North Carolina’s Community Colleges Make a Big Bid to Stay Relevant

The system is poised to ask state legislators to overhaul its funding formula to focus on how well colleges prepare students for high-demand, well-paying jobs.

North Carolina has an ambitious plan to modernize its community colleges, starting at square one: funding.

Under a proposal dubbed Propel NC, the system would no longer award money to its campuses based on total full-time enrollment, something experts have long argued punishes colleges with large numbers of part-time students. The new formula would pay a premium to each college based on labor-market outcomes: the more students enrolled in courses in high-demand, high-paying workforce sectors, the more money the college receives.

Importantly, the proposed formula makes no distinction between curricular courses that count toward degree programs and noncredit continuing education classes, which historically offer fewer slots for students because of their lower FTE reimbursement rates. 

“I don’t see a lot of the funding formulas doing this really innovative grouping of credit and noncredit” courses, says Karen Stout, president and CEO of the nonprofit Achieving the Dream, and an advisory board member of the Belk Center for Community College Leadership and Research at N.C. State University. 

The big idea: The goal of Propel NC is creating more opportunities for students to enter short-term programs in high-growth job sectors, particularly those that traditionally have required formal degrees, like advanced manufacturing, healthcare, and information technology. 

“It will actually force us and incentivize us to listen to our employers, to have those thoughtful conversations like, ‘Will a certificate and an intensive, cohort-based 16-week class satisfy your requirements if this content is delivered?’” says Dale McInnis, president of Richmond Community College and one of Propel NC’s architects.

“If we don’t change and adapt and modernize, how are we going to stay relevant?”

The details: The 22-member State Board of Community Colleges will vote on Propel NC in February. The N.C. Association of Community College Presidents endorsed the proposal 58-0 in December, the unanimous vote a sign of “a lot of pre-game preparation and inclusive conversations,” says Stout.

Ultimately, though, the decision will rest with state legislators, who must decide whether to pony up an extra $68.6M—give or take, based on enrollment—each year to fund the plan. System leaders will share the proposal with legislators when the N.C. General Assembly reconvenes in April.

If they approve the plan, North Carolina would join a handful of states that are baking an alignment between higher education and the workforce into their funding formulas. Texas, for example, allocates money to community colleges based in large part on how many credentials of value they award. 

Creating High-Demand Job ‘Sectors’

A student works in a mechanical engineering lab at Wake Technical Community College. (Courtesy of Wake Tech)

On the ground: The proposal comes amid an economic renaissance for North Carolina, where the economy had struggled to rebound from the loss of thousands of tobacco and textile jobs in the 1990s and early 2000s. The economic development announcements since 2021 include 5.1K jobs making batteries for electric vehicles for Toyota, 1K jobs at a Google engineering hub, and 1.8K jobs building semiconductors for Wolfspeed at the world’s largest silicon carbide materials facility. 

Those are the type of high-wage, high-demand jobs that the state community college system seeks to address with Propel NC. The new formula would fund campuses at higher rates based on the number of students in fast-growing workforce sectors across North Carolina: healthcare, engineering and advanced manufacturing, trades and transportation, information technology, and public safety and first responders. 

“There are other areas of need, no doubt. But these areas are really fundamental to our future,” says Scott Ralls, president of Wake Technical Community College, who was the state system’s president from 2008 to 2015. 

Officials will review statewide economic data every three years and tweak the sectors as needed, which will account for economic changes as well as the inevitable fluctuations in community college enrollment, says Judith Scott-Clayton, associate professor of economics and education at Columbia University’s Teachers College and a senior research scholar at the Community College Research Center.

“When the economy is good, fewer people enroll. When the economy is down, more people enroll. That can happen fairly quickly,” she says. 

The North Carolina community college system has enrollment and financial challenges that are unique to the state, however. Though North Carolina is the ninth-largest state, it has the second-highest number of public community colleges in the country, with 58. California, with 3.5 times the population, has 101. The size of North Carolina’s campuses also varies wildly, ranging from 20K students to fewer than 1K. 

The challenge for McInnis and his team, he says, was creating a model that didn’t put either the very smallest or the very largest colleges at a disadvantage. “We weren’t going to self-fund this by cutting one college in order to enrich another,” he says.

For both Stout and Scott-Clayton, the critical question is whether the state’s community colleges can continue to focus on strong bachelor’s degree outcomes amid Propel NC There’s a constant tension between community colleges and employers about producing workers whose training allows them to immediately meet workforce demands and those who earn the degrees that lead to higher lifetime earnings, says Scott-Clayton.

“Are they going to be equipped if something changes again in three years—an employer moves out or the economy shifts? Are we kind of trading off the short term for the longer term?” she asks.

Adding Capacity in High-Cost Programs

Changing the status quo: The system’s current funding formula is biased toward two-year degree programs, since that’s what traditionally has generated the most revenue. The result is a funding process that prioritizes degree programs over short-term training programs that allow students to enter the workforce more quickly and, typically, at a lower cost. It inadvertently signals to potential students that nondegree programs are less valuable. 

That creates situations like the one Phillip Price, the system’s chief financial officer, witnessed when he held the same role at Central Carolina Community College: instructors who taught continuing education computer science courses earned 10% less than those teaching the same subject to students in degree programs.

“With the new approach, we’re looking at instruction as instruction, whether that’s a curriculum program where you get a two-year degree or a short-term continuing education program,” Price says.

The state’s community college leaders have long argued that the current formula also contributes to low graduation rates—with only 49% of students who start out in associate degree or certificate programs earning any credential within six years. Completion rates for community colleges nationally, at 43%, are similarly low.

College leaders regularly see students in the trades and technical fields, in particular, enter degree programs, learn the skills they need, then find jobs and stop out before earning their credential—choosing the workforce over taking the math and English courses they need to graduate. 

“We look like we failed as a college because that person didn’t graduate,” McInnis says. “They’re working. They got the skills they needed, but we didn’t align the job with the credential, because we kept teaching in the same format that we’ve always taught.”

A health sciences student at Wake Tech. (Courtesy of Wake Tech)

High costs: Colleges also have struggled to recruit instructors for continuing education courses due to lower funding levels, and thus lower pay—creating a vicious cycle that pushes students into degree programs whether they need them or not. This problem has been particularly acute in skilled trades like welding and heating and air, in which instructors can earn more working in their fields than teaching.

Even in some high-cost degree programs, like nursing, the current formula doesn’t provide the level of funding needed to attract and keep faculty.

The result is too few students enrolled in critical workforce sectors, says Ralls. Wake Tech currently has 300 nursing students, but needs 400 to meet the regional workforce’s needs, he says. The same is true for its medical imaging programs that serve 80 students—45 fewer than area employers need.

Propel NC specifically addresses this lack of instructional capacity, he says.

“Ultimately, what’s necessary for educating and training the workplace of the future is having skilled instructors in place,” says Ralls. “That becomes even a tougher thing when the job market becomes as hot as it is.” 

Looking ahead: If Propel NC is approved, Stout says she expects to see colleges create comprehensive workforce development pathways, which will transform them into what she calls “career-matching organizations.”

For instance, grouping welding courses in the same workforce sector regardless of whether they’re curricular or continuing education will inspire colleges to redesign program pathways that students can enter directly out of high school or as adults returning to college to learn new skills, she says. 

“If I’m a (community college) president, I’m looking at this change and I’m thinking, ‘How will this incent me to think about new programs? How will this incent me to change the way students enter my college so they see that combination of credit and noncredit possibilities?’”

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