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Budget Cuts Galore

February 7, 2011

When the Texas House of Representatives issued its biennial budget plan two weeks ago, educators were shocked to see four rural community colleges on the chopping block. Yes, the state is facing a deep deficit, but this, they argued, went too far. A competing budget plan issued by the Texas Senate last week would significantly slash spending for the state’s student financial aid program, but would spare the four marked colleges.

And while many Texas legislators are confident that the final budget plan will fund these rural-serving institutions, community college officials say the damage has already been done: Students, parents and local business owners are beginning to doubt whether the institutions they depend on can survive as state support continues to dwindle.

Worries like these are not restricted to Texas. Officials from and beneficiaries of community colleges in rural areas all over the country are similarly bracing for severe state budget cuts. And though rural community colleges are not specifically being targeted, some educators say these institutions are likely to be disproportionately hurt by across-the-board cuts.

Some argue that the financial difficulties faced by rural institutions are indicative of a larger philosophical change in the funding of higher education, but government officials in states with huge shortfalls say this is just part of a passing economic storm.

Lone Star Lacking

Frank Phillips College, a 1,200-student institution in the small town of Borger, serves a 10-county area in the northern Texas Panhandle. It was one of the four colleges the House of Representatives eyed for closure last month, before that threat appeared to fade. Joining both educators and students in outrage, owners of businesses that dot the rural countryside say the possibility of losing one of the only workforce training outlets in that isolated part of the state is a real threat to their survival.

“I’ve been calling legislators ever since I found out and telling them that I’m madder than hell,” said Dan Redd, president of the Borger Economic Development Corporation and chairman of the High Ground of Texas, which markets the region to tourists and businesses. “There are five large plants in that community. I was talking to someone from the ConocoPhillips oil refinery there who told me, ‘The college handles our training and everything, and [closing it] would be a huge blow to our corporation.’ They just can’t close it. It’s an integral part of our community.”

Redd said he is encouraging companies and business associations in the area to “speak up” and tell their legislators about the value of the community college to their work. Even though the college has likely been saved from closure by the Senate’s latest version of the budget, Redd said he is still worried about the college meeting its operating budget with student tuition.

“We have trouble in good times with retention and recruitment here,” Redd said. “And then these politicians throw this out there without thinking about the problems it’ll cause for the school. I mean, I was talking to a coach at the college the other day who said he’s gotten three calls from kids who said they didn’t plan on coming in the fall semester, even though it looks like the state won’t close it. We’re all concerned about what this’ll do to the students coming in.”

Steve Johnson, spokesman for the Texas Association of Community Colleges, said his organization was “caught off guard” by the targeting of Frank Phillips, Brazosport, Odessa, and Ranger Colleges for closure by the House of Representatives last month. He said the chamber's budget panel looked at the 20-year growth in student contact hours at the state’s 50 community colleges and identified those four as showing the least expansion.

“Going back 20 years was pretty arbitrary, and it smacked to some people as being unfair and having no rational purpose,” Johnson said. “It also didn’t take into mind recent growth.… We need service in rural areas, but some of the institutions there just aren’t going to see that kind of large growth in the number of contact hours.”

And though Johnson said his organization is “happy” to see that “the funding is there” for all community colleges in the Senate’s version of the budget, he noted that other funding difficulties, albeit local in nature, exist for rural institutions.

He explained that the service areas for the state’s community colleges do not match up with the areas in which they have authority to levy local property taxes. For example, Howard College, in rural West Texas, serves 13 counties but can collect property taxes only in Howard County, where its main campus is located. So not only do more rural institutions generally have less of a property base to tax, in terms of value, they are not even able to tax their entire service areas.

There is some willingness to change the way community colleges are funded in Texas; however, it is not clear whether this would be a boon for rural institutions. State Representative Dan Branch, a Dallas Republican who is the chairman of the House Committee on Higher Education and also a member of the Legislative Budget Board, is one of those pushing for a change. He would like to see the funding based less on input measures and more on outcomes.

“I think that some of the existing funding formulas don’t benefit rural institutions because we have this notion of contact hours that are being measured as a part of it,” Branch said. “Many rural communities are losing population or just aren’t growing as fast, in a relative sense, as those urban and suburban communities. I think we have a healthy dialogue going on in Texas about funding more toward ... where student performance is more of a factor than inputs.”

More performance-based funding, though, could take a while to fully catch on. In the meantime, Branch offered advice to those slow-growth institutions feeling the pinch of Texas budget cuts.

“Have the discipline to get rid of programs that are not popular and are not part of your core mission,” Branch said. “Be productive with what you have, and align yourselves for the [possibility] of completion-based funding. Also, realize there’s a lot of revenue in online programs. Use technology to your advantage.”

Halving Arizona

Though there are no proposals to close community colleges in Arizona, the cuts that Gov. Jan Brewer announced two weeks ago would disproportionately affect two-year institutions: she wants to cut community college funding by about 50 percent, compared to around 20 percent for the state’s universities. And rural institutions in Arizona, like those in Texas, are wondering how they would be able to make up for these state cuts with student tuition and local property taxes.

For example, Coconino Community College is located in the city of Flagstaff, but it serves a sprawling county of more than 18,600 square miles -- the second-largest in the United States. Back in 2003, state aid accounted for more than 40 percent of its operating budget. Now it accounts for only 16.5 percent. And if Governor Brewer’s proposed cuts are approved, state aid will account for just 11.6 percent of the college’s operating budget.

Jami Van Ess, the college’s vice president of business and administrative services, said that unlike some of the more urban-serving community colleges in the state, her institution cannot rely on its local property tax levy to help float it through these severe state appropriations cuts. Currently, property tax revenues account for 37.3 percent of the college’s operating budget. For other two-year institutions in the state, the average is 55.7 percent.

“We just don’t have the base of private property that they have in the Valley [in and around Phoenix],” said Van Ess, noting that the Arizona Constitution stipulates that a college’s property tax levy cannot increase by more than 2 percent annually. “We’ve definitely been trying to explain that to [the legislature]. We just can’t go to our property taxes. I think there’s a bit of a misunderstanding or misinterpretation of that down in the capital. There’s no recognition that, financially, there are economies of scale. They’re just cutting across the board.”

With nowhere else to look for funding, Van Ess said, her institution has been forced to try to balance state cuts with tuition increases. But Coconino has had the highest tuition of all community colleges in the state for the past three years at $80 per credit hour, or $960 for a full-time semester of 12 credit hours. Also, Coconino is currently the only community college in the state that relies on tuition as its largest source of income -- around 41 percent of its operational budget. This is double the average of the 20 percent it accounts for in the budgets of the other nine community colleges in the state combined.

“We’re looking at more incremental increases in tuition in the future, perhaps the next by six percent or so,” said Van Ess, adding that at least the college has not had to lay off or furlough any full-time faculty to meet its budget in recent years.

Scott Talboom, a college spokesman, touted Coconino’s ability to trim $1.5 million from a total budget of $16 million over the last two years without having to resort to eliminating faculty positions. Among the many cost-cutting ideas from its sustainable financial plan, the college increased the average class size from 15 to 18 and eliminated its library entirely, contracting out all library services to nearby Northern Arizona University.

“Still, if they do continue to cut us more, we’ll be forced to evaluate more,” Van Ess said. "There’s only so much time that we can leave those instructional divisions untouched.”

State government officials, however, temper some of the rhetoric coming from the rural institutions about the proposed budget. Matt Benson, spokesman for Governor Brewer of Arizona, defended the proposed cuts for community colleges, noting that cuts are occurring across the board.

“Nobody’s disputing that community college districts will be impacted by these cuts,” Benson said. “No one is trying to downplay that. You just have to keep in mind the overall budget challenge the state is facing. We believe this is a fair proposal.… If anything, higher education and community colleges have been protected from huge budget cuts in recent years. But this year, unfortunately, we don’t have much of an option.”

Benson also highlighted that the state’s community college funding formula has an “equalization rate” ensuring that rural institutions get “roughly [an] equal” payout to their urban peers. Given this, he argued that any slight perceived by the rural institutions is not intended.

“A rural community college may feel this cut harder than a more urban district," Benson said. “But I can flat out tell you that rural community colleges are not intentionally being targeted.”

Changing Priorities

Speaking from Iowa, where Governor Terry Branstad called last week for $40 million in cuts for community colleges, Katherine Boswell, former director of community college policy for the Academy for Education Development, agreed that rural institutions have “fewer options” when seeking funding. Still, she questioned whether they are ultimately hurting worse than others in the community college sector. She argued that there is simply a larger shift in higher education funding policy.

“Increasingly, in the rhetoric of some of the politicians out there, I hear them say that higher education is a private good rather than a public good and that individuals should have to pay more for it instead of the state,” Boswell said. “But, at the same time, everyone from the White House to the statehouse is saying community colleges are vital to our economic recovery and success. They’re always getting the short end of the stick.”

For his part, Benson does not believe there is a shift in higher education funding philosophy, at least in his state.

“What has changed in Arizona, and in many of our peer states, is that we are facing historic funding challenges,” Benson said. “We’re just doing everything possible to confront those challenges and balance our budget.”

 

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