According to the Legislative Budget Board (LBB), HB 2110 will result in a positive net impact of approximately $13.5 million to the General Revenue Fund for the 2026–27 biennium. This fiscal benefit stems largely from cost-saving mechanisms tied to revisions in performance-based funding formulas for public junior colleges rather than a significant increase in new spending.

One major source of savings is the updated definition and funding eligibility for “credentials of value.” The Texas Higher Education Coordinating Board (THECB) anticipates implementing more rigorous standards—such as requiring that associate degrees lead to earnings exceeding $30,000 and achieving a return on investment within five years. Using historical wage data and current funding formulas, THECB projects that 6,347 credentials would no longer qualify for state formula funding, saving the state approximately $22.2 million annually starting in fiscal year 2026.

At the same time, the bill includes new costs associated with expanding performance funding to include student transfers to private or independent four-year colleges. These changes are estimated to cost $13.4 million in the fiscal year 2026 and a similar amount in 2027. Other costs arise from requirements imposed on the Texas Workforce Commission (TWC), including the enhancement of wage reporting infrastructure and labor market forecasting. These changes would necessitate increased staffing—up to 19 new full-time positions in FY 2026—and associated operating expenses and IT upgrades totaling over $2.6 million in the first year and decreasing slightly thereafter.

Despite these upfront expenses, the bill's structural reforms in funding criteria, particularly the removal of ineligible credentials, generate enough savings to offset new costs and deliver a net fiscal gain. Importantly, the fiscal note also indicates that the bill provides a legal framework for future appropriations, though it does not include a direct appropriation itself. No significant fiscal impact on local governments is anticipated.

HB 2110 offers a series of commendable reforms aimed at aligning public junior college funding with measurable workforce outcomes, increasing the value of credentials offered, and improving coordination between the Texas Education Agency, the Higher Education Coordinating Board, and the Workforce Commission. These provisions promote efficiency and accountability in public higher education funding and advance the state’s goal of better preparing students for economically self-sufficient careers. In particular, the bill's focus on performance-based funding and its use of labor market data represent a significant improvement over inputs-based models that often fail to produce measurable outcomes.

However, the bill conditions eligibility for cost-free dual credit courses on whether a student has ever been classified as “educationally disadvantaged” within a specified time frame. This preference, while intended to address opportunity gaps, represents a form of selective entitlement that exceeds the proper role of government. Instead of treating all students equitably, it creates a system in which public resources are allocated based on socioeconomic status rather than individual merit or universal access principles. This undermines the liberty principle of equal treatment under the law and invites government overreach into the allocation of educational opportunity.

From a limited government perspective, public education policy should be neutral and serve the common good without categorizing students by perceived disadvantage. If dual credit coursework is deemed beneficial, the state should broaden access to it in a way that applies equally to all students, or, at minimum, develop a more balanced tiered model. As currently written, HB 2110 crosses into the realm of social engineering by embedding income-based preferences into the state’s higher education access framework.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 2110 unless amended as described below.

Suggested Amendments:

• Eliminate Income-Based Dual Credit Eligibility Criteria: Replace with universal access language or a merit-based qualification (e.g., GPA threshold, course readiness, or parental income verification on a sliding scale).
• Introduce Tiered Cost-Sharing Based on Need or Academic Merit: This allows for a balanced approach that helps students in need while avoiding categorical preferences.
• Require Periodic Sunset or Review of Credential Funding Classifications: Prevents ossification of funding formulas and ensures ongoing fiscal discipline and alignment with actual workforce needs.
• Clarify That Credential Designation Must Remain Neutral and Non-Ideological: Safeguards against politicization of funding decisions and reinforces free market principles.
• Limit Emergency Rulemaking to Temporary Adjustments Only: Preserves legislative oversight and transparency and prevents unchecked administrative power.

The bill contains many valuable structural improvements, but it should be revised to eliminate or neutralize the economic disadvantage preference in the dual credit program to ensure fairness, uphold individual liberty, and maintain the integrity of limited government principles.

• Individual Liberty: The bill enhances educational opportunity by reducing the cost burden of dual credit programs for certain students, giving them more control over their educational trajectory and early access to higher education. However, by tying access to state-funded dual credit opportunities to a student’s economic background (i.e., being “educationally disadvantaged”), the bill imposes state-determined classifications that can exclude otherwise eligible students. This violates the ideal of equal treatment under the law, a cornerstone of individual liberty.
• Personal Responsibility: The bill encourages institutions to focus on outcomes and return on investment, requiring that “credentials of value” provide measurable economic benefits and allow students to recoup their educational costs. This promotes responsible decision-making by students, institutions, and the state by rewarding value-driven education and discouraging wasteful credentials.
• Free Enterprise: By aligning educational funding with labor market outcomes, the bill introduces market accountability into public education. Funding incentives are tied to demand-driven criteria such as employment rates, wages, and workforce shortages. This approach supports a freer flow of talent into productive sectors and reduces distortions in the education marketplace.
• Private Property Rights: The bill does not directly impact property rights. However, by requiring new employer wage reporting and data-sharing mechanisms (via the Texas Workforce Commission), it does place additional reporting burdens on private entities. While not a direct violation, this may merit further scrutiny to ensure data privacy and minimal regulatory overreach.
• Limited Government: The bill improves efficiency by consolidating overlapping grant programs and allowing the Higher Education Coordinating Board to adopt emergency rules in response to legislative appropriations—reducing bureaucratic lag. On the other hand, the state’s growing role in determining which students receive financial support and which credentials are deemed “valuable” pushes the government deeper into allocating opportunity and shaping the education-to-workforce pipeline. These decisions could be left more to individuals and private markets rather than central planners using wage formulas and demographic criteria.

• SB 1786 (Same As)