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Plans for a new funding formula developed by North Carolina community college leaders could reward colleges for offering programs in high-demand, well-paying fields.
Photo illustration by Justin Morrison/Inside Higher Ed | Getty Images | Mx. Granger/Wikimedia Commons
A new funding model for community colleges that is focused on workforce development is under consideration in North Carolina.
The State Board of Community Colleges is expected to vote on the plan proposed by system leaders this month after it was presented to the board at a January meeting. If it is approved, as board members expect, the next task will be to convince the state General Assembly to support it during the next legislative session in April.
The new funding model received unanimous support from the North Carolina Association of Community College Presidents in December, EducationNC reported. Leaders of the 58-college system have been working on the new plan since August. The state’s current community college funding structure was implemented in 2011, and community college leaders say it’s overdue for an update.
A Workforce-Oriented Model
The main goal of the proposed model, called Propel NC, is to better align state funding with workforce needs.
The state has been using a “tier-based” model in which colleges are largely funded based on program enrollments. Courses are divided into four tiers, based on how expensive they are to offer, which receive different amounts of funding. The new model would still be enrollment-based but categorizes courses into “workforce sectors” that receive different levels of funding based on median salaries and the demand for workers in those fields in the state. The sectors include health care, engineering and advanced manufacturing, transportation, and information technology.
Dale McInnis, president of Richmond Community College and co-chair of the 16-person work group that devised the new model, said the current tiers are “archaic and really needed to be updated. There was never a really strong system for keeping them coherent, and … we didn’t have accurate cost data collected to really keep those aligned.”
The new funding structure aims to “incentivize colleges to grow and expand in areas where there’s high-demand, high-salary jobs that we’re currently not satisfying the need [for] across the state,” he said.
‘Parity’ Between Credit and Noncredit
A unique facet of the model is that it would group credit and noncredit courses in the same fields into the same sectors. For example, a nursing course would bring in the same amount of funding whether it’s part of a degree program or a noncredit certificate program. Currently, noncredit courses can receive less funding than credit courses, even if the professors and course content are the same.
McInnis said creating “parity” between credit and noncredit programs will encourage the growth of noncredit workforce training programs that lead to well-paying, high-demand jobs in the state. Courses that don’t fall into workforce training categories, such as general education courses, would receive the same amount of state funding provided under the old model to make sure colleges offering these courses don’t lose money under the new structure.
“We’re going to see colleges now fully equipped and armed with the ability to match up the right class, the right credential for what their region and their communities are needing in the workforce,” he said.
Robert Kelchen, professor of education and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee at Knoxville, said unequal compensation for credit versus noncredit courses has “been a really big issue in community college finance for a long time,” because noncredit courses are just as expensive to offer, and community colleges offer a lot of them. He sees this shift as a fix.
He noted that the new model puts more focus on vocational education than on students transferring to four-year institutions, a possible disadvantage for colleges with more transfer-oriented programs. But that focus also makes the proposed model an easier sell to state lawmakers who are eager to invest in workforce development and fill labor shortages.
“That’s what legislators really across the political spectrum are interested in,” he said.
Tom Looney, chair of the North Carolina State Board of Community Colleges, said it’s not a coincidence that the proposed plan, which would incentivize colleges to grow nondegree offerings, comes at a time when students and their families are increasingly questioning whether degrees are worth the time and cost.
Students and parents are thinking about “what is the value of education and how can we get students into a living wage faster?” he said. “Students today are looking for the straightest path to employment because … they don’t want a lot of debt. Our students oftentimes have a full-time job, or students of mine have had two jobs.”
The goal is to get them into the fields they want “as quickly as possible.”
Lisa Estep, another member of the state board and chair of its finance committee, believes the expansion of microcredentials and nondegree programs could also boost completion rates in the state.
“The short-term workforce training programs typically have a lower dropout rate than the degree programs,” she said. “So if that’s really where we’re trying to drive students, then we’re driving them to an area that typically is more productive and with better outcomes.”
A Call for More Funding
Each community college also receives a base allotment under the existing model, which hasn’t been updated in several decades. That amount would be increased by 5.8 percent under the new proposal to catch up to inflation-related costs.
College system leaders also want the plan to set aside $6 million in nonrecurring funds for an enrollment growth reserve, to be distributed among colleges that surpass their expected enrollments to help pay for extra costs. The state would replenish the reserve annually rather than fund it using any excess systemwide tuition money. That extra money would instead go back to the colleges that generated those dollars.
Estep noted that systemwide enrollment rose about 6 percent last year and another 4 percent this fall compared to last fall, making this potential update to the enrollment growth reserve especially relevant.
The new model would have a hefty price tag. Changing from tier-based to workforce sector-based funding would cost about $68,583,610, according to estimates from the community college system. Increasing the base allotment per college would cost another $24,435,946.
But McInnis believes it’s worth it.
“It’s a large ask of a state that’s always been generous to her colleges,” he said. “But it’s not about the money that it brings in just in next year’s allocation. It’s about the way it changes our business model.”
National Trends
North Carolina isn’t the only state where community college leaders are rethinking long-standing funding formulas.
Texas adopted a new model last year that awards most state funds to community colleges based on student outcomes, including credentials earned in high-demand fields and enrollments of low-income students and adult learners. Oregon also embraced a new formula that bases up to 10 percent of state funding on various metrics, such as completion rates and the number of underserved students enrolled, including low-income students, adult learners, students of color and students in career and technical education programs.
“I think most states have fairly similar motivations,” Kelchen said. “They’re trying to encourage economic development and community college enrollment.”
Martha Snyder, partner at HCM Strategists, an education consulting firm, believes the North Carolina plan furthers a trend of states shifting to “more value-based” funding structures for community colleges. However, she noted that the new models in Texas and Oregon are more explicitly focused on student outcomes, particularly for historically underserved groups. (North Carolina does offer a small, separate portion of funding based on student success metrics.)
Snyder hopes if North Carolina implements the proposed model, the state tracks and disaggregates student outcomes data to ensure there’s “equal access to these higher-value program areas” among different kinds of students, including first-generation and low-income students and older adult learners.
Nonetheless, she sees the blurring of lines between credit and noncredit programs as “innovative” and believes watching “how it plays out in the state and how it potentially shifts institutional decisions” could benefit other states as well.
“I think that is kind of an advancement,” she said. “I think it’s where many states would like to get to.”
