States have put almost $4B into short-term credentials

Twenty eight states have invested in short-term credentials with a focus on their ability to boost employment and local economies, according to a first-of-its-kind analysis.

As federal policymakers continue to debate whether to fund short-term credentials, states have pushed ahead—to the tune of $3.81B.

The majority of those billions have gone toward tuition support for students or for institutions to develop and expand programs, according to a first-ever analysis of the spending released this week by HCM Strategists. Five states, including Florida and Texas, have gone as far as adding short-term credentials to their state funding formulas.

  • All told, the research found 59 different state-led initiatives across 28 states. Some date back to the early 2000s, but most have launched in the past five years.

“Perhaps the biggest driver of increased state funding for short-term credentials is economic in nature,” says Stephanie Murphy, director of postsecondary state policy and research for HCM. “It’s no secret that there is a significant disparity between the skills demanded by employers and the skills possessed by the workforce. This skills gap affects a region’s ability to attract and retain major employers.”

Short-term credentials are an attractive way to address that gap, she says, because they are targeted, flexible, and can be completed quickly. Eleven of the initiatives, for example, used federal pandemic relief dollars to boost short programs, as a way to quickly help unemployed workers reenter the workforce. 

Short programs also are seen as a tool to prevent job loss: They’re designed to be responsive to evolving industry demands, and to provide upskilling that keeps workers’ skills—and state economies—at the cutting edge. 

“Given the economic imperative, I firmly believe that the market for short-term credentials will continue to experience significant growth,” Murphy says.

Who benefits and how?

Questions of equity: Many states are investing with an eye toward helping their less-advantaged workers compete. Twenty three of the state-led initiatives include some sort of equity component, with the majority targeting low-income populations. But beyond basic income-restrictions for programs, the research found that states haven’t done much to ensure that the funding is getting to the people and communities with the greatest need. 

“While equity is often touted as a key reason to support and fund short-term credential pathways, the actual policies themselves often lack intentional measures to promote inclusivity and equity,” Murphy says.

Connecticut’s CareerConneCT stands out as an exception, the research found. The program, which provides free training for high-demand careers, specifically targets populations that are underrepresented in the overall workforce or in particular fields, including Black and Indigenous residents, people with disabilities, opportunity youth, and women.

Illinois’ Workforce Equity Initiative, a statewide grant program for career-oriented programs, also takes a more tailored approach. Only colleges that have a population that is at least 60% Black students are eligible to participate. The initiative also has some basic outcomes requirements, stipulating that completers must earn at least 30% above the state’s minimum wage.

Thus far, participants have a 67% employment rate and earn an average of slightly more than $20 an hour. But the initiative provides little upfront information on what programs are most likely to pay off financially, HCM found.

Determining value: That lack of specificity around outcomes was common across the states. More than half (32) of the initiatives tried to limit funding to short-term credentials that were of high quality and value, but most offered only basic definitions—like “high-demand areas” or “competitive wages”—of what that means. In 11 states, though, at least one initiative had a more advanced definition.

Minnesota, in particular, stood out. The state rigorously evaluates the career pathways and programs that lead to higher-paying positions, and requires comprehensive reporting on participant outcomes overall and by race, gender, geography, age, education, and housing status.

The long run

Looking forward, the report encourages states to set more specific standards around both quality and equity in short-term programs and to improve data collection. 

It also nudges states to think about ways that programs built with federal emergency funds can be continued longer-term. Florida, for example, recently transitioned its Open Door Grant Program, which provides tuition support for short-term credentials, from a federally-funded to state-funded initiative.

It remains to be seen how many others follow suit. “States closely monitor the actions of other states—and they’re certainly keeping an eye on other states’ approaches to short-term credentials,” Murphy says.

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