Budget Analysts: Reject Proposal to Permanently Cut Community College Funding

The Department of Legislative Services (DLS), in its budget analysis of Aid to Community Colleges, is recommending that the General Assembly reject a proposal in HB 152, the Budget Reconciliation and Financing Act of 2020 (“BRFA”), to permanently cut funding for community colleges.

State funding of Maryland’s community colleges is based on the Senator John R. Cade funding formula which was established as law in 1996. The Cade funding formula was created to provide community colleges with predictable support for operations, and to provide students with affordable tuition.

In Governor’s FY 21 proposed budget, community colleges are funded through the Cade program at $268 million. While this is a 5.5% increase compared to FY 2020 funding, it is actually less than would have been dictated by the Cade funding formula (by approximately $18 million).

In the proposed BRFA, the standard formula is amended to limit the growth of community college funding. Beginning in FY 2022, funding for community colleges is limited to the FY 2021 appropriation plus the annual percentage increase in General Fund revenues above the estimated annual increase in General Fund revenues, which is calculated by the Board of Revenue Estimates.

DLS estimates that this proposal would cut overall funding for community colleges by approximately $121 million by FY 2025.

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According to the DLS budget analysis:

DLS recommends amending the BRFA to retain the linkage to the level of FTES at the community colleges and State support per FTES (full-time equivalent student) at selected public four-year institutions of higher education in the Cade Funding Formula. DLS also recommends permanently calculating the Cade allocation using the percentage of the State’s per FTES funding for selected public institutions of higher education to which the fiscal 2021 Cade funding level approved by the General Assembly equates.

The original intent of the Cade formula is that community college costs be divided into equal thirds between the state, local government, and student tuition/fees. Unfortunately, due to budgetary constraints over the years, the Cade funding goal has typically not been met.

The Cade funding formula originally called for the State to provide 29% of community college funding by 2012. However, the state has adjusted the formula seven times in the last ten years – delaying its commitment to fully fund the Cade formula.

Under current law, funding is based on an amount equal to 25% of the State Aid per FTES (full-time student enrollment) at the selected four-year schools. This increases to 27% in fiscal 2022 and 29% in fiscal 2023 and thereafter.

Stay tuned to Conduit Street for more information.

Useful Links

Previous Conduit Street Coverage: Governor’s 2021 Budget Proposal – What It Means for Counties

DLS Operating Budget Analysis: Aid to Community Colleges