Financing Community Colleges: Current Landscape and Future Directions

We describe the community college landscape, with a focus on how state funding formulas, enrollment declines, and federal recovery investments during the COVID-19 pandemic intersect to shape prospects for revenue and spending patterns for community colleges looking forward. We explore variation in state funding models and mechanisms by focusing on six states—California, Michigan, New York, Ohio, Tennessee, and Texas—that together represent close to half of community college students in the nation and a variety of governance and funding structures. We then examine community college spending of federal Higher Education Emergency Relief (HEER) funds, an unprecedented federal investment (over $25 billion) in community colleges over a three-year period, and offer suggestive evidence about what community colleges would prioritize if given more flexible resources. We close with a discussion of the outlook for community college financing and key questions facing system leaders to support this critical higher education sector.