Texas community colleges face funding uncertainty after state formula adjustments to a performance-based model tied to student outcomes. At a Texas Senate hearing, Texas Association of Community Colleges CEO Ray Martinez III described “growing pains” following changes approved by the Texas Higher Education Coordinating Board. The model, enacted through 2023 HB 8, links funding to outcomes including credential completion and transfer success. Leaders said outcomes have exceeded state projections, but that increased obligations are colliding with an appropriation cap of $1.2 billion until the next legislative session. The board’s last-week formula changes could reduce fiscal 2027 payments that colleges expected. For higher education operators, the update highlights a near-term compliance and budgeting risk: even when student performance improves, institutional revenue can still come under downward pressure if statewide caps and outcome weights don’t align.