Hybrid state funding model may increase community college enrollment

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Dive Brief:

•  Community college enrollment among Black, White and Asian students increases when state governments distribute higher education funding through a hybrid model based on both previous allocations and on enrollment and performance-based incentives, a recent study published in Educational Researcher suggested. 
•  Hybrid funding models did not affect the completion rate for associate degrees or certificates at community colleges. And researchers discovered no differences across state funding models in student enrollment or completion at four-year colleges and universities. The amount states allocate, however, is widely linked to student success metrics like completion and post-college earnings, the report stated. 
• While community college enrollment increased through hybrid funding models, degree completions were not affected since students often transfer before earning a degree or leave after getting the skills needed to get a better job, said Robert Kelchen, a report co-author and professor at the University of Tennessee, Knoxville. 

Dive insight:

State governments devote nearly $100 billion in funding each year for public colleges and universities, according to the report. That investment is aimed at growing their economies, developing an educated labor force and improving the socioeconomic situation of students from historically underrepresented populations.

State higher ed funding is allocated through various methods: using enrollment metrics; tying funding to student outcomes with performance-based systems; adopting base-adjusted systems that increase or decrease funding to colleges across the board; a combination of those mechanisms — or no clear funding formula at all. 

Nearly half of all four-year colleges are still under traditional funding models fully based on how much they received the previous year — a method that, when used alone, often depresses the amount received by institutions predominantly serving students who are racial minorities, Kelchen said. States using that model continue long-standing inequities within public universities, he added. 

Meanwhile, less than 10% of community colleges are funded that way. Some 70% are funded through a mix tied to enrollment, performance and previous year amounts, said Kelchen. 

This report comes as higher ed funding is being scrutinized by lawmakers due to skepticism about the value of a college education and to competing state budget demands. 

In the wake of state funding cuts, public institutions have reduced spending and raised tuition — leading to lower enrollment and completion rates, especially among Black and Hispanic students, and to less research capacity. 

Texas recently went through an overhaul of its community college funding model, moving away from an outcomes-based approach to rewarding colleges for student completion of degrees, certificates and other credentials, said Kelchen. 

In the end, “the amount of state funding for public higher education plays a crucial role in improving student outcomes,” the report stated. How much an institution receives, according to Kelchen, ultimately matters more than the method by which states distribute the funds. 

Still, states have no interest in getting rid of performance-based funding models and doing so would likely result in funding cuts, regardless of who wields political power in a state, he said. 

Researchers still need to dive deeper into the funding models to find the real cost of providing a college education and determine how to best support institutions serving large numbers of students from historically underrepresented groups, said Kelchen.