McLennan Community College Case Study

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Community colleges have historically operated on three major sources of revenue—tuition and fees, local taxes and state appropriations. Federal funding to community colleges is largely funneled through student financial aid for tuition and fees. Although an area for potential revenue growth, other sources of revenue such as private donations, grants, and auxiliary services represent a relatively small portion of community college budgets. Originally, community college funding depended largely on local funding with support from tuition and fees. State support of community colleges entered the picture in the 1940s. Over time, state level funding outpaced local funding of community colleges, but tuition and fees remained relatively constant as a percentage of revenue. According to Cohen, “the percentage of income from various sources for public two-year colleges in 2010 showed tuition and fees at 16%, federal funds at 23%, state funds at 30%, local funds at 18%, private gifts and grants at 1%, sales and services at 4%, and other at 8%” (Cohen, Brawer, & Kisker, 2013). It is important to note that the 23% revenue from federal funds in 2010 was a result of nonrecurring economic stimulus funds and represented a significant increase in federal funds to community colleges over the 5-8% more typical of federal funding. While the above figures represent national averages, percentages for funding of community colleges vary widely by state and are dependent on the organizational structure of community colleges within each state. In states with large community college systems higher percentages of state level funding exists, whereas a few states are still structured under the historical funding basis of greater local support for community col... ... middle of paper ... ...in the number of full-time employees in favor of part-time employees, especially faculty; increases in student to teacher ratios; reductions in course offerings; reductions in student support services, especially those not essential to core missions; and many other measures aimed at improving efficiency. In addition to these efforts, community colleges are exploring ways to increase revenue streams through entrepreneurial ventures, expanded fundraising to include endowments, and practical options such as differential tuition. These alternative funding sources are likely to become critical for community college financial stability. According to Romano, it would be wise “to anticipate a continuation of the secular decline in public sources of revenue and to prepare for increasing cost pressure from both enrollment increases and a rising cost structure” (Romano, 2012).

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