TSTC Funding Formula

Training + Job = Funding for TSTC

TSTC teaches technical education – all the time. Because of this focus, success goals for TSTC cannot be measured by the number of students in a classroom or by the hours logged in training time. Workforce training in technical fields must translate into jobs for it to have value.

By implementing a returned-value funding formula in 2013, the Legislature moved away from the traditional contact-hour funding formula to a results-based formula for TSTC. The impetus behind the move was to match TSTC’s funding scheme with its dual mission of workforce training and economic development. The hallmark of the new returned-value formula is that it targets the right metric for TSTC to measure and reward –
students successfully placed in jobs. 

Training + No Job = No Funding for TSTC

For any technical training, a job is the essential outcome. Jobs provide the return and economic benefit to the state through the salary students earn after leaving TSTC. The formula tracks TSTC student earnings for five years after they enter the workforce using data gathered by the Texas Workforce Commission. Salary earnings above minimum wage are considered to be the “value added” by TSTC’s training. TSTC is then paid a discounted percentage of the direct and indirect economic benefit these value-added wages provide to the Texas economy. 

Although the formula may sound complicated, it is relatively simple. The economic benefit returned to the state through student earnings (above minimum wage) is the essence of the returned-value funding formula. Essentially, TSTC is paid on a commission derived from student earnings years after the training was received.

   61 percent increase in the first-year earning of TSTC graduates found working between 2010 and 2016**

TSTC First-Year Wages and Graduate Counts

The bar chart reflects total first year wages earned by TSTC graduates and the corresponding variance from the base year (2010). The line chart reflects the total graduate count from each fiscal year. This data source is not inclusive of "Leaver" wages, which are included in the approved Returned-Value formula. **Year 2015 includes one quarter of wages that are annualized. Historical annualization has resulted in wages that were lower than actual when reporting is complete. Wages are not included for program awards that produced less than 6 graduates.    Data Source: THECB Gainful Employment   Author: Isabel Weeden   Data Source Date: 11/22/2016 8:20:51 AM

   28 percent increase over the previous biennium in the toal economic impact Texas received from the earnings of the 2010-2011 cohort of TSTC students found working **

Texas State Technical College Economic Impact Over Time