This comentary originally appeared on Forbes on June 26, 2016
American workers continue to suffer from a sluggish economy. Yet, despite persistent unemployment, employers still struggle to fill certain types of vacancies, “especially for so-called middle-skills jobs—in computer technology, nursing, high-skill manufacturing, and other fields—that require postsecondary technical education and training.” This is the conclusion of a study by the Harvard Business Review, which asks, “Who can fix the ‘middle-skills’ gap?”
A Texas college answers, “We can.”
As many as 2.5 million new, middle-skill jobs are projected to be added to the workforce, “accounting for nearly 40% of all job growth,” according to a recent analysis.” To ensure that these new positions will be filled, Texas State Technical College (TSTC) has embarked on a novel program, one whose initial success is likely to spawn imitators in the other 49 states. The school recently took the unprecedented step of offering to be judged—and paid—on the basis of results. TSTC, a system of public two-year postsecondary institutions offering technical (vocational) training, has crafted a model on the basis of which all of its state funding will depend on the employment and earnings of its graduates. Simply put, under the plan, TSTC will not receive state funding for a student until and unless that student is placed in a job.
“We are zealously entrepreneurial,” says Chancellor Michael L. Reeser. “Most of our administrators have business sector experience so they’re comfortable with the notion that successful operations must constantly change to stay relevant in competitive and moving environments. That often means calculated risks aimed toward innovative change.” Chief among these risks/innovations has been TSTC’s willingness to transition its state funding from a cost-recovery method to a results-only method. Traditionally, state funding is based upon the number of instructional or contact hours taught. But the new results-based methodology pays the school solely for job placement and the actual earnings history of its graduates.
The Texas Legislature’s decision to base TSTC’s funding upon the earnings of graduates liberated the school. It opened the door for TSTC to employ innovative instructional models, realize efficiencies, and create better operational alignment with the final desired results—student success. Reeser adds, “Our faculty and administrators understand that, if our students don’t get good-paying jobs, we do not get paid.”
Statistics back up the results-based model. TSTC has seen an increase of 59 percent in first-year earnings for graduates since the college began transitioning to the new funding method. Graduates have also experienced a 41 percent increase in job placements.
To achieve these gains, the school reexamined all program offerings in order to ensure that the college’s focus was on high-skilled, high-wage jobs. Programs were reviewed by industry advisors in an attempt to ensure that learning outcomes were those that industry needed. The result was a retooling of programs across the system. Today, the school maintains a placement rate nearing 90 percent, with graduates in many programs receiving multiple job offers.
In January 2016, TSTC completed an 18-month process to move to a single accreditation through the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC). Single accreditation means that programs and assets can be deployed across the state when and where they are needed. Additionally, students can expect consistency of programs and quality across TSTC’s campuses, while the Legislature can expect less duplication of expensive administrative functions.
“This move will allow us to focus a greater level of our resources on serving students,” says Reeser. “One of the many benefits is that we can now move an approved program where needed in a matter of weeks, instead of the process taking a year or more.”
TSTC is also exploring innovative teaching models. The college has been a pioneer in competency-based learning methods and in aligning marketable skills with programmatic learning outcomes. TSTC degrees and awards now list each of the marketable skills mastered by each student.
In undertaking these risks and innovations, we appear to have an answer to the Harvard Business Review’s question. “Across Texas, you have thousands of unemployed or underemployed workers lacking the skills to fill thousands of available technical jobs,” says Reeser. “This so called ‘skills gap’ is growing. Businesses need those workers to succeed.”
What can traditional four-year colleges learn from this Texas school? Doubtless, the difference in mission between vocational and other higher-education institutions prevents TSTC’s example from being instantly applicable universally. But what does apply—and more than ever in these days of rising tuitions and declining student-learning outcomes—is the principle animating TSTC’s “returned-value model,” which is that results matter in every other aspect of life, and it is time that they matter more in higher education. The current funding formula for Texas public higher education—as in most other states—is based primarily on the number of students enrolled at each institution, and not on the results achieved by each university in educating those students. The principle behind TSTC’s actions should be looked to and incorporated by all public institutions of higher learning. In this way alone will students and parents glean a fuller picture of their likely return on their educational investment.
TSTC’s example bolsters the movement to require all public colleges and universities to track job placement of students within the first three years of graduation and income of college alumni over the first 20 years of their careers. Ideally, this information would be updated annually and published on each school’s website. The U.S. Department of Education has reached an agreement with the Social Security Administration to track federal student loan recipients using Social Security payroll data, and that information will be provided to Title IV participating institutions. Thus, we now have better means at our disposal than in the past to help students become more knowledgeable of the likely market value of the degree programs in which they are contemplating enrolling.
With total student-loan debt at an all-time high ($1.3 trillion), students and their parents need urgently to learn what sorts of careers await upon their receipt of a college degree. The principles informing TSTC’s returned-value model should become a guide for all.