Texas needs to overhaul its failing higher education system - which isn't adequately reaching its fastest growing population, Hispanics - to avoid a downward spiral in quality of life and economic competitiveness, according to a new government-commissioned report meant to inspire legislative action.

Some of the report's antidotes include outreach programs for Hispanic parents; changing the state's higher education funding formula to reward institutions for graduation rather than enrollment rates; creating a fund to establish more tier-one universities; and amending the top 10 percent rule, which gives high school graduates in the top 10 percent of their class automatic admittance to the public university of their choice.

The report's authors, the Select Commission on Higher Education and Global Competitiveness, should address legislators with their findings in the next few months, said commission member Dr. John Baldwin, president of the Texas Tech Health Sciences Center.

"The Legislature understands just how far behind Texas is falling," he said.

Lawmakers in the last session commissioned the report, which was released earlier this month. Gov. Rick Perry, Lt. Gov. David Dewhurst and former House Speaker Tom Craddick appointed 14 businesspeople and education officials to the commission, which was charged with developing a plan to improve higher education in Texas by 2020.

'Downward spiral'

Texas must double its annual degree production by 2025 if it wants to catch up with Canada, the top degree-earning country, the commission found.

About a dozen countries outperform America's rate of degree-earning. And Texas, in this area, lags behind the country.

Less than 31 percent of Texans ages 25-34 have an associate's degree or above, compared to about 34 percent of those ages 35 through 54; comparably, about 55 percent of Canadians ages 24-34 have an associate degree or above, compared with about 39 percent of Americans, according to the report.

Texans' low degree-earning rate weakens the state's economy, according to the report. Twenty-two states have smaller wage gaps between high and low paid workers, according to a 2006 survey in the report.

Compounding the education challenge, the state's college-age population is projected to grow substantially, with majority of the growth among Hispanics, a group historically under-reached in the current system. By 2025, a projected 13.4 million Hispanics will live in Texas, making it a minority-majority state, according to the Texas State Data Center.

Data shows black and Hispanic students are significantly less successful in Texas than white students. Of 100 students in a 1994 cohort of seventh graders, only 7.4 percent of Hispanic and 6.8 percent of African-American students had a higher education degree or certificate by 2003, one-third the number of white students, according to a survey in the report.

"Statistically, the biggest need for Texas to address - one that we must address - is how we cope effectively in assisting Hispanic students," Baldwin said.

The biggest barrier to higher education among minorities, the report suggests, is lack of understanding about the process: paying for college, applying for financial aid, taking entrance tests. Recommended solutions include a long-term English and Spanish public service campaign to lead parents and potential students through the process and outreach programs for Hispanic parents. Also suggested: an online program for earning certificates and degrees, and investing more in community colleges.

Legislative solutions?

Texas lawmakers say higher education is a big priority this legislative session.

"We have heard enough of next session," said Sen. Eliot Shapleigh, D-El Paso.

"What others see is that China and India will keep talent at home and soon academic universities there will be home to innovation. If that happens, America loses the competitive edge and jobs migrate to Asia, not to Austin, Lubbock, Dallas and El Paso," he said.

Dozens of bills this session zero in on higher education; several mirror proposals in the Select Commission's report.

Rep. Dan Branch, R-Dallas, is the author of a bill, No. 52, that would amend the top 10 percent rule so institutions could limit the number of automatically admitted students to 40 percent of each university's freshman class capacity. The Select Commission recommends a limit, as well.

Another Branch-authored bill, No. 51, would set up a system whereby the state could match research funds universities get through grants and private gifts, as well as funds they set aside from their own budgets to accomplish research-related work.

Again, the bill is similar to the Select Commission's recommendations for cultivating more tier-one universities. Many agree Texas needs more. According to a report from the Center for Measuring University Performance, California has eight public tier-ones, loosely defined as universities that annually spend at least $100 million on research. Texas has two, Texas A&M and the University of Texas.

Branch has tried to amend the state's top 10 percent rule - which has crowded UT and A&M, limiting their admissions choices - for several sessions, he said. He said it goes hand-in-hand with the concept of creating tier-ones - which also isn't new to legislators.

"There does seem to be widespread ... disapproval (in the Legislature) with the fact we don't have more tier-one universities being such a large and diverse state," Branch said.

The Select Commission recommends creating the Challenge Trust Fund to help universities, such as Texas Tech, that are committed to obtaining tier-one status. As long as they met Texas Higher Education Coordinating Board criteria, they'd be eligible for matching money from the Challenge fund for obtaining research gifts and grants.

Seven universities, including Tech, the University of North Texas, UT Arlington, UT Dallas, UT El Paso, UT San Antonio and the University of Houston, are vying for tier-one status this session. Tech Chancellor Kent Hance said it's unlikely legislators will single out one or two schools to aid in the goal. Those excluded would be unhappy, he said.

"I think (the Challenge fund) is an incentive that we certainly could live with," Hance said.

Some don't believe the state should help create tier-ones, said Baldwin, a commission member. They'd rather see for-profit institutions address the need than taxpayer dollars, he said. It's an argument that the commission debated, and one that could easily resurface in the Legislature, he said.

And money this session is tight - general-purpose funds are down about 10.5 percent since the last biennium, the state comptroller has said. Still, support for higher education reform, particularly for creating stronger research universities, among key legislators is strong, Shapleigh said.

"How to get there in tough times with scarce resources is the challenge, but our very success as a state rests on meeting that challenge," Shapleigh said.