Uncertain Finances Threaten Community Colleges' Ability to Help Meet Obama's Graduation Goal

October 27, 2010

The recession has hit community colleges hard, and the sector's financial fortunes are unlikely to improve soon, according to a report on a new survey of state community-college directors.

Enrollment numbers are expected to grow while state operating dollars will continue to be scarce, the survey found.

The report, "Uncertain Recovery: Access and Funding Issues in Public Higher Education," is being released today by the Education Policy Center at the University of Alabama.

A majority of the state directors who responded to the survey said they have not planned for the end of the federal stimulus money that has been used to avert state budget cuts to education. As a consequence, tuition is expected to continue to increase as state budgets are cut and create access problems for students.

More broadly, the financial strain threatens to undermine President Obama's college-completion agenda, the survey found. The president wants to greatly increase the number of Americans with college degrees by 2020 so the United States can once again be atop the world in the proportion of residents with postsecondary degrees or certificates.

The survey of members of the National Council of State Directors of Community Colleges was conducted July 15 through August 27. State directors, all 51 of whom took part, could choose whether or not to respond to individual survey questions. As a result, the number of responses received for different survey questions varies.

Janice N. Friedel, a co-author of the report, said community colleges are undergoing a financial "assault" that threatens their status as open-access institutions.

"Community colleges should be expanding, not contracting," said Ms. Friedel, a professor in the educational leadership and policy studies department at California State University at Northridge.

Ms. Friedel said growth at community colleges is essential because of the diverse student population they serve.

Among the survey's key findings:

  • Only four states this year offered unemployed workers free tuition to attend community college, compared with 11 states a year ago.
  • Tuition at community colleges is predicted to rise this next year at an average of five times the rate of inflation. Public four-year institutions would see a similar jump.
  • Enrollment increases are predicted at community colleges in 35 states, with an estimated average increase of 9 percent this next year.
  • A third of respondents said their community colleges are not prepared to accommodate the current numbers of high-school graduates nor the numbers of graduates they are projected to see in the future.

Fiscal Strains

President Obama has put community colleges at the center of his higher-education agenda, but the push has done little to secure more state money for the institutions. Last year community colleges reported more midyear budget cuts than any other public higher-education sector. Just six of 29 respondents reported that their states fully financed their community-college formulas, the lowest of any year of the survey.

Concerns over the economic downturn dominated the budget process in most states last year. The community-college directors most often cited the recession when asked about key budget drivers in their states during 2009-10. Medicaid and the federal stimulus money were tied for second, and no other item (including higher education) was cited by more than 50 percent of respondents. Elementary and secondary education received its lowest rating as a budget driver since the survey began in 2003, dropping from first just two years ago to fourth this year.

All types of community colleges—urban, suburban, and rural—are expected to face great fiscal challenges next year, with rural community colleges facing the greatest strain, in part because of low property-tax wealth in rural areas.

State operating support for all education sectors is predicted by respondents to decline next year. The predicted average cut of 4 percent in state operating-budget support for elementary and secondary education was the largest of any education sector. Respondents predicted operating-budget cuts for community colleges averaging 1.9 percent, compared with 3.2 percent for historically black colleges, 1.4 percent for regional universities, and 1.9 percent for flagship universities.

An overwhelming majority of respondents predicted that the lack of state revenues will be a major budget challenge, and budget gaps are predicted in three of four states next year. The end of the federal stimulus money is expected to result in operating budget cuts in 21 states next year.

"There is a lot of uncertainty across the states," said Stephen G. Katsinas, a professor of higher education and director of the Education Policy Center and co-author of the report. "At the same time, there has been little long-term planning. The primary strategy appears to be: Pray, and hope for a state-revenue rebound."

Among the strategies respondents said they planned to use to close budget gaps include across-the-board cuts, deferring maintenance, program cuts, restrictions on out-of-state travel, furloughs, and layoffs.

Unprepared for Enrollment Surge

In the midst of budget cuts, capacity is a significant concern. Some two-year colleges have begun to offer midnight classes or try other scheduling strategies to handle the enrollment surge.

The number of 18- to 24-year-olds in America will grow by one million, and the number of young adults ages 25 to 34 will grow by three million between 2009 and 2012, according to the soon-to-be published results of another study by the Education Policy Center. Even though a majority of respondents to the community-college survey said their institutions are prepared to accommodate current and future high school graduates, a third of respondents said they were not prepared. The states whose community-college directors said they are not prepared include such large ones as California, Illinois, New York, and North Carolina.

Half of respondents said their community colleges have sufficient capacity to serve current and projected numbers of older returning adult students, but nearly as many did not. Eighteen states, including the four mentioned above, said they did not expect to have the capacity.

"This 'tidal wave' of students knocking at the door for access to postsecondary education programs and services will occur whether or not public postsecondary institutions are funded to serve them," Mr. Katsinas said.