New report examines Massachusetts’ community college funding formula

Boston – After being launched with fanfare in 2013, the effort to allocate funds to Massachusetts’ 15 community colleges has faded out of use, but its development and fate offer guidance for improving funding today, according to a new report released this morning at the Boston Foundation.

Read the report

The report, Grade Incomplete: Implementation of the Community College Funding Formula in Massachusetts, was prepared by the Massachusetts Taxpayers Foundation, and released at an Understanding Boston forum at the Foundation’s Edgerley Center for Civic Leadership. The report looks at the effort to end decades of allocating funds based almost solely on previous years’ allocations and political considerations, replacing it with a model that included enrollment and performance data. After being implemented in the Massachusetts budget for FY2014, it was phased out by FY2017 and is no longer used.

“The imperfect implementation and phase out of the funding formula goes down as a missed opportunity to correctly ensure funding flowed to the campuses where high-performing programs are attracting the largest numbers of students,” said Paul S. Grogan, President and CEO of the Boston Foundation. “This report provides valuable insights into the issues that derailed the formula funding effort. We hope it can serve as a spark to reignite discussion of the critical role community colleges play in our workforce, and the resources needed for them to succeed.”

“The community college funding formula held great promise for distributing funds more rationally and with greater accountability, but we will never know if its intended results were achievable because the formula was not in place for a sufficient amount of time nor did it fully take hold as designed,” said Eileen McAnneny, President of the Massachusetts Taxpayers Foundation. “However, the initial impact was quite promising and in an age of tight budgets with fewer discretionary dollars available, it is worth reviving the formulaic approach to ensure taxpayers are well spent and educational outcomes are attained.”

Prior to the 2013 community college reform legislation signed by Governor Deval Patrick, community colleges’ funding allocations for decades has been largely based on past funding, without considering changes in enrollment or student demographics. As a result, the data showed wide differences in per student funding across the 15 community college campuses. The 2013 formula was initially intended to replace the previous funding model entirely, but was revamped to only apply to new funds, to guarantee that no campus lost funding with its implementation.

The stop loss provisions muted the formula’s impact, but even so there was a demonstrable reduction in the per student funding gap between the campuses, as those that had grown or had demonstrated success in college completion and workforce development were rewarded with higher allocations. In FY2014, the formula was used to distribute $20 million of the overall $245 million community college budget, and three campuses with the lowest per student funding under the old system – Bristol, Bunker Hill and Quinsigamond Community Colleges – received the most substantial increases.

However, beginning in FY2015, not only did the amount of money allocated through the formula decline (to $13 million that year), the report notes that the enrollment and performance metrics used in calculating formula funding allocations were no longer shared, making the rationale behind how funds were distributed a mystery to the public. By FY2016, state budget uncertainty further limited the amount of formula funding for community colleges, and again, with no public information on the factors that went into performance funding allocations, shifts in funding went unexplained.

By FY2017, the distribution of $2.6 million in formula funds basically matched the share of overall community college funding, and in FY2018, the formula funding provisions received no money.

While the funding formula has not been used in recent years, the desire and need to allocate funds based more on both cost drivers and system goals remain. The report concludes with five recommendations for creating a new formula that could be accepted. Any new formula, the authors note, should:

• Build on areas of success – In order to gain the approval of both policymakers and the colleges themselves, a new formula will need to take into account the needs of both groups, and it could benefit from using the approach used in 2013, which utilized national expertise coupled with input from Massachusetts community college leaders.
• Establish clear goals – Clear, consistent goals help to define and contextualize funding requests and provide a standard for determining whether the system has lived up to its commitments.
• Be realistic in designing the formula – The authors suggest that any new formula include hold harmless provisions to prevent campuses from losing funding for at least some transitional period, and account for cost increases resulting from collective bargaining agreements.
• Be put into state law – The 2013 funding formula for community colleges was codified as K-12 funding is, for example, making it vulnerable to changes in policy leaders and economic conditions.
• Be accessible and simple – Again using K-12 formulas as an example, the funding formula should be made publicly available each year and simple enough that interested parties can understand how formula dollars are distributed.

While acknowledging that the 2013 funding formula was imperfect in its original design and implementation, the authors conclude that it had demonstrated success. It provides both a template and some hard-earned lessons to apply toward a new formula that can introduce funding consistency and improve system outcomes, accountability and transparency.