Addressing Funding Disparities to Advance Equity in Community Colleges

January 8, 2024

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Title: Variation in Community College Funding Levels: A Focus on Equity

Authors: Sandy Baum and Jason Cohn

Source: The Urban Institute

Community colleges play a critical role in expanding access to higher education, enrolling 44 percent of all U.S. public undergraduate students. But concerns about uneven and inadequate funding for these institutions relative to public four-year colleges are widespread. A new report from the Urban Institute investigates an under-studied dimension of community college finance—variation in funding levels across states and across institutions within states—addressing implications for advancing equity.

Analyzing data for over 900 public two-year institutions, this report finds significant funding variation. In fiscal year 2019, average state and local funding per full-time equivalent student ranged from $2,061 to $16,836 across states. Funding differences across institutions within a state often reflect state policies to compensate smaller colleges for higher per-student costs. Rural colleges also tend to receive more state funding. However, heavy reliance on local funding leads to wider disparities, as local funding levels vary greatly across community colleges within a state.

The report finds no consistent national pattern of unequal funding levels translating into race- or income-based funding inequities. In most states, average per-student funding levels are similar for Black, Hispanic, and Pell Grant recipient students. But there are concerning gaps in a few states, frequently resulting when underserved groups disproportionately enroll in larger urban institutions receiving less funding per student.

Addressing funding disparities is an important step, although equal funding does not guarantee equal opportunity for disadvantaged students. Key policy implications include:

  • Making unequal local funding offsets a higher state priority, as local revenue variations drive unnecessary funding differences.
  • Incorporating student weights into enrollment-based adjustments helping smaller rural colleges, which can otherwise shortchange urban underserved students.
  • Limiting performance-based funding models to small state allocation shares to avoid instability, while still promoting equitable outcomes.

Uneven funding deserves continued attention from researchers and policymakers. But community college leaders also have a role to play in calling out funding inadequacies and disparities while pursuing institutional equity goals.

To read the full research report, click here.

—Alex Zhao

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