Published on 2015/06/05

The Rocky Road Ahead: Community Colleges and their Challenge Trifecta

The EvoLLLution | The Rocky Road Ahead: Community Colleges and their Challenge Trifecta
The triple challenge of mission change, declining enrollments and dwindling public support is creating a rocky environment for community college leaders to navigate.

Community colleges, once stalwarts of their local communities, are facing a bevvy of challenges that could change the very face of public higher education in the United States. As enrollments decline with the improvement of the labor market, colleges are also seeing their budgets dip annually with falling state funding. What’s more, the mission of community colleges is starting to shift from prioritizing access to prioritizing completion, an expensive proposition that demands more resource and capital investment from institutions. In this interview, Michael Hansen sheds some more light on the challenges facing colleges and shares his thoughts on what college leaders must do in order to navigate these issues and achieve long-term sustainability and growth.

Click here to read key takeaways.

The EvoLLLution (Evo): What are the three factors that have the greatest impact on the budgetary issues facing community colleges today?

Michael Hansen (MH): As I see it, there are 3 main challenges facing community college budgets today: the completion agenda; declining enrollment; and divestment by state legislatures.

The business model that has supported community colleges essentially since their inception was built on an access mission for most institutions. Providing an affordable postsecondary opportunity to anyone interested in bettering their lives is sustainable so long as significant student support services such as advising, counseling, tutoring, effective remediation and other structural redesigns that are created to support successful completion are not required. While almost all community colleges now have mission statements that incorporate this new emphasis on completion and success, the new business model required to fund these goals has lagged behind.

Increasing completions is achievable, it’s just very expensive. On top of that, at least in recent years (the last five, specifically) community colleges have been subject to the well-known and well-documented phenomenon of the counter-cyclical pattern of enrollment and the performance of the economy. In essence, as the economy improved recently, enrollments declined. Clearly, this sometimes dramatic decline in enrollment (as high as 10 percent a year for five years) is more easily managed by colleges who either rely more heavily on the use of adjuncts and other short-term, contract based staff, and/or those who are less dependent on tuition revenue for their overall financial support. A college that receives 70 percent of its revenue from tuition is clearly more sensitive to enrollment declines than a college that may only be 30 percent reliant on tuition revenue (the other components of revenue being state appropriation and local funding).

Finally, while community colleges in the 90’s—at least in Michigan—grew accustomed to annual increases in state funding that exceeded and often doubled the rate of inflation, since the start of the new century appropriations have been either negative, flat, or just under the annual rate of inflation. Ultimately, this means that state funding for community colleges in Michigan today is at about at the same level is was 15 years ago.

Evo: How have some of the most successful colleges adapted to overcome these challenges?

MH: There have been a number of strategies that community colleges have employed to adapt to these fiscal challenges. In terms of revenue, some have resorted to tuition increases above the rate of inflation. While locally elected boards of trustees are extremely sensitive to increasing tuition and keeping community colleges affordable, they also understand the incredible fiscal pressures that exist.

Others have looked at other non-traditional sources of revenue like customized contract training, federal and other grant opportunities, fund raising campaigns, building dormitories, internationalization, and differential tuition options.

On the expenditure side, many colleges have looked at things like program elimination/realignment, compensation controls (wage freezes, fringe benefit reductions/costs shares), contract services, and energy efficiency improvements.

Evo: What are a few of the most common concerns leaders can expect to face through this process of transformation?

MH: The challenge for community college leaders is navigating this rather significant transition, in which colleges are shifting away from an access mission and toward a completion agenda. They also need to be willing to make the necessary fiscal adjustments to support this transition to ensure its success and sustainability.

I think we’re seeing the first part of this challenge taking hold and permeating almost all layers and levels of the institution. This is especially true as we move from boutique and small-scale interventions and activities to more major structural and organizational shifts in policy, procedure and process that bring these measures to scale. Boards and presidents are now beginning to tackle the harder questions of creating a fiscal sustainability model to support this transition.

Evo: Why is it so important for college leaders to find ways to adapt to today’s market realities?

MH: I think the world of higher education is changing so rapidly right now that it’s almost too early to know what the right adaptation will look like, and what changes will prove to be the most sustainable and supporting.

Right now, the successful institutions are constantly scanning and monitoring their environment and moving forward based on assumptions they see for the future. As those assumptions change, institutions need to change. But staying as far ahead of the curve as possible is certainly a more predictive measure for success than continuing to do business as it has always been done.

This interview has been edited for length.

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Key Takeaways

  • The mission transformation for community colleges—taking the focus off access and putting it on completion—significantly raises operating costs while demanding some shifts in the way institutions serve students.

  • State appropriations continue to dwindle while enrollment suffers, leaving college leaders scrambling to balance their budgets.

  • Ultimately, leaders need to remain vigilant of market shifts and forward thinking if their institutions are to remain healthy over the long term.
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