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May 2009
A Flawed Funding Formula for Community Colleges!
By John Paul Galles

     Our biggest and most essential weapon against the current recession and unemployment levels is our community college system. North Carolina is blessed with 58 community colleges providing a broad menu of educational, vocational, economic development and community services to help those entering the work force as well as those who have been displaced or are seeking new and/or alternative job opportunities.

     These two-year institutions provide educational offerings to over 800,000 students across the state. Here in Mecklenburg County, we are proud of Central Piedmont Community College (CPCC) with its six campuses, 286 full-time and 1,500 part-time faculty and over 70,000 participating students.

     Unfortunately, community colleges are funded through a system that stands in the way of serving the increased demand at the time they are needed most. Basically, funding comes from a state-local partnership similar to the way the state funds public schools. State appropriations support instructional expenses, and local governments finance facility costs. Tuition revenues supplement public funds. Still, the objective is to keep tuition low so working adults can enroll and participate.

     In 2007, 69 percent of North Carolina Community College System (NCCCS) funding came from the state, 13 percent came from local counties, and 13 percent came from tuition, with six percent coming from other sources. In 2008, that funding amounted to $1.1 billion from the state and $186 million from local governments, along with other federal and private funds. Our current state budget deficit forces even more budget cuts when they are most needed.

     Most state dollars are allocated to local colleges according to a formula measuring the number of full-time equivalent (FTE) students enrolled. In other words, a college earns one curriculum FTE for every 32 credit hours completed over a two-semester period. A college also earns a continuing education FTE for every 688 hours of instruction over a three-semester period.

     The cash value of each FTE changes from year to year, but it was $3,686 for a curriculum FTE in 2008-2009 and a continuing education FTE was $3,519. This system may have worked since the founding of the North Carolina Community College System in 1963, but it is wholly inadequate, out-dated and inappropriate in our current economic marketplace and the demands of our urban centers.

There are three critical flaws that have been identified within this funding system:

     1. The FTE formula does not accommodate rapid enrollment growth.

In this economic downturn, community college enrollments rise more than ever. As open door institutions, colleges are obligated to take students as they come, but the FTE formula is based on the previous year’s enrollment. So, now when more students need more help, increased funding is simply not available.

     2. Community colleges have a higher bar to clear to earn FTE credit.

Universities are also funded on an FTE basis, yet they qualify for an FTE based upon fewer hours of instruction. Since community college students are more likely to be part-time students, substantially more students must be served to generate the same FTE credits.

     3. The FTE formula fails to take into account the high cost programs like allied health.

     Health programs generally cost about 150 percent more than the standard allotment per student. And so, high-cost programs are capped and funds are shifted or programs are eliminated.

     State legislators believe that county governments can pick up the difference in the number of students and their demand for curriculum. With more students and more part-time students, CPCC and other urban community colleges suffer more than rural community colleges.

     This flawed funding mechanism cannot be fixed overnight. It will take several years to accomplish systemic reform in North Carolina. That will not likely occur until the legislature is reconstituted after the census results of 2010. Population growth and shifts will create greater representation from urban areas like Charlotte, Greensboro, Raleigh and Durham. Expanded representation from these urban areas will likely shift spending formulas in more equitable ways. In the meantime, we will have to make do with what we have. It is a shame.




John Paul Galles is the publisher of Greater Charlotte Biz.
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