advanced levels of higher education has accelerated in the past two decades (Baum, 2014[59]). However, the relatively low performance of associate’s degree holders is somewhat surprising given the dynamism and diversity of Texas’ economy, and the high number of “good jobs” that do not require education at the bachelor’s level or above, as defined by the Georgetown University Center on Education and the Workforce (see Section 5.2).

This points to the particular importance of the field of study pursued by students choosing to complete sub-baccalaureate credentials. In certain study fields, including health (especially registered nursing, health care administration and some health technician specialties), information, engineering- and manufacturing-related technology, as well as certain protective services (policing, firefighting), certificates and associate’s degrees can command higher earnings than bachelor’s degrees in general fields of study (Schneider, 2015[60]; Carnevale, Rose and Cheah, 2013[61]). Research further suggests that certificate holders who enjoy the greatest benefits are men, and those working in the field in which they obtained their certificate (Carnevale, Rose and Hanson, 2012[62]; Strada, Gallup and Lumina Foundation, 2019[63]).

Field of study differences also matter at the bachelor’s degree level. However, the variation in earnings by field is lower than it is on average in the United States, as shown in Figure 5.13. For instance, whereas high-earning fields such as information and communications technology command lower earnings in Texas than on average in the country, graduates from lower-paying fields such as education enjoy notably higher earnings than elsewhere in the country. Despite lower differences in a national perspective, field of study differences do affect long-term earning trajectories. While some general fields of study, such as biological sciences, offer good salary growth, others, such as psychology and English majors, face low starting salaries and lower-than-average salary growth, in line with findings elsewhere in the country.

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Figure 5.13. Annual median earnings of bachelor's degree graduates in Texas and the United States
Annual gross earnings in current USD (not adjusted for inflation)
Figure 5.13. Annual median earnings of bachelor's degree graduates in Texas and the United States

Note: A. Public and private institutions; B. Public institutions only.

Sources: A. Adapted from U.S. Census Bureau (2019[20]), American Community Survey 2018 (database), https://www.census.gov/programs-surveys/acs/data.html; B. THECB (2019[25]) Texas Public Higher Education Almanac, http://reportcenter.thecb.state.tx.us/agency-publication/almanac/2019-texas-public-higher-education-almanac.

 StatLink https://doi.org/10.1787/888934133989

From a gender and demographic perspective, the difference in earnings by race and ethnicity follow similar patterns as those observed elsewhere in the country. However, as shown in the comparative table in Chapter 3, while Whites and African Americans who hold an associate’s or bachelor’s degree in Texas earn notably more than their peers on average across the country (USD 2 000 annual earnings advantage for Whites and USD 5 000 annual earnings advantages for African Americans), this is not the case for Hispanics (USD 500 earnings advantage) (U.S. Census Bureau, 2019[20]).

The rising costs of education and debt burdens limit graduates’ return on investment

The cost of higher education has increasingly shifted from state sources to individuals over the past decades, as discussed in the policy section of the report. The deregulation of tuition fees at Texas public universities in 2003 was a major policy change, which has resulted in sharp tuition fee increases, in particular in selective institutions and high-demand or costly fields of study such as business or engineering. Research suggests that the higher cost of study has not had a damaging effect on disadvantaged students accessing high-earning, high-cost programmes, in part because the tuition rises have allowed increased needs-based institutional aid (Andrews and Stange, 2016[64]).

However, the rising cost of study has an impact on graduates’ return on investment. Compared to the rest of the country, tuition and fees of public higher education are moderate in Texas at four-year universities (23rd most affordable out of the 50 states) and low at two-year colleges (2nd most affordable) (NCES, 2019[24]). However, the costs of higher education go beyond tuition and fees and can diminish the benefits of attainment. Two groups appear to face particular challenges in Texas: non-completers and those who have graduated but whose debt represents a large share of their starting salaries. Economically disadvantaged students and students who are not adequately prepared for college are more likely to drop out and thus face a double challenge in the labour market, as they carry debt but will not benefit from the advantage of a completed credential. A large number of Texans aged 25-64 have completed some college but no degree. This group also faces the risk of poor return on investment if they have incurred debt for the post-secondary courses they have taken. However, as discussed earlier, individuals in this group may wish to re-engage with post-secondary education, and a slightly greater share re-enrols in Texas compared to the US average. This pattern suggests an opportunity to support individuals without a credential but some experience in post-secondary study to return and complete a credential valued in the labour market.

Regarding completers with debt, African American and White students graduating from four-year public institutions are most at risk of facing heavy debt burdens, with debt burdens of 101% and 70% respectively of their first-year wage in 2017 (debt data for 2016), well above the state target of 60%. Debt loads as a share of first-year wages are lower at two-year public institutions, but remain high (54%) for African American students (THECB, 2019[25]). No information is currently available on debt loads over a longer time period post-graduation.

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5.3. Policies to improve the alignment of the higher education system and the labour market in Texas

The assessment of labour market outcomes in the previous section suggests that, to achieve a good alignment between the supply and demand of skills in Texas, the state would benefit from focusing on the following four policy areas to improve the articulation between higher education and the labour market:

  • strategic planning and co-ordination to support alignment between higher education and workforce needs;

  • funding to address issues of access, equity and attainment;

  • educational offerings responsive to labour market needs, and student supports and pathways to promote completion and good labour market outcomes;

  • targeted information for students, families, educators and policy makers about educational opportunities and labour market needs to support student choices and guide institutional practices and policy.

This section of the chapter identifies current strengths and areas for improvement in each of these four policy areas, and provides recommendations to help improve the articulation between higher education and the labour market in Texas.

Strategic planning and co-ordination

With the current higher education plan and Tri-Agency Workforce Initiative, Texas’ higher education policy has increased its focus on labour market relevance in recent years

The Texas Higher Education Coordinating Board (THECB) provides leadership for and co-ordination of Texas higher education through 15-year strategic higher education plans, which set state-wide policy objectives and targets to monitor progress and results. The current Texas Higher Education Strategic Plan: 2015-2030, or 60x30TX, focuses on raising the attainment of post-secondary certificates and degrees to 60% among 25-34 year-olds by 2030. As outlined in Box 5.2 , the plan includes four broad goals. The THECB promotes progress towards the plan’s goals in two main ways: guidance for institutions, students and employers; and the monitoring and publication of key targets identified in the plan to measure progress against the 60x30TX goals. Guidance includes, for instance, the Career Readiness Handbook, which offers definitions and concrete examples of “marketable skills”, or the 60x30 and Internships Toolkit, which provides guidance to employers on creating or expanding high-quality, paid internships for post-secondary students (THECB, 2018[65]; THECB, 2019[66]).

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Box 5.2. Texas Higher Education Strategic Plan: 2015-2030: 60x30TX

Launched in 2015, the 60x30TX higher education plan has four goals with specific targets:

  • Educated population: By 2030, at least 60% of Texans aged 25-34 will have a certificate or degree.

  • Completion: By 2030, at least 550 000 students graduating in that year will complete a certificate, associate’s, bachelor’s or master’s from an institution of higher education in Texas.

  • Marketable skills: By 2030, all graduates from Texas public institutions of higher education will have completed programmes with identified marketable skills.

  • Student debt: By 2030, undergraduate student loan debt will not exceed 60% of first-year wages for graduates of Texas public institutions.

Source: THECB (n.d.[67]).

The THECB monitors progress against the goals and associated targets at the state level but also provides publicly available information on the progress of regions and individual institutions on the dedicated 60x30TX website and through regular progress reports. OECD interviews indicated that higher education institutions perceived the plan, along with the actions it required, as a useful catalyst for action at the institutional level. For instance, the plan calls for institutions to create and implement a process to identify and update marketable skills for each programme in collaboration with employers and other stakeholders by 2020. As of spring 2018, 41% of institutions had created and implemented such a process. (This is described further in Section 5.3.) While greater progress is still needed, institutions interviewed by the OECD who had created and implemented a marketable skills process highlighted its value in engaging key parties within the institution, including faculty members, in a dialogue about labour market relevant skills and ways to convey those skills (THECB, 2019[19]).

In Texas, as in many other states, separate government agencies oversee primary and secondary education, higher education, and workforce development. While efforts in all three areas are critical to develop a skilled workforce, co-ordination and integration between them is often challenging. In 2016, the Governor of Texas created the Tri-Agency Workforce Initiative, establishing a shared set of goals for three state agencies: the Texas Education Agency (TEA), which oversees the public education system, the Texas Higher Education Coordinating Board (THECB), and the Texas Workforce Commission (TWC), which produces labour market information and oversees workforce development efforts in the state. These goals, called “charges”, were assigned to the Commissioners of the three agencies and designed to align with 60x30TX, which had been launched the previous year, in 2015. Two of the five charges laid out by the Governor had a clear focus on the labour market relevance of post-secondary education: the first charge referenced the need to equip post-secondary students with marketable skills, and the third charge required the Commissioners to “evaluate current agency efforts, as well as state and local web-based education and career awareness systems, in an effort to better link students, parents, and educators to the broad array of high-demand jobs in this state and the educational requirements to secure those opportunities” (TEA, THECB and TWC, 2020, p. 2[68]).

The initiative began with the organisation of eight regional meetings with stakeholders throughout the state, resulting in four prime recommendations, supported by a range of initiatives and additional recommendations. The prime recommendations focused on identifying initiatives to boost the state’s economic competitiveness, strengthening instruction from early childhood through high school, building a proactive partnership between the three agencies, and advancing education and employment opportunities for veterans (TEA, THECB and TWC, 2016[69]). In February 2020, the three agencies submitted a progress report to the Governor’s Office, outlining a large number of initiatives taken across the state by educators, employers, government officials and community stakeholders to meet the initial charges set out in 2015 and the prime recommendations of 2016 (TEA, THECB and TWC, 2020[68]).

In February 2020, the Governor of Texas announced new charges for the Tri-Agency initiative, outlined in Box 5.3. The new set of charges builds on the previous focus on the labour market relevance of post-secondary education. They also sharpen this focus, making it more specific by tasking Commissioners with identifying strategies to streamline educational pathways to high-wage, high-demand careers, increase the state’s capacity to produce credentials of value, and increase entry into the teaching profession.

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Box 5.3. Tri-Agency charges to promote access to high-quality education and workforce training

The Governor of Texas tasked the TEA, THECB and TWC with a set of charges in seven areas:

  • Readiness: The Commissioners should recommend strategies to ensure students are prepared for future growth at each stage in the educational pipeline.

  • Completion: The Commissioners should recommend strategies to ensure students who pursue higher education and workforce educational programs can complete those programmes in a cost-efficient and timely manner.

  • Transitions: The Commissioners should analyse and make recommendations regarding strategies to streamline educational pathways, ensuring students can seamlessly transition into high-wage and high-demand careers.

  • Upskilling: The Commissioners should recommend strategies for improving the state’s capacity to produce credentials of value aligned with the needs of high-wage and high-demand occupations.

  • Educational pipeline: The Commissioners should analyse and make recommendations to increase the supply of highly qualified and well-trained individuals entering the teaching profession across the state.

  • Partnerships: The Commissioners should explore and recommend options for increasing economic activity in rural Texas, including innovative collaborations among employers, institutions, and rural communities; and easing of regulatory burdens that may inhibit economic growth and collaboration. The Commissioners should also explore ways for businesses, school districts, and institutions of higher education to partner together to offer expanded educational options to employees and their children, and to strengthen educational and workforce programmes across the state.

  • Infrastructure: The Commissioners should identify strategies to align agency operations, increase programme efficiency, improve data analysis and capacity, and to refine 60x30TX, if necessary, to ensure the state’s goals continue to reflect the state’s needs.

Source: Office of the Texas Governor (n.d.[70]).

Partnership initiatives and intermediary organisations play an important role in supporting the alignment between higher education and labour market needs in Texas

A wide array of state-wide, regional and local partnerships exist in Texas, aiming to tackle key issues facing students and employers. The stakeholders involved in these partnerships are diverse, spanning the public, private and non-profit sectors, and focusing on issues from education at all levels to workforce and economic development. For example, Texas benefits from a dense network of non-profit organisations that facilitate alignment between secondary and post-secondary education. In addition, there are a number of higher education associations representing different sectors, such as the Texas Association of Community Colleges, Council of Public University Presidents and Chancellors, and Independent Colleges and Universities of Texas. These organisations advocate for policy changes to the Legislature and citizens at large, provide convening fora for members and other stakeholders, and design initiatives to serve their students and member institutions.

Some of these partnerships have a broad geographic remit, attempting to serve various regions across the state. Educate Texas, an educational initiative of the philanthropic organisation Communities Foundation of Texas, supports various collective impact programmes, including supporting higher education success and the alignment between education and workforce needs. Examples of such programmes include the Texas Regional STEM Degree Accelerator, an initiative that ran from 2015-18 in five regions to develop STEM degree programmes aligned with high-demand regional workforce needs. Actions included professional development of faculty, aligning mathematics pathways from K-12 to higher education and workforce, and developing next-generation sector partnerships (Educate Texas, 2019[71]).

Frequently, partnerships identified by stakeholders during the OECD visit had a regional or local scope. These were active in both densely populated urban areas and in rural areas, such as West Texas or along the southern border, where more efforts are needed to grow talent locally due to greater difficulty in importing skilled workers. The Greater Houston Partnership is an example of a business-led partnership that promotes economic development in the Greater Houston area. As outlined in Box 5.4 , the UpSkill Houston initiative is targeted to businesses, higher education institutions and job-seekers in the Houston area to meet labour market needs. Shortages of qualified workers in particular industries and regions are also an important trigger for the development of sector partnerships. In the Houston area, examples of industry-led partnerships include the East Harris County Manufacturers Association (EHCMA), which represents 130 large and small companies in the region’s petrochemical industry, and worked with post-secondary partners in the region to tackle the lack of student awareness of job opportunities with the aim of raising enrolments.

In several regions of the state, partnerships exist between institutions and employers that facilitate the development of labour market relevant programmes. These are most prevalent in sectors, industries and occupations that face shortages (e.g. nursing, engineering, advanced manufacturing, information and communications technology). These partnerships often take the form of employer participation on programmes’ advisory committees and other channels that facilitate employer input on the content of programmes. They can also take the form of direct funding from industry to institutions to support the expansion of particular in-demand programmes, as evidenced, for example, by the relationship between Texas Instruments and the University of Texas in Dallas as well as Texas A&M engineering programmes.

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Box 5.4. The Greater Houston Partnership – UpSkill Houston initiative

The Greater Houston Partnership brings together industry leaders, educational institutions, and community organisations in an employer-led initiative that works to develop the talent pipeline to meet the needs of Greater Houston’s economy. UpSkill Houston has received national recognition for its work, including from the U.S. Chamber of Commerce Foundation's Talent Pipeline Management Initiative, the Aspen Institute, the Global Cities Initiative of the Brookings Institution, JP Morgan Chase, and United Way Worldwide.

UpSkill Houston provides resources for career-seekers, educators, and industry partners to help fill the need for middle-skill workers (requiring less than a four-year degree) in the Greater Houston area. In addition, UpSkill Houston conducts analyses to gain a deeper understanding of student choices in both education and employment, public perception of middle skills jobs, and alignment with industry and labour market needs.

Sources: Greater Houston Partnership (n.d.[72]); UpSkill Houston (n.d.[73]).

Stakeholders have pointed to the need for deeper alignment between higher education and workforce development actors in Texas

The decentralised higher education system in Texas, and its large scale in terms of geography and population, pose a number of co-ordination challenges. The OECD has identified three general types of co-ordination challenges: co-ordination within government, departments or agencies whose actions need alignment to achieve policy goals; co-ordination between government and stakeholders; and co-ordination among stakeholders (OECD, 2019[74]). These three types of co-ordination challenges exist to some extent in Texas and may limit the effectiveness of efforts to align higher education and labour market needs.

Co-ordination within government is particularly important when achieving a policy objective depends on the actions of several departments or agencies, as is the case for improving the alignment between higher education and the labour market. As described earlier, the Tri-Agency Workforce Initiative offers an important opportunity to improve student preparedness, foster access and success in higher education, and successful transition to gainful employment. However, a challenge that emerged through the OECD team’s discussions with stakeholders in Texas is that each agency has legislatively mandated functions and targets to meet, requiring staff to focus on their own agency goals. By comparison, no legislative charges exist that relate to Tri-Agency Work. Thus, the impact of the Tri-Agency initiative on the work of each agency is not yet clear. Alignment of work across government agencies is a common challenge in OECD countries, especially as more countries move towards integrated policies on skills development that enable a more effective skills pipeline from childhood to adulthood and that also allow for adults to upskill and reskill. Some countries have developed mechanisms to pursue whole-of-government work to improve the skills pipeline, which may be of interest as Texas seeks to ensure higher education supports good labour market opportunities for all Texans (see Chapter 3).

While it is important to encourage local, bottom-up approaches, strengthening linkages between higher education and labour market actors at the regional level can benefit both employers and graduates in achieving good labour market outcomes. For example, stakeholders in Texas noted that because institutions often partner individually with employers at the programme or field of study level, this may lead to an over-solicitation of employers from multiple institutions and risk an overly narrow focus on one specific employer’s talent pipeline. Thus, streamlining points of contact between higher education and employer or industry groups at the regional level may be beneficial. Stakeholders in Texas also highlighted the importance of partnerships between higher education institutions and Workforce Development Boards, underlining a greater need for higher education institutions, particularly four-year institutions, to view Workforce Development Boards as a partner and intermediary body.

Stakeholders also noted additional administrative barriers to co-ordination between the tri-agencies at the regional level. For example, while the Texas Education Agency and the Texas Workforce Commission have regional-level offices or contact points, the Texas Higher Education Coordinating Board (THECB) does not have corresponding regional contact points. In addition, each agency uses different regional catchment areas, as there are 10 higher education regions, 28 workforce regions and 20 education service centres. Thus, the three main state agencies involved in broader workforce and skills development in Texas all operate in different regions, with varying degrees of authority for action. This may complicate co-ordinated action at the regional level. For example, the THECB places emphasis on the importance of regional context in increasing post-secondary attainment levels, setting regional targets to accompany the state-wide targets for 60x30TX. However, there do not seem to be mechanisms facilitating engagement of the THECB with other state agencies to help regions reach these targets.

Moreover, part of the rationale for the Tri-Agency model was to avoid duplication of efforts and strengthen cross-agency collaboration. Agency Commissioners were charged with evaluating current agency efforts to better link education and workforce opportunities. However, to date, it is unclear whether efforts have been made to implement a review or evaluation process of policies and programmes across agencies that would allow for a broader examination of potentially overlapping, contradictory or incoherent policies in terms of aligning with the goals of the Tri-Agency Workforce Initiative.

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Box 5.5. Improving regional workforce development through state agency alignment

One of the recommendations in a 2016 report by the Federal Reserve Bank of Dallas to improve regional workforce development in Texas was to increase state agency alignment. The report states that, “Workforce alignment and collaboration must be modeled at the state level. Beyond collaborating on strategic planning efforts, state agencies in Texas have modeled effective collaboration by partnering on several joint initiatives, most prominently the Tri-Agency initiative. There are several options to increase state agencies’ co-ordination to accomplish the goals and objectives of the Tri-Agency initiative”. (Blum and Groves, 2016, p. 41[16]).

The report provides examples of recommended state actions such as creating joint staffing positions that report to multiple agencies, increasing the number of cross-agency initiatives that produce services or products used by partners at the regional level, or creating inter-agency councils or leadership committees responsible for cross-agency initiatives or strategies.

Source: Blum and Groves (2016[16]).

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Recommendations for strategic planning and co-ordination
  1. 1. Texas can benefit from deepening Tri-Agency collaboration in support of long-term employability goals common to the three agencies. This could be done by agreeing on a set of metrics to monitor goals common to the three agencies. This exercise could serve to ensure alignment between the three agencies and translate the top-level co-operation that is currently in place to the policy and operational level. As the new Tri-Agency charges established by the Governor of Texas in 2020 include a focus on the production of credentials of value for all Texans and on supporting entry to the teaching profession, consideration could be given to establishing quantitative state-wide targets that support these objectives. Such targets could help provide a clear focus for stakeholder efforts and facilitate the reporting of progress to the public.

  2. 2. Consider ways to align, strengthen and scale up local initiatives to align education programmes to labour market needs. This could include strengthening the regional presence of the Texas Higher Education Coordinating Board. In addition, following models that exist in other US states, the three agencies (TEA, THECB, and TWC) could identify ways to create regional networks, and identify appropriate lead organisations to co-ordinate efforts in improving the alignment between education and the labour market. The lead organisations could report annually on progress in regional co-ordination to improve the alignment of education and workforce needs, providing other regions and state-level policy makers with mappings of collaborative practices and policy initiatives. Available funding could cover administrative costs, and to help foster and scale up promising practices and partnerships among educational providers (both secondary and post-secondary), between education and labour market actors, and among employers.

  3. 3. As part of its role as co-ordinating body for higher education, particularly in monitoring progress towards state-wide goals for higher education, the THECB could consider implementing a regular review process for evaluating policies and programmes with a direct impact on higher education-labour market alignment. The process could involve key stakeholders, including representatives from the higher education sector, employers and others who work on the alignment of education and workforce needs, to help identify policies and procedures that hamper alignment or could improve it.

Funding

Texas supports a large public higher education system with relatively low tuition and a range of financial aid programmes

Institutional funding model

The state of Texas supports a large public higher education sector, which enrols about 90% of all students. State data suggest that private institutions have experienced a decrease in enrolments since the financial crisis of 2008-09, whereas public institutions have experienced a surge in enrolments. Since the financial crisis, total enrolments in public higher education in Texas increased by 30.8%, whereas the average growth in the United States was 7.1%. This places Texas as the top state in terms of growing public higher education enrolments, far ahead of other comparable states. The next states with large enrolment growth are Arizona, Idaho and Utah, ranging from 24.7% to 21.5%, but those states have much smaller higher education systems (SHEEO, 2019[75]).

The total amount of public expenditure dedicated to higher education has decreased over the past decade, both in absolute terms and as a share of total state expenditure in Texas. However, Texas allocates a substantial amount of public funding to higher education compared to other states, dedicating about 7.9% of public expenditure in 2017 compared to 5.8% on average in the United States (SHEEO, 2019[75]).

Another feature of the Texas system is that an important share of community college funding comes from local appropriations, although the share vary significantly by college. On average, about one-third (33.5%) of community colleges’ funding comes from local property tax, with another 33.5% coming from state appropriations, and the remainder split between federal funds (17.5%) and net tuition and fees (15.4%) (Legislative Budget Board, 2019[76]). Owing to wide differences in the fiscal capacities of local governments, there is wide variation in local revenues per FTE student. For example, Austin Community College had revenues from local appropriations of USD 8 286 per full-time equivalent student in 2018, while this figure was USD 5 623 for Houston Community College and USD 3 343 for El Paso Community College (NCES, 2019[24]).

The state has taken steps to use funding provided to institutions to promote student success and help address key labour market shortages. Starting in 2014/15, the state introduced outcomes-based funding in public community colleges, which enrol the large majority of students in the two-year sector (over 730 000 students in 2018), and changed the funding model for the Texas State Technical College (TSTC) system. While the outcomes-based funding approach in community colleges focuses on student retention and completion, this comprises only about 10% of the funding coming from the state. By contrast, all state funding for instruction and administration for the TSTC is based on graduates’ labour market outcomes. Both approaches are described in Box 5.6. Despite some initial opposition, the inclusion of some performance funding in the funding model for public community colleges is now well established. In the TSTC system, stakeholders who met with the OECD team described the model as effective in improving student employment and earnings as well as in motivating changes in institutional behaviours, such as greater efforts to increase the labour market relevance of the curriculum and to strengthen partnerships with employers.

In the four-year sector, while the THECB recommended a Graduation Supplement programme to incentivise universities for completions to the 85th Texas Legislature, it did not become law. The proposal was to provide USD 150 million for the biennium to incentivise universities with USD 500 for each “not at risk” student awarded a bachelor’s degree and USD 1 000 for each “at risk” student awarded a bachelor’s degree. At risk students were defined as Pell Grant eligible or scoring below average ACT or SAT scores (TACC, 2018[77]). Some targeted institutional funding is also available to four-year institutions to enhance capacity in fields of study leading to shortage professions, though this comprises a small share of public funding. For instance, the Graduate Medical Education Expansion Grant (USD 78.6 million in 2019) provides funding to public medical schools to increase first-year residency positions.

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Box 5.6. The Success Point Model for Texas public community colleges

Outcomes-based funding in community colleges

The funding formula for public community colleges allocates 10.6% of state funding to community colleges through a Success Point model that rewards students’ progression and completion. State funds represent about one-third of total community college funding. The remainder of the community college state formula funding is allocated based on contact hours. Success Points are awarded based on milestones achieved, so multiple points can be awarded for an individual student. Points are awarded for students who enrol in a current year and:

  • became college-ready;

  • successfully completed the first college-level math course;

  • successfully completed the first college-level reading/writing course;

  • successfully completed their first 15 semester credit hours;

  • successfully completed their first 30 semester credit hours;

  • earned a degree or certificate (not in a critical field);

  • earned a degree or certificate in a critical field (2.25 points);

  • transferred to a senior institution after having successfully completed 15 semester credit hours.

Funding is determined based on the three-year average performance on these metrics.

Returned value formula in the Texas State Technical College System (TSTCS)

A “returned value” funding formula is used to determine the amount of state general revenues provided to the TSTCS for instruction and administration expenditure. Other sources of funding also exist, including tuition fees. The method, reviewed every two years, involves several steps:

  1. 1. identify cohort of students who have completed a minimum amount of training in the TSTCS (9 semester credit hours) and left the system for at least two years and calculate their wages;

  2. 2. calculate TSTCS value-add by comparing student wages to the minimum wage;

  3. 3. calculate worker’s additional impact on the state of Texas by applying a standard tax rate and economic multiplier;

  4. 4. allocate funding amongst TSTCS colleges by determining their share in the total value-add.

Sources: Legislative Budget Board (2019[76]); THECB (2013[78]), background information provided by the THECB (2019).

Tuition levels

The responsibility for tuition fee setting is shared between the Legislature and institutions for all public four-year institutions, public health-related institutions, and two types of two-year institutions, the Lamar Colleges (which are lower-division institutions of higher education within the Texas State University System) and the colleges of the Texas State Technical College System (TSTCS). The Legislature sets statutory tuition, institutions set board authorised tuition (within legislative limits), and institutions set designated tuition, which makes up the largest part of tuition revenue (WSIPP, 2019[79]). In the public four-year sector, which enrols about 40% of students in Texas, average tuition and fees were slightly below the national average, at USD 8 375 per year versus USD 8 804, placing Texas in the middle of the 50-state distribution (THECB, 2019[25]). As will be discussed in the next section, tuition and fees in the four-year sector have increased significantly since the deregulation of tuition in 2003.

Texans have access to affordable higher education due to the large network of two-year community colleges across the state, which enrols about 45% of all higher education students. In this sector, average tuition and fees for domestic students were USD 2099 per year in 2016/17. This was the third lowest tuition amount in the two-year public sector among the US states, after California and New Mexico.

Financial aid

The financial aid available to Texas students from federal, state and institutional sources provided more than USD 10 billion in grant and loan assistance to Texas students in 2017 (THECB, 2018[80]).

A large range of programmes is available at the state level, aiming to achieve different goals. The largest programmes focus on supporting students with financial need: in 2017, four programmes, including the TEXAS grant, Texas Public Educational Grant (TPEG), the Texas Educational Opportunity Grant (TEOG) and the Texas College Work-Study (TCWS) programme served over 232 000 students (although students may be double counted in the case of multiple awards). Students in receipt of this aid had an average family income below USD 35 000. Two of the programmes targeting financial need, the Texas Public Educational Grant (TPEG) and financial assistance funded by designated tuition set-asides (resulting from House Bill 3015 that deregulated tuition fees in 2003), are funded from institutional resources and institutions are free to set specific eligibility criteria. These two programmes are only applicable in the public higher education sector. Other programmes are also available for students who have higher family incomes, including the College Access Loan (CAL) programme that provides one of the lowest-cost non-federal student loan options in the United States with a fixed annual interest rate of 5.2%.

In addition, a range of small-scale programmes ranging from USD 100 000 to 15 million channel funding directly to prospective students in fields of high labour market demand, from medicine, nursing and teaching to policing and public safety. As shown in Table 5.6, the scale of these programmes is small compared to needs-based programmes; for example, the three largest needs-based programmes combined amount to approximately USD 785 million. The loan repayment for certain physicians is the largest of the programmes targeting occupations in shortage fields, with an investment of about USD 15 million for fiscal year 2020 to encourage physicians to practice in areas facing shortages of health professionals. In place for more than 30 years, this programme has seen its funding expand in recent years, yet it enrols relatively low numbers of participants, namely around 100 on average over the seven most recent cohorts. Biennial surveys of physicians are conducted to determine how many continue to serve in a health shortage area. Results suggest an initially high rate of retention that steadily declines over time, from more than 90% retention in the first of the programme to about 70% during the fourth (and last) year of the programme. Retention decreases to around 40-50% three to four years after programme completion (THECB, 2018[80]). The THECB also indicated that a review of the Nursing Shortage Reduction Program, in place since 2005, is underway. However, there is no systematic information available to assess whether the scale and design of these types of programmes are effective in achieving the state’s goal of expanding the available workforce in shortage occupations.

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Table 5.6. Overview of state financial assistance programmes
Main need-based programmes in fiscal years (FY) 2017 and 2020 and programmes for students in high-demand fields of study in FY 2020

FY 2020

FY 2017

Total awarded (USD)

Total awarded (USD)

Number of recipients

Average award

(USD)

Average family income (USD)

Need-based programmes

Toward EXcellence, Access, and Success (TEXAS) Grant

422 222 737

357 662 758

72 144

4 949

31 465

Financial assistance funded by designated tuition set-asides (HB 3015)

m

252 029 316

107 943

2 332

38 904

Texas Public Educational Grant (TPEG)

m

176 135 596

133 156

1 318

32 166

College Access Loan (CAL)

m

166 215 488

11 429

14 454

92 300

Tuition Equalization Grant (TEG)

89 305 147

96 081 753

27 374

3 507

47 240

Texas Educational Opportunity Grant (TEOG)

47 996 150

46 963 354

23 039

4 210 PSC

3 840 PTC

1 959 PCC

23 422

Texas B-On-Time (BOT)*

a

28 844 731

3 866

7 443

89 658

Texas College Work-Study (TCWS) (including Work-Study Mentorship programme)

8 404 639

9 016 128

4 102

2 197

32 601

Top 10%**

a

7 207 826

3 631

1 985

55 715

Texas Armed Services Scholarship Program (TASSP)

3 420 000

1 758 369

246

7 147

113 100

Texas WORKS internship programme

1 000 000

Programmes for students in high-demand fields of study

Repayment of certain physician education loans

15 345 078

Joint Admissions Medical Program (guaranteed admissions, financial and non-financial supports)

10 206 794

Nursing Shortage Reduction Program

9 940 024 (2019)

Family Medicine Residency Program

5 000 000 (2019)

Peace Officer Loan Repayment Program (starts in FY 2021)

4 000 000***

Nursing Faculty Loan Repayment Assistance Program

1 500 000

Texas Statewide Preceptorship Programs in Family Practice, Internal Medicine, and Pediatrics

1 500 000 (2019)

Teach for Texas Loan Repayment Assistance Program

1 337 500

Math and Science Scholars Loan Repayment Program

1 287 500

Repayment of certain mental health professional education loans

1 062 500

Programmes to encourage certification to teach bilingual education, English as a second language, or Spanish

750 000

Rural Rotations Program (family medicine in rural and underserved areas)

102 500

(2018)

Notes: *FY 2020 was the final year of issuing loans through this programme. **FY 2018 was the final year of issuing grants through this programme. ***The figure refers to the FY 2021 budget for this programme. Other programmes targeting students in fields leading to shortage occupations exist but have not been funded for 2020 and are excluded from the table. With respect to programmes for students in high-demand fields of study, cells for 2017 are empty because this information is based on background information provided by the THECB, which focused on recent years.

Sources: FY 2017: THECB (2018[80]), Report on Student Financial Aid in Texas Higher Education: Fiscal Year 2017, http://www.60x30tx.com/media/1412/student-fin-aid-in-texas-report.pdf. FY 2020: Background information provided by the THECB (2019).

 StatLink https://doi.org/10.1787/888934135034

Declining state funding to institutions and limited financial aid may hinder the state’s efforts to develop a skilled workforce and meet labour market needs

State appropriations

The overall level of state funding for higher education institutions is important to ensure the quality of provision while maintaining affordability; achieving this balance is critical. Low quality of provision can result in insufficient knowledge and skills among graduates, leading to poor outcomes for both graduates and employers, but also to high drop-out rates (TCF, 2019[81]; Deming and Walters, 2017[82]). The lack of affordability limits access to higher education, particularly for disadvantaged students, which both hinders equity and reduces the pool of future highly skilled workers available to meet labour market needs.

Most states have experienced a reduction in higher education spending since the global financial crisis of 2008. As the US economy returned to expansion, fiscal capacities have increased again, although they differ across states. According to a research report that calculated the revenue capacity and expenditure need of US states, Texas presents a relatively high fiscal capacity, ranking 18th in the country for total taxable resources, behind Virginia (11th) and Washington (12th), but close to California (15th), and ahead of Ohio (32nd). In higher education, the report suggests that Texas ranks 13th in terms of higher education spending need, but 20th in terms of higher education expenditure (Gordon, Auxier and Iselin, 2016[83]).

Total public higher education appropriations in Texas decreased from USD 19 462 million in 2008/09 to a budgeted amount of USD 17 687 million in 2018/19. As a share of total state expenditure, this represents a reduction in the state budget allocated to higher education, from 11.3% to 8.5% (Legislative Budget Board, 2019[76]). A portion of this decrease is due to the reduction in one component of state appropriations for higher education, referred to as “other funds”. Other funds decreased from USD 7 890 million for the 2012-13 biennium to USD 1 881 million for the 2014-15 biennium, due to the exclusion of an estimated USD 6 100 million in patient income from the appropriations to health-related institutions of higher education in the 2014-15 appropriations process. The receipt of these funds was not limited by the Legislature and institutions continued to receive this revenue (Legislative Budget Board, 2013[84]).

Given rapidly growing enrolments, Texas has experienced a greater decline in per full-time equivalent (FTE) student state spending since the economic recession than on average in the country (-18.2% compared to -11.2% nationally between 2008 and 2018). While the economic recovery has led to increases in higher education spending across the United States, the increase was modest in Texas, with 6.5% over 2013-2018 in Texas, compared to a US average of 15.2%.

Public higher education appropriations per FTE student in Texas in 2018 was USD 7 707, very close to the US average of USD 7 853, but below California for instance, at USD 8 553. Compared to the other states examined in this report, state spending per FTE student in public higher education is higher in Texas than in Virginia (USD 5 420), Ohio (USD 6 361) and Washington (USD 6 966) (SHEEO, 2019[75]). However, when looking at the split between the four-year and the two-year sector, higher education appropriations per FTE are notably higher than average in the four-year sector in Texas, but well below average in the two-year sector.

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Table 5.7. Public higher education appropriations, four-year and two-year sector, 2018
Per full-time equivalent (FTE) student, USD

 

State support

Local support (two-year) or research, agricultural and medical (RAM) (four-year)

Total

Two-year sector

Ohio

4 728

2 114

6 843

Texas

2 621

3 594

6 215

Virginia

4 108

231

4 338

Washington

5 811

-

5 811

United States

4 988

2 553

7 541

Four-year sector

Ohio

4 975

752

5 727

Texas

8 258

2 723

10 981

Virginia

5 257

1 053

6 310

Washington

6 471

943

7 414

United States

7 482

1 602

9 083

Source: SHEEO (2019[75]), SHEEO State Higher Education Finance (SHEF) Tableau Data, https://sheeo.org/project/state-higher-education-finance.

 StatLink https://doi.org/10.1787/888934135053

Texas faces particular challenges that require ensuring adequate state funding in the public two-year sector. The post-secondary population in Texas is large and growing; and about 45% of post-secondary students attend community colleges. The state’s students are less prepared academically and have lower completion rates than on average in the United States, and a growing share of incoming students come from minority and low-income families. As discussed below, students with the highest unmet financial need in Texas are those studying at community colleges. In addition, Texas relies more heavily than other states on local taxes for funding community colleges, as noted in Chapter 3.

Financial aid

Texas has significantly increased the amount of need-based aid provided per total fall enrolment over the past three decades. However, it remains below the investments of various states, as shown in Figure 5.14. While Texas investments grew fast between 1980 and 2010, reaching the level of California, they stagnated after 2010.

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Figure 5.14. State undergraduate financial aid per total fall enrolment (1980, 2000, 2010, 2013 and 2016)
Figure 5.14. State undergraduate financial aid per total fall enrolment (1980, 2000, 2010, 2013 and 2016)

Note: All figures are in 2018 USD (inflation-adjusted).

Sources : Financial aid data: NASSGAP (n.d.[85]), NASSGAP Annual Surveys for academic years 1979-1980, 1999-2000, 2009-2010, 2012-2013 and 2015-2016, https://www.nassgapsurvey.com. Total fall enrolment: NCES (2019[24]), Integrated Post-secondary Education Data System (database), https://nces.ed.gov/ipeds/use-the-data.

 StatLink https://doi.org/10.1787/888934134008

Limitations in the financial aid system are apparent when considering the large number of students enrolled in higher education institutions in Texas who demonstrate substantial “unmet need”. Unmet need refers to the difference between the “cost of attendance” (COA), which includes tuition and other study and living costs for one year, and the funds available to cover these costs, namely the student or family contribution (the “expected family contribution”, or EFC) as well as financial aid in the form of grants (see Box 3.10 in Chapter 3 for further information).

In Texas, in 2017, the unmet need was highest for students attending public two-year institutions, at USD 6 495, and was USD 7 002 for students attending public universities and health-related institutions (THECB, 2018[80]). By comparison, a recent study using data from the U.S. Department of Education for the academic year 2015/16 suggests that, nationally, the unmet need is greater among students attending four-year not-for-profit and for-profit institutions. The report also finds that at public two-year institutions, 71% of students had some unmet need, averaging USD 4 920, a figure that is well below that in Texas (CLASP, 2018[86]). In Washington, where two-year students are, like in Texas, those with the highest unmet need, that unmet need was still lower than in Texas, at USD 5 346 on average, according to a study that followed students who graduated in 2008 and 2009 (ERDC, 2018[87]). This indicates that, despite Texas’ affordable public two-year sector by national standards and the existence of several student aid programmes, students attending two-year institutions continue to face important financial barriers. As noted in Section 5.2, and in line with national research, students who are low-income and Black/African American or Hispanic are more likely to attend two-year institutions (Chetty et al., 2017[88]; Carnevale and Rose, 2003[89]).

One consequence of high unmet need is that students may incur heavy debt loads to cover the cost of attending higher education and related costs. Black/African American and White students graduating from four-year institutions are most at risk of facing heavy debt burdens in proportion to their starting wages; in 2017, student loan debt represented 101% of the first-year wages of African American graduates from four-year institutions, whereas the 60x30TX target is 60% (THECB, 2019[25]). High debt loads may deter some students from entering higher education, depress graduates’ return on investment, and dissuade graduates from entering professions that are societally important but that have relatively low starting salaries, such as teaching, social work and nursing.

Financial assistance can also be a tool to promote and incentivise the participation of low-income students in educational opportunities that they may not otherwise engage in. The Texas College Work-Study (TWCS) programme, which includes both placements and mentorships, and the recently introduced Texas WORKS internship programme, provide opportunities for work-based learning. In addition, the recently passed HB 3808 allows for work-study students to do internships off campus and centralises the application process through the THECB. However, both the placement and mentorship streams of the Work-Study programme served a limited number of students: 4 102 students benefitted from these opportunities in fiscal year 2017, as shown in Table 5.6. The new Texas WORKS internship programme is small in scale, with USD 1 million in funding for 2020.

Community and regional initiatives to respond to the challenge of affordability are numerous. In recent years, various College Promise programmes have been launched in Texas with strong support from local and regional leaders (see Box 5.11 on the Dallas County Promise). These programmes are designed to eliminate tuition and fees by ensuring that federal student aid eligibility is fully used, and by providing “last dollar” student financial assistance from local funds to eliminate tuition fees for (eligible) entering students.

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Recommendations on funding higher education

Institutional funding

  1. 1. Raise state community college funding to improve student completion and attainment. Consider new approaches to raise funds for post-secondary education, taking into account examples of other states with a high need for skilled workers. See, for example, Washington’s legislation requiring contributions from industries and firms employing highly skilled workers (Chapter 7).

  2. 2. Consider the incorporation of student employment outcomes in institutional funding at both public two-year and four-year institutions, taking into account experiences from other states (see Chapter 3).

  3. 3. Consider dedicated funding to strengthen institutional capacity to develop new programmes/opportunities to respond to labour market needs. This funding could support dedicated staff at institutions to promote and oversee processes to develop new learning opportunities (courses, programmes, minors, micro-credentials, etc.) responding to labour market needs across departments. Such dedicated staff could also serve as a point of contact for the programmes, from state agencies and non-profit partners that promote partnerships between institutions, employers and other stakeholders to develop accelerated programmes to meet labour market needs.

Student funding

  1. 4. Consider expanding the coverage and award levels of state grant programmes to reduce the number of students with unmet need and the level of unmet need in both the four-year and two-year sectors.

  2. 5. Monitor the impact of local and regional College Promise initiatives in Texas, by assessing the extent to which they are effective at facilitating completions for low-income students. Consider ways to expand the scope of these programmes, for instance by providing matching funds designated for non-tuition expenses that may not be covered by these programmes.

  3. 6. Review the availability of financial supports to meet basic needs (e.g. transportation, childcare) for economically disadvantaged students facing barriers to participation in educational and work-based learning opportunities. Monitor the development of funding recently made available for support services through the Texas WORKS initiative. Consider examples of countries with programmes combining financial and non-financial supports with a demonstrated positive impact on student success.

  4. 7. Conduct an independent and comprehensive evaluation of the existing programmes to address shortages in fields such as nursing and teaching to: i) ascertain whether or not they have achieved their intended effect, and ii) if not, identify ways to redirect the investment. The programmes to be reviewed include shortage reduction programmes, loan forgiveness/repayment programmes, and other financial assistance programmes intended to increase enrolment in critical and high-demand fields of study.

Educational offerings, student supports and pathways

The state’s “marketable skills” goal aims to increase institutional focus on labour market relevance and outcomes

The higher education system in Texas encompasses a wide range of programme and credential types, from certificates lasting less than one year to doctoral degrees. The delivery and content of educational programmes in Texas are primarily the responsibility of higher education institutions and their academic and teaching faculty, as institutions in Texas enjoy substantial autonomy in organisational, academic and staffing decisions.

The state provides guidelines for several aspects of educational content at the sub-baccalaureate and baccalaureate levels with the aim of ensuring a minimum level of knowledge, skills and competencies are developed through public higher education in Texas. The Texas Core Curriculum provides a framework for the general education component of all academic associate’s and bachelor’s degree offerings at public institutions. A revised Texas Core Curriculum was implemented in 2014 and incorporated “21st century competencies”. Each Texas public institution of higher education has its own unique listing of core courses and provides annual updates and revisions to the THECB. In addition, the Texas Higher Education Coordinating Board (THECB) provides guidelines for instructional programmes for workforce education, including certificates and applied associate’s degrees, which were last updated in 2015 (THECB, 2015[90]).

The concept of “marketable skills” was a key component of the state’s higher education plan, 60x30TX, for the period from 2015-30. The higher education plan emphasised the importance of embedding marketable skills in all educational programmes in order to strengthen signalling of the skills content of credentials to employers, thus facilitating the transition of graduates into the workforce. By encouraging the development of a “marketable skills” language which reflects the labour market value of educational programmes, the marketable skills goal may serve to increase institutional focus on labour market relevance (see Box 5.7). In addition, the marketable skills goal is accompanied by a state-wide target to have 80% of graduates from all public institutions working or enrolled one year after graduation. The state calls this a “maintenance goal”, as outcomes over the last few years are very close to the goal, with 78.5% of graduates working or enrolled one year after graduation in 2017 (THECB, 2019[19]).

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Box 5.7. Communicating labour market value through “marketable skills”

Marketable skills have been defined as “skills valued by employers that can be applied in a variety of work settings, including interpersonal, cognitive, and applied skill areas. These skills can be either primary or complementary to a major and are acquired by students through education, including curricular, co-curricular, and extracurricular activities” (THECB, 2015, p. 22[91]).

The 60x30TX plan requires public two-year and four-year higher education institutions to identify and document the marketable skills that each degree programme confers to students, enabling them to market themselves effectively to employers. Though not a requirement, private higher education institutions are also encouraged to participate in the goal. The Texas Higher Education Coordinating Board (THECB) monitors institutional progress on the creation and implementation of these processes, and facilitates discussions on practices.

An intermediate term goal in the 60x30TX plan is that, by 2020, higher education institutions will have created and implemented a process to identify and regularly update marketable skills for each of their programmes. This requires creating an effective process for “continually updating the skills that are in demand and in development” (THECB, 2018, p. 4[92]) In order to facilitate this process, the THECB has established implementation guidelines for higher education institutions.

The marketable skills implementation guidelines suggest that institutions:

  • work with career services and engage with industry and other stakeholders, including regional and workforce partners;

  • draw on national resources for information about competencies and skills, such as the National Association of Colleges and Employers (NACE) Competencies, the Degree Qualifications Profile (DQP), and Liberal Education and America’s Promise (LEAP);

  • consider the NACE First Destination survey or Gallup-Purdue Index as survey examples if conducting an annual survey of recent graduates;

  • use labour market information, including data from O*NET, the U.S. Bureau of Labor Statistics, and the US Census, for information about employment and skills requirements for different occupations;

  • consult international sources on transferable and employability skills from the United Kingdom, Ireland and Canada.

As of 2018, 41% of higher education institutions had reported creating and implementing a process for identifying marketable skills in their programmes (THECB, 2019[19]).

Targeted to students, the recently published Career Readiness Handbook aims to provide students with information on how to prepare for their careers and how to communicate with employers about their skills. The handbook explains that both hard skills (such as building websites or performing statistical analysis) and soft skills (for example, listening and reasoning) are important in the workplace. In addition, students are encouraged to use a digital tool, Match your Skills to Career, provided by the Virtual Career Network. The handbook is published by the THECB in collaboration with the Texas Workforce Commission.

Sources: THECB (2015[91]; 2018[92]; 2019[19]).

Texas higher education institutions are aware of the need for greater labour market alignment, but workplace readiness among recent graduates is a concern among employers

OECD interviews with institutional leaders in Texas demonstrated a commitment at both two-year and four-year institutions across Texas to ensure graduates are equipped with the relevant knowledge and skills to meet the changing demands of the labour market. This is generally reflected in institutional practices including systematically reviewing programme offerings and curriculum content, providing professional development opportunities for faculty, engaging industry representatives through the use of advisory boards or practitioner-faculty, and providing career services and counselling to guide students towards viable jobs and careers. It also includes facilitating access to adult and part-time learners by ensuring that the delivery of programmes meets their needs, and providing relevant educational offerings for workers who need to update their skills.

In OECD interviews, some institutions also pointed to increased use of data on graduate labour market outcomes in programme review and curriculum-planning processes. This includes using alumni surveys to understand how graduates have fared in the labour market, particularly in terms of skills use in the workplace. The University of Texas (UT) system is also participating in a US Census study on Post-Secondary Employment Outcomes (PSEO), which will allow for more detailed analyses of the employment outcomes of UT graduates. Other institutions also conduct their own labour market analyses and engage systematically with employers to better understand emerging skills needs.

Many higher education institutions in Texas have developed innovative approaches to skills development and labour market alignment by using comprehensive learner records, skills inventories and other digital tools to engage employers and help students connect with them. Some examples of these approaches are outlined in Box 5.8.

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Box 5.8. Innovative tools to facilitate skills-based labour market alignment in Texas

Texas State Technical College System: SkillsEngine

The Texas State Technical College has developed a Shared Skills Language Platform that standardises skills and competencies with the aim of facilitating alignment of curricula with labour market needs and across institutions. The platform and skills library forms the basis of several digital applications, including SkillsEngine API, which translates text from resumes and curricula into skills data, and Calibrate, which allows educators to validate and align curriculum content with employer needs.

Dallas County Community College District: GreenLight Credentials

The Dallas County Community College District partnered with GreenLight Credentials to create a platform where students could gain ownership of their complete transcript history, thereby initiating a digital lifelong learning record. The platform uses blockchain technology to securely store and share credentials. Sharing credentials through the platform also allows employers to verify applicants’ credentials and identify qualified candidates by matching skills and education history to open positions.

Sources: C4EO (n.d.[93]); DCCCD (2019[94]); GreenLight Credentials (n.d.[95]); SkillsEngine (n.d.[96]).

While Texas institutions are demonstrating commitment to improving the labour market relevance of their educational offerings, a frequently cited concern among stakeholders was a general lack of workplace readiness among recent graduates, mainly due to weak “soft skills” such as interpersonal and professional skills, including team work, persistence and communication. This challenge is not unique to Texas, and the general desire for stronger soft skills among graduates mirrors a common sentiment among employers nation-wide and across a range of industries, as reflected in multiple employer surveys (IHE, 2019[97]; SHRM, 2019[98]; Adecco USA, 2019[99]). To better prepare graduates for the world of work, stakeholders in Texas called for deeper higher education-industry partnerships and more widely accessible work-based learning opportunities for students. This echoes some of the recommendations in the state’s Tri-Agency Workforce Initiative, which also calls for a substantial increase in paid internships, apprenticeships, externships, and other applied workplace learning opportunities (TEA, THECB and TWC, 2016[69]).

State-funded initiatives such as the Texas College Work-Study programme may not be providing a sufficient diversity of work-based learning opportunities for students, due to the programme’s requirement for campus-related work. The funding allocated to the Texas College Work-Study programme has declined by almost 40% between 2017 and 2020; and in 2017, the programme only served 4 102 students. By contrast, the Washington State Work-Study programme served approximately 4 000 students in a higher education system enrolling about one-fifth of the number of students in Texas. Through House Bill 3808, the Texas Legislature recently provided funding for a new programme, the Texas WORKS internship programme, which will allow work-study students to take internships off campus. The intention of the new Texas WORKS internship programme is promising, but is currently small in scale, with USD 1 million in funding for 2020.

While labour market relevance is a criterion for approving new degree programmes, it is not considered in any ex-post review process at the state level

General quality assurance and accreditation of higher education in Texas falls under the purview of the regional accrediting body for all public and private not-for-profit degree-granting institutions in the southern states, the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC). The institutional accreditation standards and processes used by SACSCOC verify a wide range of institutional characteristics and policies, and provide a basic guarantee of academic quality (SACSCOC, 2018[100]). However, the institutional standards make no explicit reference to institutional policies and practices to align skills development with labour market needs and do not take into account the labour market outcomes of graduates in the accreditation process.

At the state level, public higher education institutions in Texas are required to seek approval from the Texas Higher Education Coordinating Board (THECB) for the opening of new degree programmes as well as “substantive changes” to existing programmes. The programme approval process requires institutions to provide labour market data to substantiate the job market need for the programme. For most new programmes at the certificate, associate’s, bachelor’s and master’s levels, institutions must submit information demonstrating that a series of criteria are met and that local institutions have raised no objections during a public notice period to receive approval from the Board. The criteria are wide-ranging, from demonstrating student demand and workforce need, to sufficient faculty resources, administrative capacity and equipment. The criteria generally differ to some extent between two- and four-year institutions. The criteria pertaining to workforce need are highlighted in Box 5.9.

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Box 5.9. Workforce need and the labour market relevance of new programmes

The Texas Administrative Code outlines a series of criteria public institutions must meet when submitting a request for a new programme to the Texas Higher Education Coordinating Board. These include criteria related to workforce need and labour market relevance.

Bachelor’s and master’s degree programmes delivered by public four-year institutions (TAC, § 5.45)

  • Workforce need: There should be a demonstrated or well-documented need for the programme in terms of meeting present and future workforce needs of the state and nation. There should be a ready job market for graduates of the programme, or alternatively, it should produce students for master's or doctoral-level programmes in fields in which there is a demonstrated need for professionals.

  • Marketable Skills: There must be a list of the marketable skills associated with the proposed programme, in keeping with the state strategic plan, 60x30TX, and a plan for how students will be informed of the marketable skills.

Certificates and associate’s degree programmes delivered by public two-year institutions (TAC, § 9.93)

  • The institution has researched and documented current job market need for the programme and/or that the programme would lead to opportunities for further education.

  • Basic and career technical/workforce skills have been integrated into the curriculum.

  • Representatives from private sector business and industry have been involved in the creation of the programme through participation in an advisory committee.

  • The institution has an improvement plan in place for all career technical/workforce programmes that do not currently meet Board standards for both graduation and placement.

  • Skill standards recognized by the Texas Skill Standards Board, if they exist for the discipline, have been reviewed and considered for inclusion in the curriculum for the programme.

Sources: Texas Administrative Code (2003[101]; 2004[102]).

For some programmes, a specific and detailed programme approval process is required. In the four-year sector, institutions must provide a “planning notification” if they plan to develop new doctoral programmes in any discipline, engineering programmes, or programmes with new costs likely to exceed USD 2 million during the first five years. In the public two-year sector, colleges seeking approval for applied bachelor’s programmes must also undergo this process. In these cases, detailed labour market data to substantiate need are requested of the institution. This includes providing evidence of labour market demand in Texas and nationally for the occupations for which the programme aims to prepare students, as well as a state and national supply-demand analysis to demonstrate present and future gaps that justify the creation of the programme.

While the above process ensures that the creation of programmes takes account of labour market demand, there is no state requirement or process enabling the THECB to review the labour market relevance of existing programmes. In other words, the state requires an explicit labour market need to establish new programmes (ex-ante), but does not assess labour market relevance in programmes once established (ex-post). As labour market needs change rapidly, such a mechanism would be useful to encourage institutions to adapt their programmes on an ongoing basis. The THECB conducts an annual review of low-producing programmes (LPP), but this is primarily with the objective of consolidating or closing programmes with few degree completions. THECB may recommend to an institution's governing board the consolidation or closure of any non-exempt degree programme that has been on the annual list of low-producing programmes for three or more consecutive reviews. New degree programmes are exempt from LPP review for the first five years of operation. Programme reviews do not consider graduate outcomes in the labour market; thus programmes that are producing a sufficient number of graduates, but resulting in poor outcomes for their graduates, are not considered for re-design or closure.

Different jurisdictions approach the challenge of preserving and enhancing the labour market relevance of higher education in various ways, utilising tools that range from funding, information, and strategic planning and co-ordination tools. Some countries utilise various mechanisms to ensure an ongoing dialogue between public authorities and institutions on the labour market relevance and outcomes of higher education. For instance, jurisdictions as diverse as Austria, Denmark, Ireland, the Netherlands and the province of Ontario in Canada have established “compacts” and “strategic mandate agreements” with each public institution (see Chapter 3).

Multiple initiatives are in place to increase college access and preparedness in Texas, but sufficient supports are critical for student success

With rapid population growth and a demographic makeup that is relatively young and diverse, ensuring adequate access to and preparedness for higher education are important concerns for higher education policy in Texas. This is important not only to ensure that more Texans benefit from the value of a post-secondary credential, but also to bolster the supply of highly skilled workers in the state’s economy. The state grants automatic admission to all public universities for students who reach the top 10% in class rank during their penultimate year of high school, but many students in Texas schools struggle to transition from secondary to post-secondary education. As seen in Section 5.2, only 52% of Texas secondary school students enrol in higher education, compared to a national average of 67% (THECB, 2019[25]). Notably, a majority (59%) of public secondary school students in Texas are considered to be economically disadvantaged (TEA, 2019[103]), and these students are less likely to be adequately prepared for college, which in turn reduces their likelihood of completing a post-secondary credential. This is particularly prevalent in under-represented populations, such as the African American and Hispanic communities, and in economically distressed regions such as West Texas and the Rio Grande Valley.

An important public policy tool to facilitate access to higher education is through means-tested financial aid programmes to help students cover the costs of attending higher education, including living costs. In Texas, state-funded programmes targeted to economically disadvantaged students include various programmes, such as the Toward Excellence Access and Success (TEXAS) and the Texas Educational Opportunity Grant (TEOG), which have been described in the preceding section, along with a recommendation to examine current policy tools to reduce the number of students in Texas with substantial unmet financial need. Informational tools and counselling initiatives have also been developed to reach out to high school students throughout the state. Generation TX and Advise TX are two examples of state-wide initiatives that are targeted to first-generation and low-income students to encourage and guide their transition from high school to higher education. State-wide initiatives often supplement the work that is conducted through local partnerships between school districts, higher education institutions and local workforce boards, in addition to programmes initiated by private companies, non-profit organisations and advocacy groups.

Ensuring students are adequately prepared for college improves the likelihood of completion, which is an important policy priority for Texas, given the state’s goals to increase post-secondary attainment levels among 25-34 year-olds. Thus, strengthening the pipeline not only into higher education, but also within and through higher education, is critical to improving graduation rates and completions. However, according to the 2019 Texas Public Higher Education Almanac, 40% of incoming undergraduates in Texas are not deemed to be “college-ready” by state standards (THECB, 2019[25]). These statistics are based on outcomes from the state-wide Texas Success Initiative (TSI) assessment, which determines college readiness and eligibility for developmental education or remedial coursework. While there are certain exemptions, in principle all incoming students to Texas higher education institutions are required to take the TSI assessment, which examines skills in reading, writing and mathematics. If a student does not pass one or any of the content areas, the student is required to enrol in developmental education courses either prior to or at the same time as enrolling in college-level courses.

However, practices regarding developmental education differ across institutions, with varying degrees of success in improving students’ preparedness for college-level courses, as evidenced by the proportion of students who fail or withdraw from first-year courses (THECB, 2018[104]). In 2017, House Bill 2223 was passed by the Texas Legislature to standardise the use of assessment instruments across institutions and set standards for designing developmental coursework (Texas Legislature, 2017[105]). The legislation requires, among other things, the use of “co-requisite models” for a share of students enrolled in developmental or remedial courses. This allows a student to enrol simultaneously in a college course as well as a “support course” or intervention that is designed specifically to encourage successful completion of college coursework, for example through student counselling. The state’s strategy for increasing college preparedness is articulated through the 2018-2023 Statewide Plan for Supporting Underprepared Students. In this strategy, the THECB has set a goal for public higher education institutions to deliver developmental education through co-requisite models by 2023.

Once successfully enrolled in college-level courses, however, students may face additional barriers to completion. In order to facilitate student success in higher education, students often need non-financial supports (Holzer and Baum, 2017[106]; Angrist, Lang and Oreopoulos, 2009[107]). This is particularly important for students from disadvantaged backgrounds. Some research suggests that effective student supports can reduce the public cost per degree, as the cost of intervention is offset by an increase in number of degrees produced (Scrivener et al., 2015[108]). As highlighted in the Texas Statewide Plan for Supporting Underprepared Students, students entering their first year of higher education who are struggling to pass their courses may be struggling due to the need for so-called “wrap-around” supports in the form of housing, child care and additional financial support. State funding was approved by the 85th Texas Legislature to expand grant eligibility for institutions to provide student support programmes for all students, not just for those who are deemed under-prepared through the TSI assessment (Texas Legislature, 2017[105]). This includes funding for support services such as supplemental instructors and targeted tutoring, adaptive courseware, and advising. Furthermore, the Texas Legislature recently passed House Bill 3808 requiring all public higher education institutions to designate a “liaison officer” who provides current or incoming students with information about available support services and other resources, as described in Box 5.10 (Texas Legislature, 2019[109]).

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Box 5.10. Designation of a support services liaison officer to assist students in higher education

Texas House Bill 3808, passed in 2019, requires public higher education institutions to designate at least one employee to act as liaison officer for students at each institution. The liaison officer would be responsible for providing students with information and resources about:

  • medical and behavioural health coverage;

  • public benefit programmes, including those related to housing and food security, as well as case management assistance and counselling;

  • parenting and child care resources;

  • employment assistance;

  • financial counselling and tax assistance;

  • student academic success strategies.

Source: Texas Legislature (2019[109]).

Stakeholders highlighted the need for clearer credential pathways, more efficient transfers, and guidance to identify the routes to in-demand careers

Pathways into and across higher education

The Texas higher education landscape is large and complex, with several sub-systems in the public higher education sector and a diverse range of private colleges and universities. One of the most consistent findings to emerge from the OECD team’s discussions with stakeholders was the need for higher education pathways that are clearer to learners. The need for streamlined pathways has been highlighted in the state’s Tri-Agency Workforce Initiative, which also emphasises more industry-aligned career pathways, credentials with marketable skills, and efficient stackable programme opportunities (TEA, THECB and TWC, 2016[69]).

As in many other states, Texas promotes multiple pathways to give students a range of options to obtain a post-secondary credential. Dual credit programmes have continued to expand in the United States over the last two decades, facilitating the pathway to sub-baccalaureate and baccalaureate degree programmes (Troutman et al., 2018[110]; Miller et al., 2018[111]). In Texas, participation in dual credit courses increased by 753% between 2000 and 2017, representing 10% of public higher education enrolments in 2017 (THECB, 2018[112]). Research suggests that while dual credit participation increases college enrolment and completion, there are important racial disparities in outcomes among Texas students (Miller et al., 2017[113]).

In addition to dual credit programmes and similar models such as early college high schools, alternative pathways such as apprenticeships are gaining traction in Texas. In some apprenticeship programmes, credits can be applied towards associate’s degrees. This and other models are outlined in Box 5.11.

Clear and structured pathways serve to guide students efficiently into and through higher education, relying on a system of credits that can build on each other and transfer between institutions, to ensure a sufficient degree of “stackability” and mobility within the higher education system. Efficient transfer processes are essential to improve students’ chances of completing a credential (Bailey et al., 2017[114]; Xu et al., 2017[115]). Important mechanisms to facilitate transferability are articulation agreements between institutions, not only from two-year to four-year institutions, but also between two-year institutions. Regional partnerships and transfer collaborations can be especially effective in creating clear pathways and transitions between secondary school and higher education, and within higher education (Bailey et al., 2017[114]).

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Box 5.11. Alternative pathways and education models facilitating the transition from high school to post-secondary education or training and into the workforce

Apprenticeship programmes – Example of Houston Community College

Apprenticeships combine paid on-the-job training under the supervision of experienced journey workers with related classroom instruction. Registered apprenticeship training programmes typically have a duration of 3-5 years, determined by industry standards. To qualify for public funds, apprenticeship training programmes and apprentices must be registered with the U.S. Department of Labor Office of Apprenticeship.

Houston Community College (HCC) works with local employers to provide apprenticeship training opportunities in high-demand fields, where students complete classroom instruction through the college. Successful completers of registered apprenticeship programmes can receive up to 36 college credits towards their associate’s degree in applied science and construction management as a HCC student.

Early college high schools – Example of P-TECH (Pathways in Technology)

P-TECH is a public-private education model and form of “early college high school”, which encourages students to obtain a post-secondary credential while in high school. As of the 2019/20 school year, Texas had 63 designated P-TECH schools. According to the Texas Education Agency, P-TECH programmes:

  • enable students to earn a high school diploma, an associate’s degree, and a two-year post-secondary certificate or industry certification, within six years;

  • allow students to gain work experience through internships, apprenticeships, or other job training programmes;

  • partner with higher education institutions (typically through articulation agreements) and regional businesses and industries in Texas.

‘Promise’ initiatives – Example of Dallas County Promise

Dallas County Promise is a public-private partnership that has the dual objective of improving equity in access to post-secondary education as well as aligning post-secondary education with labour market needs. Key features include:

  • a “last dollar” scholarship to bridge the gap between the cost of attending post-secondary education and available resources;

  • individual success coaches and career mentoring with a focus on middle-skill, high-demand careers in Dallas county, such as health professions and the skilled trades;

  • partnerships between institutions to track student progress through education and workforce pathways, using real-time reporting.

Sources: TWC (n.d.[116]); HCC (n.d.[117]); TEA (n.d.[118]); Dallas County Promise (2019[119]).

In addition to the Texas Core Curriculum and the College and Career Readiness Standards, the Texas Higher Education Coordinating Board (THECB) has developed “fields of study curricula” as a framework for grouping lower-division undergraduate courses that are guaranteed to transfer between any public Texas institution as part of the same field of study (THECB, 2019[120]). A related initiative is the framework for “programs of study”, which is similar to fields of study, but specific to career and technical education (CTE). A third framework is the concept of “meta majors”, which is a grouping of academic disciplines or “programs of study” that share common foundational skills (Texas Legislature, 2019[121]). In a recent Senate Bill (SB 25) proposed to facilitate transfers between Texas higher education institutions, the Texas Legislature tasked the THECB with conducting a study on the feasibility of implementing “meta majors” for eight discipline areas state-wide (Texas Legislature, 2019[121]). As part of this study, and to support more efficient transfers at the undergraduate level, the Legislature has requested that an advisory committee make recommendations on the effectiveness of requirements regarding transfer of credits between institutions for courses in the core curriculum. The bill goes on to state that:

The study and recommendations must include an analysis of: 1) The efficacy of dividing the recommended core curriculum for each meta major into a general academic core curriculum and an academic discipline core curriculum and, if determined to be efficacious, the recommended number of semester credit hours for each component of the recommended core curriculum for each meta major; 2) Methods to ensure that courses completed in the general academic core curriculum and academic discipline core curriculum transfer between institutions of higher education for course credit applied toward a student’s major at the receiving institution; 3) The potential inclusion of courses in the field of study curricula adopted by the board under Section 61.823 in the recommended core curriculum adopted by the board under Section 61.822.

(Texas Legislature, 2019, p. 12[121])

While efforts to facilitate transferability are necessary and positive, the existence of multiple frameworks and pathway initiatives may in fact interfere with students’ ability to efficiently complete a credential, particularly in cases of transfers between two-year and four-year institutions. If institutions use different typologies to cluster courses and define pathways, this may present a hindrance to students’ ability to understand their opportunities to “stack” credentials across institutions and within a similar field. In particular, stakeholders in Texas highlighted the need to do more to ensure that those who attain lower-level credentials have opportunities to achieve higher-level qualifications later in life. This includes potential returners to higher education, in need of re-skilling or up-skilling, and the “some college, no degree” population that needs a clear pathway towards credential attainment. Moreover, it is unclear to what extent institutions actually accept credits from transfer students towards a particular field of study or major, as required by law. Thus, it is important that the state monitors and follows up on transfer credits to ensure that institutions comply with this requirement (Texas Legislature, 2019[121]).

Guidance for students

In a system that encourages a great deal of student choice, providing sufficient student support and guidance towards a credential that leads to a viable career path is important for improving the labour market outcomes of graduates. Based on a growing concern over students taking excess credits that do not count towards a credential, and the gap in completion between low-income and high-income transfer students, a 2017 paper written by the Community College Research Center in collaboration with the Greater Texas Foundation suggested several policy recommendations to improve transfer processes in Texas (Bailey et al., 2017[114]). One of the most important policy levers highlighted in the paper was to help students select and enter a transfer pathway through clear guidance and better support for transfer students.

Structured, guided pathways through higher education are particularly important for first-generation and economically disadvantaged students who typically face additional barriers to completion and are at higher risk of incurring debt (Holzer and Baum, 2017[106]). Guided Pathways is an example of a national initiative that has developed and expanded to a large number of two-year institutions across the United States, rooted in research that has identified critical factors supporting student success (Bailey, 2017[122]). Box 5.12 describes the Guided Pathways model and a number of colleges in Texas that are involved in implementation initiatives. One example is the Dallas County Community College District (DCCCD), where faculty and staff have designed approximately 200 pathways that fall into seven main “career paths”: Arts, Humanities, Communications & Design; Business; Education; Health Sciences; Industry, Manufacturing & Construction, Social Sciences & Public Service; and STEM. The DCCCD has developed standardised one-page, mobile-friendly documents for each pathway, providing information about the career path to which each pathway leads, the specific college(s) offering the pathway, the courses necessary to complete either a degree or a certification, and key milestones to stay on track with course progression/completion.

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Box 5.12. Implementing the Guided Pathways model at community colleges in Texas

Thirty community colleges across the United States were selected to participate in a project co-ordinated by the American Association of Community Colleges (AACC) to implement the Guided Pathways model at their institutions over a period of three years. Among these, four community colleges in Texas were selected: Alamo Community College, El Paso Community College, Paris Junior College, and San Jacinto College. Tarrant County College is also participating in a separate but related project, the so-called Pathways 2.0 Project, where institutions can receive customised assistance.

The Texas Pathways Project has been developed to support community colleges in Texas who want to implement the Guided Pathways model. This project is co-ordinated by the Texas Success Center and the Texas Association of Community Colleges (TACC), and funded by the Greater Texas Foundation. Biannual conferences gather participants to discuss pathways implementation at their institutions and to learn from participating colleges in the AACC Pathways Project. Texas Pathways participants include: Amarillo College, Brazosport College, Dallas County Community College District, Grayson College, Houston Community College System, Lone Star College District, McLennan Community College, Midland College, South Texas College, Southwest Texas Junior College, and Temple College.

The Guided Pathways model is based on developing broad “programs of study” that are explicitly aligned with requirements for successful employment and further education, and where student supports and instructional approaches are fully integrated and aligned with each programme of study.

Key features of Guided Pathways include:

  • programme “maps” that show clear pathways to completion, further education, and employment in key fields;

  • transfer pathways that align pathway courses and expected learning outcomes with transfer institutions;

  • remedial or developmental education designed for entry into a programme of study;

  • academic and non-academic student supports and a strong advising process;

  • programme-level learning outcomes aligned with the requirements for successful employment and further education in a given field;

  • learning outcomes assessments to improve the effectiveness of instruction;

  • integrated applied learning experiences for students.

Sources: AACC (n.d.[123]); TACC (n.d.[124]).

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Recommendations on educational offerings, pathways and student supports
  1. 1. Consider ways to expand work-based learning opportunities for undergraduate students both on and off campus, for example through programmes like Texas College Work-Study and Texas WORKS. Monitor student participation in relevant work-based learning opportunities through the newly initiated Texas WORKS programme.

  2. 2. Consider implementing a process to review labour market outcomes of graduates by programme, signalling the importance of monitoring the labour market outcomes of higher education graduates. This could be conducted in conjunction with the low-producing programme (LPP) review process, or as a stand-alone exercise. For example, data on employment and earnings by programme up to ten years post-graduation could form the basis for identifying which programmes have consistently low labour market outcomes and should be reviewed in priority.

  3. 3. Monitor the implementation of “student support liaison officers” at higher education institutions to provide information and resources about student support services. Review, and consider expanding, funding for “wrap-around supports” (see recommendation in funding section).

  4. 4. Develop clear and consistent formats and resources for presenting information about credential pathways that facilitate student transfers and promote consistency between institutions and across institution types.

  5. 5. Continue work to improve the measurement and monitoring of transfers and non-transfers between institutions, following from Senate Bill 25, 86(R) Legislature, which requires institutions to report on the credits that are not transferring.

  6. 6. Consider following up on specific policy recommendations in the Community College Center, Columbia University (Bailey et al., 2017[114]), to support and strengthen transfers from two-year to four-year institutions.

  7. 7. Strengthen regional articulation agreements between two-year and four-year institutions within a region or metro area, following the model from the Dallas County Community College District or the University of Houston’s Joint Admissions initiative.

  8. 8. Ensure that dual credit programmes benefit all students, particularly those who face barriers to access and completion in higher education.

Information

Texas maintains a wealth of information about educational opportunities, institutional performance and graduate outcomes

Texas has a well-established system for collecting longitudinal post-secondary data, as well as multiple sources of publicly available information about post-secondary education and career opportunities. The Educational Data Center at the Texas Higher Education Coordinating Board (THECB) co-ordinates the collection of data from public higher education institutions in Texas. Private institutions report data related to certain performance measures as required by the state Legislature. The Texas Higher Education Accountability System, targeted mainly to educators and policy makers, was established in 2004 and provides data for 38 public universities, nine health-related institutions, four Texas State Technical Colleges, and three two-year Lamar State Colleges. Data from the state’s 50 public two-year community colleges were added to the Accountability System in 2005. In addition, longitudinal data across several agencies are made available in a data repository through the Texas Education Research Centers to enable policy research.

The Texas Public Higher Education Almanac is published every year with detailed information about the student population and graduate outcomes of public two-year and four-year institutions of higher education. This includes institutional comparisons of graduate outcomes such as the number of degrees awarded, graduation rates and graduate debt levels. While the Almanac also contains a state-wide overview of graduate earnings and debt profiles, only debt information is provided at the individual institutional level. Average earnings by field of study and institution can be found on the Texas Consumer Resource for Education and Workforce Statistics (CREWS) dashboard, which is targeted primarily to students and families in order to explore average wage outcomes and loan levels for specific majors and by institution.

While Texas collects data on whether graduates are found working or enrolled in further education one year after graduating, obtaining information on in-field job placements is more challenging. State-level post-secondary data systems that collect data on earnings through Unemployment Insurance (UI) wage records typically cannot obtain information on the specific occupation of graduates. While UI records often indicate the industry in which an individual is employed, this does not include information on their occupational group and is thus insufficient to assess qualification or field mismatch. The US Census study on Post-Secondary Employment Outcomes (PSEO) is intended to allow for more detailed analyses of graduate employment outcomes, but currently only the University of Texas System is participating in the study.

Information on labour market outcomes is not clearly targeted to prospective and current higher education students

Studies on the intergenerational persistence in educational attainment and occupational choice have shown that young people often take the educational level of their parents as a reference point for their own aspired educational attainment (Page, Levy Garboua and Montmarquette, 2007[125]). When learning about the economic returns on education, young people also rely substantively on what they know about their parental earnings. As a result, youth with higher socio-economic status are more likely to opt for a higher education degree and aim for higher salary jobs than youth with lower socio-economic status. Thus, information about the costs and benefits of post-secondary education can help students to make better choices in terms of selecting a field of study and career path that leads to good labour market outcomes.

Moreover, some studies suggest that a significant share of students do not fully understand the costs of higher education or how much debt they are accumulating (Akers and Chingos, 2014[126]). For first-generation students, the costs of attending higher education are often more salient than future benefits. Ideally, information on graduates’ return on investment should be a labour market metric that is included in post-secondary longitudinal data systems (TICAS, 2018[127]). According to the State Higher Education Executive Officers Association (SHEEO), many states struggle to find ways to report accurate information on student debt and loan repayment. SHEEO suggests strengthening state agency capacity to collect this kind of information, by acknowledging gaps in student financial indicators and publicising plans to collect and report this data (Whitfield, Armstrong and Weeden, 2019[128]).

Texas offers various websites that contain information on the labour market outcomes of higher education programmes, but these do not appear to be well-connected to other resources dedicated to prospective and current higher education students. At present, users interested in labour market outcomes are left to find their way between various national, state and institutional data sources, which may use different sources and measures, running the risk of providing inconsistent information. Students in Texas currently lack easily accessible information on the average return on investment from different study programmes. In order to increase student awareness about the labour market outcomes of post-secondary education, it is important that this information is made available – and is easy to find – on the same sites where students find information about educational opportunities and pathways.

While the resources made available through the Texas Higher Education Data website are comprehensive, they appear to be mainly targeted towards educators and policy makers. These data include detailed information about earnings and debt that could be made available to students in an easy-to-access manner as part of the information they consider when exploring educational opportunities. Similarly, while information about average earnings and loan amounts is presented at the programme level in the Texas Consumer Resource for Education and Workforce Statistics (CREWS) dashboard, this tool appears somewhat disconnected from other student-oriented sites on post-secondary opportunities, and thus it is unclear if the intended users are prospective students, educators or policy makers. By contrast, websites clearly targeted to prospective students, such as ApplyTX and College for all Texans, do not appear to include information on either labour market outcomes or employment prospects based on changing labour market needs. Texas OnCourse aims to combine tools and links to various websites for students and families, as well as educators. However, while the site contains a wealth of information, it may be difficult for the ordinary user to identify which of the tools are most relevant.

Table 5.8 provides an overview of some commonly referenced sources of information about post-secondary educational opportunities and graduate labour market outcomes or opportunities.

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Table 5.8. Common sources of information about post-secondary education and labour market outcomes or opportunities in Texas

Website, publication or platform

Description

Co-ordinator

Texas Higher Education Accountability System

Provides data on high-priority measures of higher education performance in Texas, organised around the goals and targets of the state’s 60x30TX higher education plan.

THECB

Higher Education Almanac

Provides an annual summary of key features and performance of Texas public higher education institutions. This includes a state-wide overview of graduate earnings and debt levels, as well as percentage of students working or enrolled one year after graduation.

THECB

Texas Higher Education Regional Portal

The portal includes information and data on occupational growth, population growth, graduate completions, enrolments and other education information. Regional links provide data about each of the state's 10 higher education regions.

THECB

Texas Labor Analysis

Uses data on graduate completions from the THECB, online job postings, and TWC unemployment insurance data to compare labour demand and supply by industry or occupational career cluster.

TWC

Texas P-16 Public Education Information Resource

Provides information about Texas public school students from pre-K through college and into the workforce, including wage comparison by educational attainment level for high school graduates.

TEA

Texas Consumer Resource for Education and Workforce Statistics (CREWS)

An interactive dashboard tool that provides comparative information about graduate earnings of Texas public two-year and four-year post-secondary institutions. Each allows a comparison of degree programmes and career choices.

THECB, TWC

Texas OnCourse

Serves as a college and career planning guide for educators, students and their families through the planning process from high school and into the workforce. Provides links to multiple other sites, such as MapMyGrad, Share Your Road, and College Scorecard.

UT Austin

Texas Career Check

Shows 25 top occupations with earnings above the Texas median wage, ranked by the highest projected number of annual openings for a ten-year period. Also provides links to sites such as Texas Reality Check, which provides estimates of monthly expenses per city to compare with salaries in each occupation.

TWC

Note: The table is not meant to provide a comprehensive overview of all websites, publications or platforms that provide information on post-secondary education or labour market opportunities in Texas.

There is considerable potential for improvement in the quality and use of labour market information in higher education in Texas

Many higher education institutions engage directly with employers and conduct their own labour market analyses to understand changing skills needs, inform programming and curriculum design, and obtain approval for new programmes. As part of these efforts, they also rely on public workforce data and labour market information, which underscores the importance of ensuring transparent, consistent and easily accessible information about the labour market and state-wide workforce needs. Labour market and career information for Texas, including employment statistics and occupational projections, is provided by the Texas Workforce Commission (TWC).

Texas has several tools that combine higher education data with labour market information, primarily for policy planning purposes. The Texas Higher Education Regional Portal is a useful site that presents information about occupational projections and population growth estimates with relevant information on graduate enrolments, completions and labour market outcomes for ten higher education regions (THECB, n.d.[129]). This regional context data is used as a basis for the so-called Regional Target Starter Kits that the THECB has created to help regions develop strategies to reach the attainment targets of the 60x30TX plan. One of the tools developed by the TWC is a labour gap analysis tool, which can be applied either state-wide or by region (TWC, 2019[33]). The tool utilises different sources of data to estimate current and anticipated labour gaps for major occupational groups and career clusters. Estimates of anticipated gaps rely on a crosswalk between fields of study and occupations, but it is not clear how this was developed. As limited feedback was received about this tool during OECD interviews, the extent to which it is used in higher education planning or workforce development is not clear.

In some states, gap analyses are conducted systematically at the state level, using diverse methodologies. In Washington, for example, a workforce supply-demand analysis is conducted every two years as a joint agency initiative, using both national and state level data (WSAC, SBCTC and WTECB, 2018[130]; Hershbein and Hollenbeck, 2015[131]) Many states have developed dashboard tools to estimate gaps in workforce supply and demand (Prince et al., 2015[132]). As data-scraping methods improve and data from online job postings can be used to obtain more granular information about skills needs, supply and demand models using real-time labour market information may also become increasingly useful for strategic planning and forecasting in higher education (Dorrer, 2016[133]). Regional economic development agencies and state workforce or higher education agencies sometimes contract with commercial services such as Burning Glass Technologies or Economic Modeling Specialists International (EMSI) to conduct skills gap analyses based on data from online job postings (Goldman et al., 2015[134]). Generally, as a basis for policy, supply and demand models should also be supplemented with both quantitative and qualitative information from employers, workforce boards and other stakeholders to provide a comprehensive picture of labour market demand.

There are opportunities for Texas to improve the use of workforce data for strategic planning purposes in higher education. A recent report by the RAND Corporation provides a guide for educators and policy makers in Texas on how to use workforce information for programme planning (Goldman et al., 2015[134]). The report was commissioned by the THECB after the Texas Legislature passed a bill (HB 1296) in 2013 requiring the THECB and the TWC to collaborate to provide a broad supply-demand analysis based on five-year projections of state workforce needs and the educational attainment and training levels of individuals projected to enter the workforce (Texas Legislature, 2013[135]). The bill states that the THECB “shall identify the types and levels of education, training, and skills that are needed to meet the state’s future workforce needs and shall make recommendations concerning the expansion of existing programs or the development of new programs at public and private post-secondary educational institutions in this state as necessary to meet the projected workforce needs” (Texas Legislature, 2013, p. 3[135]). The RAND report suggests that workforce data should be more systematically integrated into higher education planning, noting that this has not been common practice among state agencies. In addition, the report recommends designing a website with relevant data sources that can help guide institutions on how to apply the information for their own programme and curriculum-planning purposes.

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Recommendations on information
  1. 1. Review the portfolio of informational tools and websites on Texas post-secondary and career opportunities, with the aim of consolidating and streamlining sites tailored to specific user groups. Consolidated information on likely future employment prospects and return on investment for higher education should be part of the state’s future communication and awareness-raising activities targeted to prospective and current students. In particular, for sites targeted to students and their families, information about graduate outcomes in the labour market and career opportunities should be easily accessible along with information about post-secondary educational opportunities and credential pathways. This can build on an existing source or platform such as Texas OnCourse, for example.

  2. 2. As a joint initiative between the Texas Higher Education Coordinating Board and the Texas Workforce Commission, follow up on the recommendations of the RAND report (Goldman et al., 2015[134]) and conduct regular skills supply and demand analyses in order to achieve a comprehensive picture of the demand for and supply of both middle and high-level skills at the state level. A skills gap analysis can be supplemented with both quantitative and qualitative information from employers, workforce boards, educators and other stakeholders. Mechanisms to ensure regular stakeholder engagement on skills forecasting could be considered, for example by drawing on mechanisms in place in Ireland and Finland (see Chapter 3).

  3. 3. Develop tools to generate information about graduate employment trajectories and employer perspectives on graduate skills. This could include the development of a state-wide graduate outcomes survey, in collaboration with higher education institutions, to complement other data sources, and to provide information on rates of in-field job placement, capturing graduates who left the state as well as those who are self-employed. In the longer term, the graduate outcomes survey could be combined with an employer survey to gather systematic employer views on the quality and relevance of graduate skills, as is current practice in Australia and the United Kingdom (see Chapter 3). It can also include the use of real-time labour market information through online job postings to obtain a better understanding of changing skills demand.

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