Navigating the Funding Crisis: A Strategic Guide for Community Colleges
David Campbell, PhD
11/8/20259 min read
Introduction
Community colleges stand at a critical crossroads. While serving as the most accessible gateway to higher education for millions of Americans, these institutions face unprecedented financial pressures. State funding per student has declined significantly over the past decade, even as enrollment demands remain high and colleges are asked to do more with less. The proportion of state and local funding for two-year colleges has declined from 64 percent to 52 percent, while funding through tuition revenue has increased from 22 percent to 33 percent.
This article presents evidence-based strategies for community colleges to address their funding challenges through three critical approaches: generating additional revenue, implementing innovative staffing models, and adopting cost-saving measures. These solutions are grounded in current research, proven practices from institutions nationwide, and emerging models from both within and beyond higher education.
I. Revenue Generation: Diversifying Income Streams
A. Workforce Development and Non-Credit Programs
The Opportunity
Non-credit programs at community colleges are experiencing substantial growth, with North Carolina's community college system reporting 8.8 percent year-over-year growth in non-credit enrollment compared to 5.8 percent in credit programs during the 2023-2024 academic year. These programs represent a significant untapped revenue source.
Strategic Implementation
Expand High-Demand Training Programs: Maryland funds many high-demand, non-credit workforce programs at the same rate as credit programs, requiring comprehensive data collection but providing substantial revenue. Colleges should identify regional workforce needs and develop short-term certificate programs in fields such as:
Healthcare (phlebotomy, EMT, medical coding)
Manufacturing and skilled trades (welding, CNC operation)
Technology (cybersecurity, cloud computing, data analytics)
Transportation (commercial driver's licenses)
Create Stackable Credentials: Miami Dade College has focused on stackable credentials that bridge credit and non-credit programs, allowing students who complete non-credit training to apply it toward college credit certificates and eventually degrees. This approach increases student retention while generating sustained revenue.
Leverage Federal and State Funding: Louisiana's community college system increased graduates from 12,500 annually to 35,000 between fiscal years 2012 and 2024, including 15,000 who received short-term, non-credit workforce training credentials. Pursue:
Perkins Career and Technical Education funding
Workforce Pell grants (when available)
Department of Labor Strengthening Community Colleges grants, which have provided funding to 170 colleges across 31 states
State-specific workforce development funds
B. Strategic Employer Partnerships
Co-Investment Models
Northern Virginia Community College and Amazon Web Services partnered with AWS contributing $300,000 to develop certificate and associate degree programs in cloud computing and data center operations. Effective partnerships include three essential elements:
Dedicated Business Hubs: Create centralized offices to facilitate connections between the college, students, and employers
Committed Industry Expertise: Engage employers as curriculum advisors, adjunct professors, and participants in career services
Financial Investments: Secure employer funding through grants, equipment donations, paid internships, and training contracts
Regional Consortia Approaches
Columbus State Community College established a Workforce Advisory Council consisting of chief talent officers from the region's largest employers, acting as the employers' voice in setting workforce priorities. This model has generated sustainable funding while aligning programs with labor market demands.
C. Facility Monetization
Space Utilization Strategies
Whittier College pulled in $700,000 in 2023 from weddings, yoga retreats, and film shoots—a 40% increase from the previous year. Community colleges can similarly monetize underutilized assets:
Event Rentals: Conference rooms, auditoriums, and athletic facilities during evenings, weekends, and summer months
Summer Programs: Youth camps, enrichment courses, and professional development workshops
Community Partnerships: San Bernardino Valley College partnered with Community Action Partnership to provide mobile shower services for students, demonstrating how facility-sharing partnerships can address student needs while reducing costs
Public-Private Partnerships (P3s)
Universities are increasingly leasing space to establish innovation hubs, generating revenue while creating valuable learning and research opportunities. Community colleges can explore:
Student housing partnerships
Mixed-use retail developments on campus property
Technology incubators and maker spaces with corporate sponsorship
D. Foundation and Grant Development
Diversified Fundraising
Women now drive 85% of high-net-worth charitable decisions, yet comprise only 28% of university board members. Colleges should:
Expand board diversity to reflect donor demographics
Engage underrepresented alumni groups through leadership pipelines
Create targeted campaigns around specific programs rather than general operating support
Develop corporate partnerships that align with regional economic development goals
Grant Capacity Building
Columbus State Community College created an Office of Talent Strategy supported by corporate funders, ensuring grants align with long-term strategic outcomes rather than diffusing resources across unrelated short-term projects.
E. Dual Enrollment Expansion
Strategic Growth
Dual enrollment remains a driver of community college enrollment growth, with programs accelerating nationwide. Texas's new community college funding formula rewards institutions for high school students who complete 15 semester credit hours in dual credit or dual enrollment courses.
Implementation Best Practices
Successful dual enrollment partnerships require communication and collaboration, shared vision between high schools and colleges, adaptive and responsive approaches, and action-oriented implementation. Focus on:
Building clear pathways from dual credit into college programs
Providing wraparound services for first-generation students
Addressing historical tensions between K-12 and higher education systems
Ensuring equity in access for underrepresented populations
II. Braided Staffing Models: Strategic Human Resource Management
A. Shared Services and Regional Collaboration
Consortium Models
While specific research on "braided staffing" in community colleges is limited in the search results, emerging practices from related sectors provide guidance:
Shared Specialized Positions: Multiple colleges within a district or region can share:
Grant writers and development officers
Legal counsel and compliance specialists
IT security experts and infrastructure personnel
Marketing and communications professionals
Institutional research and assessment coordinators
Regional Resource Centers: Create centralized offices that serve multiple institutions for:
Professional development and faculty training
Purchasing and procurement
Technology support and infrastructure
Student support services (tutoring, counseling)
B. Credit and Non-Credit Faculty Integration
Breaking Down Silos
Columbus State Community College restructured programs into four strategic areas (Healthcare, Advanced Manufacturing, Biotech, and IT), with each having an enterprise project manager responsible for aligning credit and non-credit programs, allowing faculty to collaborate on designing both types of coursework.
Benefits of Integration
This model enables:
Reduced duplication of instructional resources
Seamless pathways for students between programs
More efficient use of faculty expertise
Streamlined curriculum development
C. Adjunct and Part-Time Optimization
Strategic Deployment
Rather than replacing full-time positions, optimize adjunct faculty use through:
Professional Partnerships: Recruit working professionals for specialized courses, bringing current industry practices into the classroom
Cohort Teaching Models: Group adjuncts into teams with shared professional development and mentoring from full-time faculty
Multi-Year Contracts: Provide stability for experienced adjuncts while maintaining flexibility
D. Administrative Efficiency
Dual-Function Roles
Create positions that bridge multiple responsibilities:
Faculty members with release time for program coordination
Student services professionals who also teach freshman seminar courses
Administrators who maintain teaching loads to stay connected to instruction
Industry professionals in part-time administrative roles (e.g., advisory board members who also serve as program consultants)
III. Cost-Saving Measures: Strategic Efficiency Without Sacrificing Quality
A. Technology and Digital Transformation
Operational Efficiency Tools
Administrative Automation: Implement systems for:
Automated advising and degree audits
Chatbots for routine student inquiries
Digital enrollment and registration processes
Electronic document management
Learning Technology: Georgia State University reduced summer melt by 22% through a student portal and AI chatbot named "Pounce," helping students overcome enrollment barriers. Similar technology can reduce advising costs while improving student success.
Open Educational Resources (OER)
Expanding the use of open-access educational resources and other zero-cost textbook programs would serve to reduce costs systematically for both institutions and students. Implementation strategies include:
Faculty incentives for adopting OER materials
Institutional repositories for shared resources
Collaborative development of discipline-specific OER
Grants to offset initial conversion costs
B. Energy and Facilities Management
Sustainable Operations
Energy costs significantly affect community college budgets, with recent declines in energy prices contributing to lower cost-of-living adjustments. Proactive strategies include:
Energy Efficiency Upgrades: LED lighting, HVAC optimization, smart building systems
Renewable Energy: Solar panels, geothermal systems (often funded through state or federal grants)
Deferred Maintenance Prevention: California voters approved Proposition 2, authorizing $1.5 billion in state bonds for community college facilities—pursue similar state funding to prevent costly emergency repairs
Space Optimization
Research shows that with an average persistent efficiency of 87%, few community college institutions are relatively cost inefficient in their operations. Improve space utilization through:
Comprehensive scheduling software to maximize room usage
Hybrid and online course delivery to reduce physical space needs
Multi-purpose spaces that serve multiple functions
Strategic building consolidation where appropriate
C. Benefits and Compensation Strategies
Healthcare Cost Management
Districts' pension costs have increased substantially, with CalSTRS rates rising from 8.9% to 19.1% and CalPERS from 11.8% to 27.1% between 2014-15 and 2024-25. While pension rates are fixed, colleges can manage healthcare costs through:
Wellness Programs: Preventive care initiatives that reduce long-term claims
Self-Insurance Consortia: Regional groups that pool risk
High-Deductible Health Plans: With HSA contributions to maintain employee satisfaction
Telemedicine Options: Lower-cost alternatives for routine care
Compensation Innovation
Performance-based incentives tied to student success metrics
Professional development in lieu of salary increases during lean years
Flexible work arrangements that reduce facility costs
Student loan repayment assistance as a recruitment tool (often grant-funded)
D. Process Improvement and Shared Services
Academic Efficiency
Course Scheduling Optimization: Institutions that showed increases in short-run efficiency over time shared their experiences and best management practices with counterparts. Strategies include:
Data-driven course scheduling based on enrollment patterns
Elimination of low-enrollment sections
Strategic course rotation to maximize faculty load
Accelerated formats to improve completion rates
Program Rationalization: Regularly review program viability based on:
Enrollment trends
Completion rates
Graduate employment outcomes
Regional labor market demand
Cost per completer
Procurement and Purchasing
Join cooperative purchasing consortia for volume discounts
Strategic vendor negotiations and contract management
Centralized procurement to eliminate redundant spending
Energy performance contracting (where vendors guarantee savings)
E. Student Support Services Redesign
Efficiency Through Technology and Redesign
CASS programs leverage dedicated advisors, coaches, or case managers who connect students to tailored resources including financial assistance, academic guidance, housing, transportation, childcare, and career services. Cost-effective models include:
Case Management Approach: One professional serves multiple support functions rather than separate offices for each service
Peer Mentoring Programs: Train student workers to provide first-tier support
Virtual Support Services: Remote counseling, tutoring, and advising reduce facility needs
Community Partnerships: Project QUEST in San Antonio provides participants with comprehensive training and educational support through local alliances, reducing institutional costs while improving outcomes
IV. Implementation Framework: Putting Strategies into Action
A. Assessment and Planning
Institutional Readiness
Before implementing new strategies, colleges should:
Conduct Financial Analysis: Identify current revenue streams, cost drivers, and efficiency opportunities
Assess Institutional Culture: Determine readiness for change and potential resistance points
Engage Stakeholders: Include faculty, staff, students, and community partners in planning
Establish Baseline Metrics: Document current performance to measure improvement
Strategic Prioritization
Sustainable success depends on integrated planning across departments—finance, advancement, facilities, and academics—with cross-functional teams established to pilot, measure, and scale revenue projects.
B. Phased Implementation
Year One: Foundation Building
Establish revenue diversification task force
Conduct employer needs assessment
Pilot one or two high-potential revenue initiatives
Implement basic cost-saving measures (OER, energy efficiency)
Begin shared services discussions with neighboring institutions
Year Two: Expansion and Refinement
Scale successful pilot programs
Formalize employer partnerships with memoranda of understanding
Implement staffing innovations in selected departments
Launch facility monetization initiatives
Expand non-credit offerings based on market demand
Year Three: Sustainability and Growth
Full integration of new revenue streams into operating budget
Mature shared services arrangements
Comprehensive assessment of outcomes
Strategic reinvestment in high-performing initiatives
Development of replication models for successful programs
C. Measuring Success
Key Performance Indicators
Track progress through metrics such as:
Revenue Measures
Non-tuition revenue as percentage of operating budget
Workforce training enrollment and completion rates
Employer partnership funding generated
Foundation giving and grant awards
Cost recovery on facility rentals
Efficiency Measures
Cost per student FTE
Administrative cost ratio
Space utilization rates
Energy cost per square foot
Technology return on investment
Student Success Measures
Retention and completion rates
Employment outcomes for workforce programs
Transfer rates to four-year institutions
Time to credential completion
Student satisfaction scores
V. Challenges and Considerations
A. Balancing Mission and Revenue
Community colleges must ensure that revenue-generating activities do not compromise their core mission of providing accessible, affordable education. Resource allocation is a concern—partnerships must balance value-add versus revenue generation.
Guiding Principles
Revenue initiatives should support, not supplant, academic programs
Maintain focus on underserved populations
Ensure equity in access to new programs
Preserve institutional identity and community relationships
Avoid mission drift toward revenue over service
B. Regulatory and Compliance Issues
Accreditation Considerations
Credit programs require state commission approval following college-level approval, while non-credit programs can respond more quickly to workforce needs. Balance rapid response with quality assurance.
Financial Aid Eligibility
Not all revenue-generating programs qualify for Title IV financial aid, potentially limiting access for low-income students. Advocate for:
Expansion of Workforce Pell eligibility
State-level aid for short-term programs
Employer-sponsored financial assistance
C. Labor Relations
Implementing staffing changes requires careful attention to:
Collective bargaining agreements
Faculty workload policies
Classification and compensation equity
Professional development needs
Shared governance processes
D. Sustainability Concerns
One-off strategies aren't enough—sustainable success depends on integrated planning and cross-functional teams that evaluate mission alignment, ROI, and long-term viability before launching new ventures.
VI. Promising State-Level Models
Texas Outcomes-Based Funding
Texas transformed community college funding through House Bill 8 in 2023, shifting from a static system tied primarily to students' time in class to an outcomes-based formula reflecting workforce needs. The historic $683 million investment rewards schools for getting students to complete degrees or certificates, transfer to four-year universities, or participate in college and career readiness activities.
Maryland's Non-Credit Funding Parity
Maryland's funding model supports many high-demand, non-credit workforce programs at the same rate as credit programs, and allows students to use the Maryland Promise community college scholarship for both credit and non-credit programs.
Free Community College Initiatives
Minnesota saw an 11.5% enrollment surge from fall 2023 to 2024 after expanding tuition-free eligibility. While these programs are state-funded, they demonstrate how reducing financial barriers can drive enrollment and subsequent revenue through increased state appropriations.
Conclusion
The funding crisis facing community colleges demands bold, multifaceted responses. No single strategy will solve the challenge, but a comprehensive approach combining revenue diversification, innovative staffing models, and strategic cost management can help institutions navigate current pressures while maintaining their essential mission.
Community colleges need to think beyond traditional models and embrace new approaches that value competency and skills as employers demand faster responsiveness. Success requires:
Institutional Leadership
Vision for sustainable financial models
Willingness to challenge traditional structures
Commitment to data-driven decision making
Investment in change management
External Partnerships
Deep engagement with employers and economic development agencies
Collaboration with K-12 and four-year institutions
Strategic relationships with government and foundations
Community trust and support
Student-Centered Focus
Equity in access and opportunity
Quality instruction and support services
Clear pathways to careers and further education
Affordability and value
As community college leaders emphasized at the 2024 Axim Collaborative convening, institutions are "in the obstacle-removal business". By implementing the strategies outlined in this article, community colleges can overcome financial obstacles while continuing to serve as engines of economic mobility and regional prosperity.
The path forward requires courage, creativity, and collaboration. Community colleges have historically been innovative and adaptable institutions. By leveraging their strengths, embracing new models, and focusing relentlessly on student success and community needs, they can build sustainable financial futures that honor their vital mission in American higher education.
Resources and Further Reading
National Organizations
American Association of Community Colleges (AACC)
National Council for Workforce Education (NCWE)
League for Innovation in the Community College
Association of Community College Trustees (ACCT)
Research and Policy Centers
Community College Research Center (CCRC) at Teachers College, Columbia University
The Institute for College Access & Success (TICAS)
New America Education Policy Program
Center for American Progress
Federal Resources
U.S. Department of Education, Office of Career, Technical, and Adult Education
U.S. Department of Labor, Employment and Training Administration
National Science Foundation, Directorate for Technology, Innovation, and Partnerships
State-Level Resources
State higher education coordinating boards
Community college system offices
Workforce development boards
Economic development agencies
This article synthesizes current research, innovative practices, and emerging trends to provide community college leaders with actionable strategies for addressing funding challenges. Implementation should be tailored to each institution's unique context, mission, and community needs.