Budget and Finance in the American Community College New Directions for Community Colleges, Number 168 J–B CC Single Issue Community Colleges Series

Take an in depth look at the current key issues and practices in budgets and finance for community colleges. In this volume, topics include:

• the contemporary challenge of meeting growing demands for increased student persistence and success,
• diminishing state support for higher education,
• new calls for accountability and ways to measure institutionaleffectiveness,
• the increasing reliance of many community colleges on grants and other sources of revenue, and
• college policies that have significant financial ramifications.

This is the 168th volume of this Jossey–Bass quarterly report series. Essential to the professional libraries of presidents, vice presidents, deans, and other leaders in today′s open–door institutions, New Directions for Community Colleges provides expert guidance in meeting the challenges of their distinctive and expanding educational mission.

EDITORS NOTES 1
Trudy H. Bers, Ronald B. Head, James C. Palmer

1. The Clear and Present Funding Crisis in Community Colleges 5
Daniel J. Phelan

This chapter describes the impact of major changes in community college funding on its open–access mission, as well as on the work and responsibilities of college leaders as they attempt to balance the increasing demands made of their institutions while concomitantly grappling with diminished public fiscal support.

2. Community College Budgeting and Financing Demystified 17
David S. Murphy, Stephen G. Katsinas

The topic of budgeting and financial resources often strikes fear in the hearts of community college administrators and faculty, as they believe it is an arcane and complex art understood only by accountants and financial specialists. This chapter attempts to demystify the basic concepts involved in budgeting and addresses approaches to budgeting, cost allocation, and using budgets for planning and control.

3. Budgeting Approaches in Community Colleges 29
James C. Palmer

Several budgeting approaches have been initiated as alternatives to the traditional, incremental process. These include formula budgeting; zero–base budgeting; planning, programming, and budgeting systems (PPBS); and responsibility center budgeting. Each is premised on assumptions about how organizations might best make resource allocation decisions. Though the incremental approach remains dominant, experience with the alternative approaches suggests key questions that can guide the work of community college budget developers.

4. Program Costs and Student Completion 41
Terri M. Manning, Peter M. Crosta

Community colleges are under pressure to increase completion rates, prepare students for the workplace, and contain costs. Colleges need to know the financial implications of what are often perceived as routine decisions: course scheduling, program offerings, and the provision of support services. This chapter presents a methodology for estimating the cost of instructional programs for completers who follow the program s curriculum (program cost) and for students who follow a different trajectory, often not even completing a program (pathway cost). Together these measures provide important insights to guide decision makers.

5. The Implications of State Fiscal Policies for Community Colleges 53
Alicia C. Dowd, Linda Taing Shieh

A variety of policies and practices, including those developed by local boards and administrations, as well as those mandated by state and federal governments, affect budgets and finances at community colleges. Examples include tuition policies, fee structures, performance–based funding, and personnel policies. This chapter explores some of the reasons for policy changes and provides a framework for incorporating effectiveness into the community college mission, thereby avoiding unintended negative consequences for students or the fiscal viability of the institution.

6. Linking Resource Decisions to Planning 65
Laura Saunders

This chapter explores the relationship between strategic planning and budgeting. It describes how community college leaders can use strategic and foundational plans (academic, facilities, technology, and financial) to drive budgets and resource allocations in support of institutional goals and objectives. Finally, it identifies challenges of doing so and the usefulness of budget decision packages as a way of determining the link between resource allocation decisions and the achievement of planning goals.

7. Philanthropy and Private Foundations: Expanding Revenue Sources 77
Carlee Drummer, Roxann Marshburn

As community colleges seek new revenue streams, philanthropic organizations, including college foundations and private funders, have already begun to influence both revenues and college programming. This chapter discusses the current role of philanthropy, especially private foundations such as the Lumina Foundation for Education and the Bill and Melinda Gates Foundation, to provide revenue and direction to community colleges. The chapter also explores untapped potentials and the role of local college foundations and alumni in contributing resources.

8. Entrepreneurship: The College as a Business Enterprise 91
Brent D. Cejda, Michael R. Jolley

This chapter explores the concept of entrepreneurial waves, with a special focus on the third wave of entrepreneurial ventures: alternative means of funding programs and services in light of continued reductions in public financial support and as an approach to building strong and sustainable relationships with external constituencies. The chapter also explores the leadership characteristics necessary to create and sustain a culture of entrepreneurship.

9. Assessing Financial Health in Community Colleges 103
Trudy H. Bers, Ronald B. Head

In this age of educational accountability, there is an increasing emphasis on assessment and institutional effectiveness, not only in the academic arena but also in other aspects of community college operation, such as fiscal health and stability, revenue generation, resource allocation, facilities, workforce development, and community enrichment services. This chapter describes the challenge of effectively assessing community college financial services and budgets as well as internal and external standards and benchmarks developed to measure institutional fiscal health and the allocation of resources (e.g., reserve fund amounts, deferred maintenance, and bond ratings).

10. Evolving Practices and Emerging Innovations in Community College Finance 115
Christopher M. Mullin

Besides the shift in community college funding from the state to the student, a number of other innovations and trends have emerged with respect to community college finances. This chapter explores some of these developments, including performance–based funding, changes in student and institutional eligibility for financial aid, changes in local funding, generating revenue from institutional data, and the potential financial impact of massive open online courses (MOOCs). Clearly, the financial landscape of community colleges is changing dramatically, calling for more skillful financial managers and entrepreneurs.

11. Concluding Thoughts 127
James C. Palmer

Community college leaders face several fundamental challenges as they work on sustaining the fiscal viability of their institutions. These include the need to anticipate the unintended consequences of performance–based funding, diversify revenue streams in ways that reduce fiscal dependence on tuition and state appropriations, control costs, and rethink the comprehensive, all–things–for–all–people mission.

INDEX 131