Financing Community Colleges: Policies, Incentives, and Language Matter

1. Financing Community Colleges: Policies, Incentives, and Language Matter Nancy Shulock Achieving the Dream State Policy Meeting Atlanta, GA February 5, 2008 California State University, Sacramento

2. The California context Finance policy and incentives matter for student success A new approach: “Invest in Success” Overview California State University, Sacramento

3. California’s Performance is Lagging • Preparation • 35th and 49th in high school students taking advanced math and science • Bottom 1/5 in 8th gradersscoring “proficient” in all subject areas of the NAEP • Participation • 40th in direct to college from high school • 48th in full-time college enrollment • Completion • 47th in BA degrees per 100 undergraduates enrolled • 46th in degrees/certificates awarded per 100 students enrolled in 2-year colleges California State University, Sacramento

4. Percent of Adults with an Associate Degree or Higher by Age Group—Leading OECD Countries, the U.S., and California Source: Organisation for Economic Cooperation and Development, Education at a Glance 2007; Not shown on the graph are Belgium, Norway, Ireland and Denmark, which also rank ahead of the U.S. on attainment among young adults (attainment is increasing for younger populations as in the other countries) California State University, Sacramento

5. California Is Becoming Less Educated Than Other States (Rank Among States in % with College Degrees) California State University, Sacramento

6. California Community College Facts Size and Governance: • 109 community colleges in 72 districts • 2.5 million students per year • Over 70% of public undergraduates • Locally elected boards • Collective bargaining – local contracts • Highly regulated • Highly politicized Finance-Related: • Lowest fees in the nation • Low funding per student • High participation rates • Low completion rates California State University, Sacramento

7. Tuition/Fees in 50 States California State University, Sacramento

8. Our Student Success Research • Rules of the Game – February, 2007 • Policies are impeding completion – especially finance policy • Beyond the Open Door – August, 2007 • We know what works: student success strategies • Patterns that are more/less successful in the CCC • Invest in Success – October, 2007 • Finance policies are misaligned with priorities • A new funding approach can reward performance fairly • It Could Happen – Forthcoming, February, 2008 • Reform is possible but requires finance policy reform and external pressure on system to change California State University, Sacramento

9. Incoming CCC Students 1999-2000 Policies to Promote Access 520,407 Students Non-Degree-Seekers, 40% Degree-Seekers, 60% 206,373 Students Basic Skills, 9% Personal Enrichment, 42% 314,034 Students Policy Barriers to Completion Job Skills, 49% Complete Certificate, Degree or Transfer within 6 Years, 24% 75,682 Students 238,352 Students Do Not Complete within 6 Years, 76% California State University, Sacramento

10. Age and Race/Ethnicity Matter Rates of completion: • 27% for students age 17-19 at enrollment • 21% for students in their 20s • 18% for students in their 30s • 16% for students age 40 or older • 33% for Asian students • 27% for white students • 18% for Latino students • 15% for black students California State University, Sacramento

11. Enrollment Patterns Matter – Especially Full-Time California State University, Sacramento

12. Community College Reaction “This is another typical ‘university view’ of our community colleges written by people who have no experience in our institutions.” Authors seek to “remake community colleges into another elite university system.” “It is clear that the authors have little or no understanding of our colleges or our students and their work is not helpful….” “The study is insulting to community colleges.” California State University, Sacramento

13. Support Emerges “The resistance you're experiencing is an indication of how badly the message needed be delivered.” “There are a number of us who resent the defensive manner in which the system responded to your report. You have put critical issues on the table that we have ducked for a long time because of political timidity.” “Please accept my commendation for your courage in thinking out loud about issues that have for years been repressed and avoided by the systematic work of institutional defensive routines.” California State University, Sacramento

14. What Finance Policies Impede Student Success? • Appropriations • Enrollment-driven funding • Restrictions on college use of resources • Fee policy • Low fees for all • Fee revenue is an offset to state funding • Financial aid • Low use of financial aid • No incentives for students California State University, Sacramento

15. California State University, Sacramento

16. Base Appropriations (Enrollment-Driven) California State University, Sacramento

17. Categorical Program: “Matriculation” California State University, Sacramento

18. Restrictions on Spending: 50% Law California State University, Sacramento

19. Financial Aid Focus on Fees, Instead of Affordability California State University, Sacramento

20. Key Reforms Require Changes to Funding: From FTES to Success • Mandatory assessment/placement • Mandatory orientation • Enforced prerequisites • Integrated academic/student services • Remove spending requirements • Increase fees for non-needy students California State University, Sacramento

21. The Question that Continues to Perplex American Higher Education How can we best incorporate measures of success into funding decisions? California State University, Sacramento

22. How Traditional Performance Budgeting Has Typically (Not) Worked • Make no changes in basic funding incentives • Create a small performance pot – preferably new money of 2-5% of total • Select measures (usually controversial) • Select targets (necessarily arbitrary and controversial) • Mete out rewards (or not - what to do with low performers?) • Performance problems not solved • Performance funds get cut • Everyone is frustrated (or worse) California State University, Sacramento

23. What’s Wrong with this Picture? • Performance has become marginalized - an “add on” responsibility to basic operations • Set up to fail – how can 2-5% of total funding solve performance problems? California State University, Sacramento

24. Invest in Success • Not AFTER colleges are funded “to operate” • Incentives for success are built into core funding • Re-think what is “workload” • Enroll students for a full term • Serve disadvantaged students • Get students to threshold # units • Get students to complete, or advance in, remedial work • Get students to complete programs California State University, Sacramento

25. Trade-offs and Challenges Design Issues: • Which workload factors to include – new incentives • Importance of each factor – the “stability” question • How to use the factors fairly • Phase-in time period Institutional Culture: • Focus on funding students, not institutions • Ideological resistance to rewarding performance • Baggage from failed performance budgeting California State University, Sacramento

26. Lessons We Have Learned • Incentives are powerful – we get exactly what we design through policy • Changing policies – needs external support • Performance funding needs a new language • “Invest in Success” – so far, so good Copies of reports Online: www.csus.edu/ihe Request hard copies: ihelp@csus.edu California State University, Sacramento