State-Related Community Colleges

Illinois leads list of states where community colleges already get only a single-digit percentage of their budgets from the state, and more cuts may be on the way.

December 3, 2014

State spending on higher education has improved since the depths of the recession. But competition for public funds is intense in most states, where K-12, Medicaid and pensions are the primary budget drivers.

The funding outlook for public colleges is particularly dire in Illinois and Maryland, where incoming Republican governors have promised to roll back taxes in coming months.

Potential cuts in Illinois would follow more than a decade of slumping support. Many Illinois community colleges, for example, now get roughly 5 percent of their revenue from the state, with larger portions coming from tuition and local government support.

For example, state spending at Harper College, in Chicago’s northwest suburbs, fell below a 10 percent share of the budget for the first time in 2005. The $7 million the college will receive from the state this year is 6.4 percent of its total revenue.

“This is just money that’s never coming back,” said Kenneth Ender, Harper’s president.

Most flagship public universities long ago were forced to make do with state support's being only a small share of their budgets. But for community colleges, which can't raise big money privately, the erosion of state funding is more recent. At least in theory, many states originally planned for community colleges to get roughly equal shares of their revenue from states, local governments and tuition. Some, most notably California, long tried to make community college virtually free to students.

Maryland faces a projected $600 million budget shortfall for next year, with bigger gaps expected in future years. The hole is even bigger in Illinois, where an income tax increase is set to expire in January, which would lead to as much as $2 billion in lost revenue. The state also is facing gigantic unfunded pension obligations -- $100 billion or so -- and several billion in unpaid bills.

Bruce Rauner, the Republican governor-elect in Illinois, is scheduled to deliver his budget plans in February. But higher education officials are expecting bad news.

After meeting with Rauner’s budget team, the state’s Board of Higher Education told presidents of public institutions to prepare for funding cuts of up to 30 percent over the next 18 months, the Associated Press reported this week.

The money woes in Illinois hit some public colleges harder than others, said Stephen G. Katsinas, director of the Education Policy Center at the University of Alabama.

Four-year institutions in the state also face serious budget concerns. But the 48 community colleges typically cannot rely on major tuition hikes or recruiting out-of-state students -- who pay much more than in-state rates -- for temporary fixes to the bottom line.

The problem is most challenging for two-year colleges in rural and urban areas that lack the local tax bases to pick up slack for the state, Katsinas said. He calls this the “rise of intra-state inequality.”

Katsinas’s center this month released the results of a survey of state directors of community colleges. It found public higher education fading as a funding priority in states. K-12, Medicaid and pensions topped the list, according to respondents, with higher education in a three-way tie for fifth place.

Community colleges in most states rely on local tax revenue for a portion of their budgets. (Georgia and Florida are notable exceptions.) On the extreme end are 96 two-year colleges around the country that Katsinas said now get less than 5 percent of their revenue from state governments. A fair number of those institutions are in suburban areas, like Harper, were local tax revenue is relatively healthy.

In these areas, funding the 13th and 14th years of a public education “is becoming a function of local government,” Katsinas said.

Federal Lifeline

Despite the tight times, several community colleges in Illinois have drawn national attention for their efforts to improve graduation rates and to close the “skills gap” between employers and higher education.

Perhaps most notably, City Colleges of Chicago has almost doubled its low student completion rates since 2010. Cheryl L. Hyman, chancellor of the system, made completion a central goal of a “reinvention” plan. The rate climbed to 13 percent last year, up from 7 percent before Hyman arrived.

City Colleges have also boosted their degree production. Their annual number of degrees issued is almost 4,000. It was 2,000 before the student-success plan began.

Likewise, Harper has earned plaudits for creating industry-endorsed certificates in manufacturing. The credentials are “stackable,” meaning they are designed to allow students to reenter higher education easily and without losing credits.

Harper leads a coalition of two-year colleges and manufacturing companies across the state. The group has worked to build a curriculum for the certificates that synchs up with the industry’s needs.

The federal government helped fund that effort. That's because Harper is also part of an interstate group of community colleges that received a $25-million grant from the U.S. Department of Labor to design stackable credentials. That money came from $2 billion in career-training grants for community colleges.

“Most of the success we’ve had in recent years,” Ender said, “has in many ways been incubated by federal, workforce investment funds.”

The $2-billion grant program has run dry, however.

Meanwhile, Illinois is covering a shrinking amount of community college students’ educations. When it first built two-year colleges, state government planned to pay for one-third of their costs. Yet a budget presentation from the Illinois Community College shows that state government is covering only $191 million of the $561 million in reimbursable credit hours students are projected to earn in 2015.

The budget situation is the most challenging Ender has seen in a 40-year career in higher education.

Even so, Ender looks at the difficult finances as an opportunity for the college to get creative. New relationships with businesses and other colleges will be part of the solution, he said. Apprenticeship programs could be, too. It will take plenty of effort, but he is confident that Harper will find a solution to what is a historic budget mess.

“There’s no easy way out,” said Ender.

State Contribution to Harper College (IL)

Fiscal Year Unrestricted Funding % of Total Revenues % Change
FY2003 $7,997,479 11.9% -4.3%
FY2004 $7,635,871 10.6% -4.5%
FY2005 $7,077,323 9.2% -7.3%
FY2006 7,077,420 8.4% -1.0%
FY2007 6,900,258 7.7% -1.5%
FY2008 7,128,094 7.6% 3.3%
FY2009 7,215,056 7.4% 1.2%
FY2010 7,187,128 7.0% -0.4%
FY2011 6,887,420 6.4% -4.2%
FY2012 6,904,640 6.4% 0.3%
FY2013 6,938,432 6.4% 0.5%
FY2014 Projected 7,035,549 6.4% 1.4%
FY2015 Budget 7,029,860 6.3% -0.1%

Source:Harper College


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