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

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

California State University, Sacramento 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 California Is Becoming Less Educated Than Other States (Rank Among States in % with College Degrees) Age Group:AA or HigherBA or Higher >642 nd 5 th th 10 th st 16 th th 23 rd

California State University, Sacramento 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 Tuition/Fees in 50 States

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

California State University, Sacramento Age and Race/Ethnicity Matter Rates of completion:  27% for students age 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 Enrollment Patterns Matter – Especially Full-Time

California State University, Sacramento 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 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 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

Base Appropriations (Enrollment-Driven) Readiness-Disincentive to stress readiness because it could reduce FTES Access+/-Incentive to increase enrollment; no incentive to favor enrollment of degree-seekers over personal enrichment Completion-No incentive for course completion; incentive to allow late registration and to minimize prerequisites Workforce+/-Disincentive to meet workforce needs in high- cost and new fields Efficiency-Focus on inputs does not direct funds where they would have the most impact on outcomes

California State University, Sacramento Categorical Program: “Matriculation” Readiness-Discourages readiness with 109 definitions of readiness (109 local assessment practices) Access+/-Promotes broad access but not necessarily by degree-seeking students Completion-Formula is richer for new students than continuing and remedial and based on enrollment, not services provided Workforce-No incentive for students to obtain, or colleges to provide, advising about academic pathways and careers Efficiency-Complex approval and validation process; 95 percent prior year funding guarantee

California State University, Sacramento Restrictions on Spending: 50% Law Readiness-Discourages time spent by faculty and staff on K-12 alignment and readiness Access-Limits spending on functions supportive of access (outreach, financial aid administration, orientation) Completion-Discourages investment in support services that are critical to persistence and success Workforce-Disincentive for faculty to participate in curriculum development crucial for workforce education Efficiency-Imposes artificial constraints on use of resources

California State University, Sacramento Financial Aid Focus on Fees, Instead of Affordability Access-Impedes access because students do not maximize available financial aid Affordability-Students get too little aid for major costs of college Completion-Leaving aid unused leads to too many work hours and lower completion Efficiency-State funds used for costs that the federal government would cover

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

California State University, Sacramento 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 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 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 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 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: Request hard copies: