Unprecedented Demand, Dwindling Funding

Given the difficulties of the recession, the state of community college systems could be better, but it also could be a lot worse, an annual survey of state directors of community college systems finds.

The Education Policy Center at the University of Alabama released a report Thursday based on the responses from state community college officials in 48 states to an extensive set of questions about changes in state funding, the impact of federal stimulus dollars and plans for the future. (An explanatory presentation with more charts and graphs breaking down the data was also released.)

Though many states have finally been giving community colleges their due, both in terms of public attention and -- sometimes -- funding, the report finds that this did not help many of them avoid cuts when times got tight last fiscal year. Seventy-one percent of states made midyear cuts to community colleges, compared to the 74 and 75 percent that made cuts to regional and flagship universities, respectively. States whose community colleges aren't locally funded were more likely to hit those institutions with midyear budget cuts than were states whose community colleges receive local funding

Nearly all state community college directors (45 of the 48) reported that they either “agree” or “strongly agree” that the recession, which produced a decline in their states' revenue, “was by far the top budget driver in last year’s budget process.” Top competitors for state tax dollars, as identified in the survey, were K-12 education and Medicaid.

Last year, 39 state directors responded that they used federal stimulus funds “for the purpose for which they were intended, to backfill revenue shortfalls in state tax revenues” and “not for one-time innovations or investments.” Most of the community college directors -- 37 -- agreed that stimulus funds “were distributed fairly” between their institutions and four-year institutions.

Still, there are lingering concerns about what will happen in fiscal year 2011-12 and beyond, when these federal stimulus dollars disappear. Nearly 80 percent of the respondents expressed some level of concern about this.

“The ARRA stimulus finds helped with one-time costs to bridge the system down to a lower funding level anticipated in FY2010,” wrote one respondent in Minnesota. “The state is currently projecting a deficit of $4.5 billion for the 2012-2013 fiscal biennium.”

Concerns about the future aside, predictions from state directors about the current fiscal year are also grim. Although state support for all sectors of public higher education is expected to decline in 2009-10, “the predicted average state operating budget decline of 1 percent for community colleges is larger than any other postsecondary sector, despite record enrollments.” By comparison, regional universities expect to see a cut of 0.85 percent, and flagships will see a cut of 0.1 percent.

In addition to these early cuts for 2009-10, 34 state directors responded that the likelihood was either “high” or “very high” that they would experience further cuts in the middle of the current year.

For their part in using tuition to raise money to cover budget shortfalls, community college state directors noted that they expect their tuition rates “to rise at more than double the rate of inflation.” The projected Higher Education Price Index for this fiscal year 2009-10 is 2.3 percent; however, community colleges in 46 states will raise their tuition by an average of 5 percent. For states raising tuition, similar increases are projected for regional and flagship universities. Although hardly desirable, such hikes are seen as a matter of necessity for most community college directors.

“For the third year in a row, the FY2009-2010 budget years will be a combination of strong enrollment increases, reduced college operating budgets, and significant tuition increases,” wrote one respondent in Florida. “The state does not have the revenue to fund these enrollment increases, but expects us to do our best to accommodate student growth. The [stimulus] money has helped to some degree, but it is likely that our state economy will not be able to replace the loss of those funds after the 2010 fiscal year. The capacity of our colleges to expand job training programs beyond current levels has been diminished by these factors.”

Regarding President Obama’s goal that the United States regain the number one spot in adult baccalaureate degree attainment by 2020, 43 state directors “strongly believe” that increasing community college capacity is crucial to its accomplishment. Still, 46 reported that they desperately need funding for new construction and renovation projections. A majority of these respondents indicated that they would like to see the federal government offer funding specifically for these facilities needs.

Not all of the news from the report is foreboding, however. Forty-one state directors “predict raising Pell Grants to $5,350 next year significantly helps low income students access community colleges.” Another majority, 35, also predict that "making Pell Grants an entitlement" -- as the Obama administration has proposed, though Congress is falling short of that goal in current drafts of its legislation -- "will help community colleges reach talented, disadvantaged individuals.”

Steve Katsinas, the report's co-author and director of the Education Policy Center at the University of Alabama, told Inside Higher Ed that he thought it was clear from the responses of state community college directors that they appreciated the steps the federal government has taken to provide sufficient need-based aid to keep their institutions a viable option for low-income students. Still, he acknowledges that there are great challenges ahead.

“The funding situation is more of a challenge now that it’s ever been,” Katsinas said. “Public higher education will face a rough year next year as well, not that we didn’t know that already. But, this report shows it all from the perspective of state community college officials. From them, it’s clear that while community colleges have received record publicity at the national level, it has not produced more state funding.”