Understanding the Relationship between Equity and Efficiency: Towards a Concept of Funding Adequacy for Community Colleges

Community colleges are the linchpin of the nation’s current efforts to increase the proportion of adults with postsecondary education. Yet, despite the significant historical role community colleges have played in expanding access to higher education, there are reasons to question whether community colleges are equipped to supply these additional credentials. Specifically, community colleges nationally face two related challenges: they provide access to large numbers of disadvantaged and academically underprepared students, and they typically receive lower levels of per-student funding relative to other sectors with which to do so. In this paper, we consider the relationship between these challenges by framing them in terms of equity and efficiency as goals of higher education funding policy. Specifically, we develop a simple model that policymakers can use to test whether current state or system funding formulas are achieving their desired goals in terms of equitable and efficient funding. In addition, we propose four different formulas and use data from the largest community college system in the nation to illustrate the tradeoffs in equity and efficiency between those formulas. The results suggest that a “balanced” formula that provides additional funding to districts serving more low-income students and rewards them for improving outcomes, might be a first step towards a conceptual understanding of “adequacy” in community college funding.