During the Great Recession, more students turned to community colleges for an education while out of work than to four-year schools; at the same time, as state budgets contracted, community college systems across the country suffered significant budget cuts. As California navigates the current health and fiscal crisis, the state can take lessons from this very recent history as it looks to protect its most vulnerable students.
California’s Near-Term Budget Challenges
This month, California’s leaders must craft a budget amid dire fiscal circumstances. The state Department of Finance predicts an average unemployment rate of 18 percent in California in 2020, and since January, revenue projections have declined 22 percent. Facing a budget deficit of $54.3 billion, Governor Gavin Newsom’s revised budget would draw down reserves, cancel new programs, defer certain payments, and make a number of cuts, including base reductions of 10 percent for the public higher education segments. Those cuts would be triggered only if the federal government does not step in to provide additional support. The state legislature has proposed an alternative approach, with smaller cuts for public universities and almost no cuts to the community college system. All of the proposals wisely preserve nearly all funding for the Cal Grant, at a time when student financial aid will be especially necessary. As state leaders face tough choices, they can look to lessons learned during the Great Recession to avoid some of the most harmful actions.
Lessons from the Great Recession
Before the Great Recession, California spent $7,100 per full-time equivalent (FTE) community college student in state-appropriated funds; that number declined to $4,351 per FTE by the 2012–13 school year, as more people enrolled and the system had fewer funds available per FTE, and then as the state reduced its budget allocations in response to the recession-fueled revenue decline. The American Recovery and Reinvestment Act (ARRA) provided some protection during this time, by filling gaps in state higher education budgets for the first couple of years. Between 2009 and 2011, about $1.7 billion in federal funding went to supporting the state’s public higher education system. This support helped stave off some of the harm of reduced state funding, though total funding still declined, even after the addition of ARRA funds.
Like other states, California increased fees during the Great Recession to try and make up for the part of the difference, raising the per FTE revenue collected by about $491, or 71 percent, between the 2007 academic year (the last year academic year that tuition would have been set before the state budget felt the effects of the recession) and the 2011 academic year. It’s worth noting, though, that fees remained significantly lower in California than in the rest of the country, and some of the increase in per FTE fee revenue may also have been driven by significant enrollment by out-of-state students, who pay far more. Nationally, tuition and fees went up slightly more, on average about $642, or about 85 percent.
As a result of budget cuts, the community college system cut back on what they offered to students who were looking to enroll: course offerings declined by over 20 percent, and the student-to-faculty ratio increased by about 14 percent. It is likely that, as a result of this reduced capacity, the state was less able to serve students who wanted to enroll, though determining just how many students were left out is difficult. The system prioritized existing students in its course offerings and in who received enrollment priority, and while enrollment of students of all ages dipped, the biggest dips in enrollment rates were among high school students (many of whom were “special admit” students), and students over age 50. There were widespread reports of overcrowding and waitlists. Although limited research exists on the overall impact of waitlists on enrollment and persistence, one study of waitlists did show that students at DeAnza Community College who missed the waitlist cutoff were 3.7 percentage points more likely to take zero courses that semester.
Community college enrollment growth, while significant, was also lower over this time period in California than in other states—the system saw 11 percent growth from before the recession started and would have affected enrollment trends (the 2006–07 academic year to the 2011–12 academic year), while enrollment increased nationally by 25 percent—although growth in enrollment at four-year institutions in California was comparatively very low as well, so some of this differential may relate to other demographic trends or baseline enrollment levels.
During the Great Recession, for-profit college enrollment increased in California by 39 percent over the same time period—even higher than the 25 percent increase nationwide.
There is research to suggest that lower public funding for community colleges also makes students more likely to enroll in for-profit colleges. During the Great Recession, for-profit college enrollment increased in California by 39 percent over the same time period—even higher than the 25 percent increase nationwide. The growth rate at two-year for-profit programs was even higher. Aggressive (and often predatory) recruitment and marketing, combined with the earlier deregulation of for-profit colleges, fueled high enrollment during the recession—and California students were more likely than others to enroll.
A New World
Today’s recession differs in a few key respects. First, during the Great Recession, the state received some help from the federal government. While the state funding provided in the House-passed HEROES Act would mitigate the governor’s proposed cuts, it is unclear whether and when that federal help will arrive. Second, enrollment patterns may differ this time around. While workers may decide to go back to school during the economic downturn, that effect may be delayed as some campuses will remain closed and instruction is provided online, even through the fall.
It is clear, however, that community colleges play a vital role during economic downturns. At a time when lower quality institutions will be aggressively marketing to California residents looking to navigate their next steps during an uncertain economic climate, the state must ensure it continues to provide both an affordable and accessible route for those future students. The legislature’s proposals to mitigate the harm to the community college sector in particular is a good start.