The purpose of this investigation was to analyze the public policy guiding the funding of community colleges in Texas. In essence, the history of community college funding from 1942 to 2006 has been documented. Specifically, the study focused on the funds community colleges have received from the State of Texas, analyzed the funding shares from state and local sources, assessed the changes in the state/local source relationship over time, and detailed the development of the Texas community college formula system. A two-phase research process was used for this policy analysis. First, an archival analysis located both primary and secondary documents related to Texas community college funding. After examining these records, a revenue database for Texas community colleges was created. Second, thirteen open-ended interviews of individuals with knowledge of community college funding were conducted. Based upon the analysis of state funds and other revenue sources, several conclusions were reached including: 1) During the pre-formula period (1942-1973), state funds were provided solely as an instructional supplement to public community colleges. This was known as the sufficient-to-supplement policy; 2) There has been an agreement between the State of Texas and the community colleges regarding community college funding as the formula system was implemented. The state would fund instruction and the college districts would pay for facilities; 3) The proportion of Texas community college operating revenues from the state has decreased relative to the other sources of revenue available to community colleges; 4) Full formula funding is a concept that is much discussed among Texas community college leaders. However, it has never been realized in the history of funding Texas public community colleges; 5) "Sufficient-to-supplement" is not an adequate or meaningful policy for funding community colleges in Texas. The policy recommendations that emerged from the study were: 1) The State of Texas should establish an explicit policy on how public community colleges will be financed, and 2) The State of Texas should adequately fund the new policy. / text

Throughout the United States, colleges and universities are faced with an increasing need for financial funding, while at the same time resources continue to diminish. With the limitations of available funds, community colleges must exhibit efficiencies in the operations of their institutions. External interests, such as governing boards and legislatures, require demonstration of efficient financial management. This evidence is then used to make decisions concerning future financial support for the community college. This study determined if community college chief executive officers use financial performance indicators as provided by the State Auditor's Office and if the chief executive officers of the community colleges value the compilation and the distribution of the financial performance indicators. In the selected colleges, many of the chief executive officers depend on their chief financial officer for understanding and application of financial performance indicators. The performance indicators distributed by the Auditor's Office captured only a snapshot of the college's performance, and failed to fully describe the whole college performance or specific financial events captured by the indicators. Though the indicators had flaws, either through incorrect data or lack of explanation, the CEOs did value their compilation because they provided a means for ‘getting the community college story' to decision makers external to the college.The State Auditor's performance indicators were developed using a university model. Because of the distinct difference in mission between the community college and the university, several of the indicators were not applicable to the community colleges. The CEOs suggested that another set of indicators be developed, using community college input, that would better capture the financial performance of the colleges. The new set of indicators should be simplified and measure only those areas, such as revenues and expenditures, that are truly comparable from one institution to another.

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