Texas community colleges warned at a state Senate hearing that a performance-based funding model is creating “growing pains” after outcomes exceeded expectations. Leaders said the Texas Higher Education Coordinating Board approved changes to funding formulas that could significantly reduce performance-based awards in fiscal 2027, following improvements that surpassed lawmakers’ budget assumptions. HB 8, enacted in 2023, ties formula funding to outcomes such as completion of in-demand credentials and successful transfers. Since implementation, the state reported enrollment growth of about 12% from fall 2023 to fall 2025, while student achievement exceeded projections across much of the system. Because the model’s obligations grew faster than anticipated, the coordinating board is managing a $1.2 billion appropriation cap for community colleges until the next legislative session, starting January. Officials and college leaders described the need to stabilize long-term funding while keeping incentives aligned with student success goals.