Alamo Colleges District, once a top earner under Texas’ House Bill 8 finance formula rooted in student outcomes, is now expecting to receive $3.9 million less for the upcoming 2027 fiscal year.  

Community colleges across Texas outperformed the state’s expectations, exceeding the funding allocations — $441 million for fiscal year 2026 and 2027 combined — which prompted changes and new limits to the funding formula.

“They just thought we weren’t going to meet the projections, which is completely the opposite of what happened,” said Priscilla Camacho, Alamo Colleges chief legislative, industry and external relations officer. “Everybody lost money compared to what they got last year, and certainly lost money compared to what they were projected to get for fiscal year 2027.”

House Bill 8, passed in 2023 during the 88th Texas Legislature, ties community college funding to outcomes rather than enrollment. The outcomes-based model incentivizes transfer rates to four-year institutions, dual enrollment attainment and completion of high-demand degrees, certificates and workforce credentials.  

In 2026, Alamo Colleges District became the Texas institution with the largest total funding change year-over-year with more than $4.6 million in additional funding linked to the new formula. That year the college was expecting to receive about $92 million in state funding, which Camacho said has not yet been paid in full due to the district’s performance exceeding state allocations.

According to state data, Alamo Colleges was slated to receive just over $100 million in state appropriations for fiscal year 2027. But after adjustments to meet state appropriations, the colleges are expecting to receive just over $88 million, a 12% loss. 

This drop brings the colleges back to a level of state funding not seen since 2024, when the colleges received $88.6 million in state funding. 

“We need to work with our agency to help them craft a methodology that actually does a better job of projecting how we will do,” Camacho said. 

In fiscal year 2026, the state had fallen short about $285 million on state allocations under the new funding formula, and in fiscal year 2027, changes to the formula were intended to address another projected shortfall in funding of $156 million, Camacho explained.

The changes, proposed by the Texas Higher Education Coordinating Board, reduced the weight attributed to academically disadvantaged students, economically disadvantaged students and adult learners. This means less funding is allocated to colleges that serve these populations.

The board also capped the number of credentials earned per student that count toward formula funding.

“These are populations — particularly for the economically disadvantaged — that we have a lot of,” Camacho said, adding that reduction alone equates to a loss of millions of dollars for Alamo Colleges for fiscal year 2027.

Meanwhile, early results on the impact of HB 8, released by the nonpartisan policy think tank Texas 2036, showed increases in overall community college enrollment of more than 5%, and nearly 6% for high-demand fields from 2023 to 2026. Dual enrollment also jumped by more than 20%, and credential attainment grew by more than 22% — with a 26% jump in completion of high-demand credentials or degrees. 

Alamo Colleges District and its five colleges — San Antonio College, St. Philip’s College, Palo Alto College, Northwest Vista College and Northeast Lakeview College — was positioned to become one of the top earners across the state. 

Because of its size, serving more than 89,000 students, Alamo Colleges receive state funding solely based on performance, Camacho said, unlike smaller colleges that receive a base allocation. 

The HB 8 funding methodology was highly welcomed, mainly due to its ability to connect the colleges’ degree programs to high-demand jobs across the region, said Alamo Colleges Chancellor Mike Flores in 2025. 

“We’re focused on those high wage, in-demand economic sectors,” Flores said in an interview then.  “That includes health care — nursing and all of allied health; that includes manufacturing and logistics … It includes IT with an emphasis on cybersecurity. In all of those areas we are increasing the number of seats in the programs or ensuring that we create programs to meet the demand.”

In 2025, the colleges awarded 14,089 degrees and certificates, a 32% increase from 2024 when the total degrees and certificates reached 10,671. 

This summer the Alamo Colleges board of trustees approved a budget that hinges on a tax rate increase of $0.0125 — the college’s first in more than a decade — to close a $28 million budget deficit. 

The colleges rely on property taxes to fund nearly half of its revenue, with state funding and tuition making up the bulk of the other half.

This deficit was mostly fueled by enrollment increases that have outpaced revenue by more than three times, officials said. Property values have remained stagnant across Bexar County and Gov. Greg Abbott froze tuition and fee increases across the state, leaving them with few options to make up this gap. 

Gaps in funding put programs at risk that support student tuition, such as AlamoPROMISE, and other expenses such as books and instructional materials. 

For colleges like Alamo Colleges, the overall idea of HB 8 and its funding methodology remain the right answer to the longstanding question of how to better support community colleges, Camacho said. But the idea that the state would not pair this program with a financial buffer to support performance growth is the problem. 

“This is what our communities need, we need more individuals with credentials of value that allow them to get that family sustaining wage. That is the core mission,” Camacho said. “But that means we need adequate investments from the state.”

The San Antonio Report partners with Open Campus on higher education coverage.