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For community colleges to succeed as engines of prosperity, states must enact coherent and effective funding policies that deliver more adequate and equitable resources, incentivize increasing credential attainment and reducing equity gaps, and equitably distribute enough resources to allow institutions to effectively meet these goals. Mapping community college finance systems is an essential first step in this process, according to a report from HCM Strategists.
Among the report’s key findings:
- Even though each of the three state’s finance systems includes a student-centered funding formula, the percentage of total revenue actually tied to student outcomes ranges widely: from 3 percent in Texas and 9 percent in California to 42 percent in Ohio. These differences are due to the intersection of formula design, the share of total funding it controls, and the prominence of other funding streams.
- All three state finance systems strongly incentivize community colleges to focus on enrollment, with 80 percent of total revenue tied to enrollment in California, 40 percent in Ohio, and 46 percent in Texas.
- Relying on local revenue does not necessarily lead to inequitable funding between colleges. Some states, such as California, have policies that level the funding playing field, while others do not.
- Net incentives for community colleges to increase equity in student outcomes are highest in Ohio and lowest in Texas, while California’s finance system prioritizes equity in student access.
The report concludes by stating that the path forward is neither straight nor uniform: Each state must chart its own course, starting with a clear, usable map of where it is now.