89th Legislature

SB 1786

Overall Vote Recommendation
Vote Yes; Amend
Principle Criteria
Free Enterprise
Property Rights
Personal Responsibility
Limited Government
Individual Liberty
Digest

SB 1786 proposes several reforms to Texas public higher education statutes, with a particular focus on expanding access to dual credit opportunities and modifying funding mechanisms for public junior colleges. The bill amends Section 28.0095 of the Texas Education Code to broaden eligibility for free dual-credit courses. Under current law, only students classified as educationally disadvantaged in the current school year qualify. SB 1786 extends eligibility to students who have been identified as disadvantaged at any point during the current or previous four school years. School districts and charter schools are directed to determine eligibility and notify participating higher education institutions accordingly.

In addition to expanding access, the bill includes provisions aimed at streamlining regulatory practices by authorizing the Texas Higher Education Coordinating Board to adopt manuals or policy documents by reference as formal rules. It also grants the Coordinating Board the authority to utilize emergency rulemaking procedures to align funding formulas with legislative appropriations, even without declaring an emergency under standard administrative requirements.

Further, the bill amends provisions related to performance-based funding for junior college districts. The updated funding metrics emphasize outcomes such as the number of credentials of value awarded (with special emphasis on high-demand occupations), student transfer success, and completion of dual credit coursework. These changes are designed to better align funding with student achievement and workforce readiness outcomes, supporting a more results-driven and efficient community college system.

The originally filed version of SB 1786 and its Committee Substitute share the same overall intent—to expand access to dual credit courses and update performance funding for junior colleges—but differ in both structure and key provisions.

A major difference lies in the treatment of tuition exemptions. The originally filed bill introduced a new Section 54.215 in the Education Code, which explicitly mandates that institutions of higher education participating in the FAST (Financial Aid for Swift Transfer) program must exempt eligible students from paying tuition and required fees for dual credit courses. In contrast, this provision is absent from the committee substitute, which instead relies on broader language in existing statute about student eligibility and leaves tuition and fee coverage more implicitly handled through program participation and local implementation. The removal of this section in the substitute version likely reflects either cost concerns or a decision to avoid statutory mandates on institutions.

Another significant difference is in the effective date. The original bill includes staggered effective dates, with the dual credit eligibility rules and tuition exemption beginning in the 2025–2026 school year and fall semester, respectively. The Committee Substitute retains the same academic year applicability for the amended Section 28.0095 but omits the phased implementation of tuition exemptions entirely​.

Structurally, the Committee Substitute appears more streamlined and focused on immediate programmatic implementation. It omits language that could have created direct financial obligations on colleges, such as the tuition exemption requirement. However, both versions retain changes allowing emergency rulemaking and adoption by reference by the Texas Higher Education Coordinating Board, signaling continuity in the administrative empowerment goals.

In summary, the Committee Substitute removes the tuition and fee exemption mandate found in the originally filed bill and focuses solely on eligibility expansion, performance funding changes, and administrative rulemaking tools. These changes narrow the scope of financial impact while preserving the core education access objectives.

Author
Brandon Creighton
Co-Author
Cesar Blanco
Molly Cook
Juan Hinojosa
Sponsor
Gary Vandeaver
Ken King
Charlene Ward Johnson
Stan Kitzman
Co-Sponsor
Aicha Davis
Maria Flores
Suleman Lalani
John Lujan
Vincent Perez
Mihaela Plesa
Fiscal Notes

According to the Legislative Budget Board (LBB), SB 1786 is projected to have a positive fiscal impact on the state budget, with a net gain of approximately $13.5 million to General Revenue-related funds over the 2026–2027 biennium. These net savings arise primarily from changes in community college funding eligibility and performance-based funding refinements, particularly the redefinition of what constitutes a "credential of value" and more selective funding for programs that yield positive wage outcomes for students​.

A key driver of these savings is the Texas Higher Education Coordinating Board's (THECB) proposed methodology for determining which credentials are eligible for performance funding. Using a wage threshold of $30,000 and shortening the return-on-investment window for associate degrees from ten to five years, THECB estimates that over 6,300 previously funded degrees would no longer qualify. At a funding rate of $3,500 per credential, this results in annual savings exceeding $22 million, starting in the fiscal year 2026​.

However, these savings are partially offset by new costs associated with expanded transfer funding eligibility and administrative upgrades. For instance, allowing junior colleges to receive formula funding for students transferring to private institutions introduces projected new costs of roughly $13.4 million in FY 2026–27. Additionally, the Texas Workforce Commission (TWC) will require new personnel and system upgrades to manage expanded wage reporting and labor market projections. TWC anticipates hiring up to 19 new full-time employees in FY 2026, with total agency implementation costs reaching approximately $2.6 million in that year alone​.

Although the bill authorizes significant programmatic shifts and system enhancements, it does not appropriate funds. Instead, it sets the legal framework for future appropriation decisions by the legislature. Importantly, no significant fiscal impact is anticipated for local governments, and the state-level savings outweigh implementation costs in the long term, signaling a favorable overall budget outlook for the bill.

Vote Recommendation Notes

SB 1786 represents a strategic continuation of Texas’s shift toward outcomes-based funding in higher education, building on reforms initiated in the previous legislative session with HB 8. The bill demonstrates a clear intent to better align postsecondary education, especially in community colleges, with labor market outcomes by defining and rewarding “credentials of value” and promoting dual credit access for educationally disadvantaged students. These aims are consistent with the principles of personal responsibility and free enterprise, as the bill incentivizes pathways that equip students for success in the workforce.

From a fiscal perspective, the bill appears cost-conscious and well-calibrated. While it introduces new administrative obligations for agencies such as the Texas Workforce Commission (TWC) and the Higher Education Coordinating Board (THECB), it ultimately yields a positive general revenue impact of over $13 million in the 2026–2027 biennium. This is achieved largely through tighter controls on what constitutes a fundable credential, focusing funding only on programs that deliver a return on investment for students. These reforms reflect prudent stewardship of taxpayer resources.

However, key provisions raise concerns from a limited government standpoint. Notably, the bill authorizes the Coordinating Board to bypass standard emergency rulemaking procedures, weakening checks on administrative authority. It also permits the adoption of rules by reference, potentially reducing transparency and accountability in policymaking​. These provisions—though aimed at streamlining implementation—create long-term risks of administrative overreach and dilution of legislative oversight.

In light of the above, Texas Policy Research recommends that lawmakers vote YES on SB 1786 but also strongly encourage them to consider amendments to reinforce procedural safeguards and legislative accountability.

  • Individual Liberty: The bill expands access to dual credit courses for students who have been identified as educationally disadvantaged during the current or preceding four years. By broadening access to these courses, the bill removes a significant financial barrier, giving more students the freedom to pursue higher education early in their academic journey. This promotes individual educational opportunity and upward mobility, especially for underserved populations.
  • Personal Responsibility: The bill reinforces the principle of personal responsibility by incentivizing educational attainment aligned with real-world workforce needs. Students are encouraged to pursue credentials that provide a tangible return on investment, such as higher wages or in-demand job placement. The bill also strengthens metrics that reward institutions when students successfully transfer or complete programs of value, reflecting a broader push for accountable outcomes in public education.
  • Free Enterprise: The bill enhances alignment between community colleges and Texas's labor market by requiring the Texas Workforce Commission to conduct regional labor demand studies and collect enhanced wage reporting data. These provisions ensure that public investments in education support high-demand industries and economic growth, which is favorable to the principle of free enterprise. However, the expansion of centralized data collection and state-defined wage thresholds could potentially over-standardize educational offerings, which may hinder localized innovation in some areas.
  • Private Property Rights: There are no direct implications for private property rights under the provisions of this bill. The bill does not create or alter any laws governing ownership, land use, or regulatory takings.
  • Limited Government: This principle sees the most strain under the bill. It grants the Texas Higher Education Coordinating Board the authority to adopt rules by reference and to bypass traditional emergency rulemaking procedures without a formal finding of emergency under the Government Code. These provisions diminish procedural safeguards designed to protect against unchecked bureaucratic action. Such administrative flexibility, while expedient, risks eroding transparency, legislative oversight, and citizen input in rulemaking processes​.
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