Sunday, October 28, 2018

Fun with Funding

The new Century Foundation report, “Policy Strategies for Pursuing Adequate Funding for Community Colleges,” lacks a catchy title, but it’s well worth the read.  If you have a chunk of time, I recommend it.

It takes as a starting point the basic fact that applying “performance funding” models to colleges that are underfunded from the outset amounts to punishing them for being underfunded in the first place.  Models like ASAP -- which feature heavy advising with low ratios, as well as stipends for public transportation -- are much more expensive per student, but they’re so good at helping students finish that they’re cheaper per graduate.  The problem is that most public funding is per student, not per graduate. And it lags results, so to afford it, you’d have to get the results before you start the program. The space-time continuum doesn’t work that way. That means that many community colleges lack the funding to implement measures that they know would work.  

On a per-student or per-FTE basis, community colleges get far less public funding than four-year regional colleges or state universities do.  Given American political history, the report rightly notes, it’s hard to escape the conclusion that at least some of that has to do with the demographics of community college students, as opposed to four-year students; broadly speaking, the less white the student body, the less money it gets.  

The report doesn’t mention this, but at the state level, there’s an inverse relationship between the strength of the four-year sector and the funding for community colleges.  As examples of states that spend relatively well on community colleges, it cites Alaska, Wyoming, and North Dakota; states that take the cheap way out include Vermont and New Hampshire. Race can’t be the only variable; Vermont and New Hampshire are among the whitest states in the country.  In Massachusetts, Governor Dukakis supposedly once justified weak funding for public higher education on the grounds that the state already has Harvard, MIT, Wellesley, and Williams for that sort of thing. The children of the privileged in New England and the Middle Atlantic often find their way to private institutions, of which there are many within a few hours’ drive.  In Wyoming and North Dakota, that’s much less true. That means that elites in Wyoming and North Dakota are likelier to see community college as “theirs,” and to fund them accordingly. In New England, not so much.

Private colleges generally have also been much more effective in courting philanthropic support.  Some of that has to do with having a head start; a school founded in the 1600’s has a much deeper alumni base (and longer-compounding endowment) than one founded in, say, 1967.  Even the flagship public universities have become much more assiduous about fundraising than they used to be. Community colleges, as a sector, lag badly in this area. Although we have over 40% of the undergraduate enrollment in the country, our share of the higher ed philanthropic pie is in the single digits.  

One could object, of course, that that’s not directly subject to legislative control.  But states could, if they chose, provide seed money to grow the philanthropic capacity of community colleges.  They simply haven’t chosen to.

One real strength of the report is that it distinguishes between institutional funding and student financial aid.  To the extent that college funding is funneled through student tuition, colleges with enrollment declines can easily slip into death spirals.  In that model, too, colleges have to raise tuition in order to capture that revenue. Sending increases in operating aid directly to colleges themselves allows them to respond to local needs quickly.  In other words, you’re likely to get better performance for your funding if it isn’t performance funding.

The report notes, again correctly, that the political climate in most states makes it difficult to raise public revenue, and that community colleges compete for dollars with K-12, corrections, and Medicaid.  Those are hard battles to win. (The report notes at one point that between 1995 and 2015, federal financial aid spending tripled, while state appropriations per FTE fell by 28 percent, both after adjusting for inflation.)  That’s where federal matching funds can do a lot of good. Unlike the states, the federal government can deficit-spend, which means that it can inject counter-cyclical dollars when recessions hit. It could, if it chose, tinker with the formula to make the match larger when times are tighter.  It can’t compel states to step up, but it can make it awfully tempting to. The “grants-in-aid” model has a long history -- federal highway money was attached to raising the drinking age, for instance -- and it has survived court challenges repeatedly. It can work.

The real virtue of the report, to me, is that it starts not by attacking community colleges or suggesting that they can be replaced with an app, but by noting the remarkable value that community colleges provide.  From a pure ROI perspective, leaving aside any humanistic considerations, they’re spectacular social investments. They aren’t perfect, of course, but they could be a whole lot better if they weren’t forced to run on shoestring budgets.  A tip of the cap to authors RIchard Kahlenberg, Robert Shireman, Kimberly Quick, and Tariq Habash. Here’s hoping it gets the readership it deserves.