The Case for Change

A “perfect storm” is brewing for the Virginia Community College System. We are experiencing unprecedented enrollment growth and requests for our services, yet at the same time state support is declining at equally unprecedented rates.

  • From fall 2007 to fall 2009, enrollments in our community colleges have increased by more than 22,000 students, an increase of more than 13%. At the same time, annual full-time-equivalent students are estimated to have increased by more than 19,700 FTE from FY08 through FY10, an increase of more than 19%. These rates of growth are unprecedented in our system.
  • From FY08 to FY12, it is anticipated that the cut in general fund support will reach $105 million, a loss of 27% of our state funding.
  • Combining these two statistics results in a loss of state funding on a per FTE basis of $1,632, or 41% over the five years. Without considering this year’s enrollment growth, base budget adequacy guidelines indicate a shortfall of $65 million for FY 2010. Adding in this year’s growth increases that shortfall to $153 million.
  • It is not anticipated that these statistics will recover before FY 2015 and may actually decline further before seeing any improvement.
  • The state requires that regardless of funding levels, state funds will be allocated among community colleges based on enrollments; with declining state funds and uneven enrollment growth among colleges, small and rural colleges with less enrollment growth will lose incrementally more funding and will be in greater need of new service delivery models.
  • Faculty and staff will need to be compensated as we require greater productivity from them. Providing just a 2% annual increase would cost over $10 million each year. Recent guidelines from SCHEV indicate that the VCCS would need increases of 8.9% for two years to move to the 60th percentile of the benchmark group, at a biennial cost of $29.5 million, and that’s just for full-time teaching faculty salaries.
  • The proportion of full-time faculty has dropped from 52% in FY 1999 to 41% in FY 2009. To return to the level of 10 years ago would require $88 million per year in the base budget adequacy model.

And, we are about to embark on an ambitious strategic plan to expand even further our reach to serve the unmet needs of more citizens of the Commonwealth, to assist them and the communities they live in to have improved economic opportunities.

  • Too many students arrive at our colleges not ready for college-level courses, hindering associate degree completion. Of recent high school graduates who enrolled in the VCCS in the fall of 2008, just under half (45%) enrolled in at least one developmental education course, reflecting a lack of readiness for college-level coursework. This percentage has remained constant over the last 5 years.
  • Another barrier to student success is moving students from initial enrollment in a developmental course through to completion of needed developmental courses. More than half of the program-placed students in the fall 2004 first-time-in-college cohort required developmental education (56%). Of those, (83%) placed into developmental mathematics. Only one-half of students who enrolled in a developmental course completed it on the first attempt. Of those beginning in developmental mathematics, only 22% completed a gatekeeper mathematics course. Non-developmental students are almost twice as successful in completing an award as those requiring developmental education.
  • 50,000 more students (20,000 FTE) are to be served on an annual basis by FY 2015. With current year increases, it is likely that even more students will be served. At the same time our colleges will strive to serve at least an additional 25,000 students each year from underrepresented populations.
  • The number of students graduating, transferring or completing a workforce credential is to increase by 50%, and the success of students from underserved populations is to increase by 75%. Additionally, more of these graduates need to be in high demand disciplines – science, technology, health care, “green” technologies, and other workforce areas that are the highest in cost to start-up and maintain.
  • As these additional students are served, SCHEV restructuring performance standards require “acceptable progress” toward targets for annual retention and progression rates, toward degree productivity, toward graduation rates according to financial aid status, and toward targeted ratios of awards to annual FTE enrollments.
  • It is likely that we will have to increase even further the number of students receiving an associate degree in order to meet the goals of Governor McDonnell and the Grow by Degrees campaign. [The Governor’s campaign goal was to have additional 100,000 degrees awarded over the next 15 years; the Grow by Degrees campaign cites a comparable goal of an additional 70,000 degrees over 10 years. ]
  • To serve an enrollment level of 139,838 FTES by 2015 (2.82% annual growth over current enrollment levels) and provide 2% salary increases each year would require an additional $338.1 million. If that were funded solely with tuition, tuition would need to be increased by 79.1% over the next 5 years.

Our new strategic plan has an ambitious goal for raising funds other than traditional state support for our colleges, but also commits to keeping tuition at less than half the comparable rate of four-year colleges.

In addition to lack of state funding for faculty and staff costs (tied to serving more students), it is anticipated that state support for other costs will not be forthcoming:

  • 1 million square feet of new space is targeted to open in 2008-10 with another 1 million square feet targeted to open in 2010-12, with no new state support; it is estimated that is a total cost of $13.6 million that has been or will be absorbed over the two biennia.
  • The cost of technology increases in terms of license fees for software that are based on student enrollments; more desktops are needed as computer labs are used more heavily; maintenance fees for enterprise system software licenses continue to escalate; and costs to acquire and expand new applications such as the Wizard must be funded. The cost to “true up” the Oracle data base license this year alone was almost $500,000.
  • Faculty and staff have not received salary increases for two years and it is not anticipated that state funding for salary increases will be available for two more years. Additionally, retirement costs and increases in health care costs may be passed on to faculty and staff. To provide even a 2% increase in salaries without state funding would cost $20.6 million for a single biennium.
  • Support for the Equipment Trust Fund and Maintenance Reserve are projected to decline in the next biennium, at a loss of $7.9 million to the VCCS.
  • Increases in energy costs, increases in library materials and laboratory supplies needed for more students, and other maintenance costs will all need to be absorbed by existing college budgets.

Tuition and non-traditional fund sources will become more important “legs” to our funding, but the third “leg” of traditional state funding will be unstable for years to come. This wobbly funding platform is not sufficient to achieve the goals of our new strategic plan or to sustain our precedent-setting reputation.

  • At current enrollment levels, each 1% increase in tuition generates approximately $3.3 million in additional revenues.
  • To cover the additional projected general fund reduction of $40.7 million in FY 2012, it would require an additional increase in tuition of $330 for a full-time student, or an increase of more than 11.6%. This does not replenish the loss on a GF/student basis due to enrollment growth.
  • To cover annual salary increases of 2% without additional state support, tuition would need to be increased by 3% each year.
  • To cover the estimated guideline funding for enrollment growth and 2% salary increases would require $338.1 million; to also improve our fulltime faculty ratio moves that total to $504.8 million. Even with 6.5% tuition increases each year through FY 2015, the remaining funding gaps would still require another 17 – 33% increase.
  • Achieve 2015 has a goal of raising an added $550 million in revenues from grants and other non-state funding sources, over the course of six years. Those are traditionally one-time fund sources that can be used for program start-up, short-term pilot programs, financial aid, or other needs that are not on-going in nature. These funds will not address the on-going annual operating costs of $338.1 – 504.8 million.
  • Even moderate tuition increases require comparable increases in financial aid, however no additional financial aid is recommended in the Governor’s budget for 2010-12. With enrollment growth alone, the existing base of financial aid will be diluted and the workload of existing staff increased. With higher tuition increases, even more students will be in need of aid. From FY 2005 to FY 2009, the number of FAFSA applicants increased 44.7% from 91,425 to 132,270,the number of applicants receiving aid increased by 37% from 48,736 to 66,865, and grant and scholarship aid increased by 60%, all at a time when enrollments increased by only 13% over the five years. The amount of aid, the way in which it is disbursed, and the sources of aid will need to be dramatically altered to serve the new students in the new environment.

Therefore, we need to seek new ways of doing our work, to become smarter in our investments of people and talent and technology, to better leverage our combined size and resources, to restructure our work patterns and habits, and to break down barriers to change and improvement, without making changes to our fundamental governance and organizational structure that has remained a constant and enduring backbone since the inception of our system. To that end, I am creating Virginia’s Community College’s Re-Engineering Taskforce, to examine and rethink every aspect of our organization and operations other than governance, in order to afford us the resources and opportunities needed to serve our students in a continued tradition of excellence and innovation.

  • Without such change, even the status quo can’t be maintained. Implementing efficiencies alone can perhaps allow us to tread water. But through substantial review of all aspects of our enterprise through a more comprehensive re-engineering effort, the VCCS can continue to meet the growing needs of our communities for new and better services while maintaining its reputation for excellence and innovation.
  • It will be necessary to determine if there are things we can stop doing, things we can do differently, and to selectively decide on what the most strategic steps need to be taken to achieve our goals through 2015 and beyond.
  • There are at least three opportunities for study. Some questions are provided for each opportunity as examples to stimulate thinking:
    • Operational Productivity
      • How can technology be used to both provide new services and to more efficiently provide existing services
      • How can operations among and between the 23 colleges and the system office be better organized using new models of service delivery, including self-service, out-sourcing, regional and system-wide services
      • How can the size of the system be better leveraged to reduce costs
      • How can college physical plants be utilized more efficiently and effectively with regard to class schedules and other activities
    • Resource Productivity
      • How can we better leverage the existing resources of the system to bring in new revenues or resources
      • Are there alternative resource structures that should be examined such as differential tuition to incentivize students to access our services in different ways
      • Should more emphasis be placed on students that bring in more revenue, such as out-of-state students
      • Are there other cost structures for services provided to communities and business and industry
    • Teaching and Learning Productivity
      • How can moving the non college-ready student to college-ready be accomplished in a more streamlined fashion so that resource savings can be deployed for other instructional purposes
      • What new instructional design and delivery models can be explored for delivery of distance learning and other courses that optimize faculty’s investment of time
      • How can incentives be provided for faculty to teach more students in order to generate more revenues for professional development, curriculum development or other instructional activities
      • How can technology be deployed to provide student services such as first-line advising and tutoring through self-help options that can free up faculty and staff to work with students in need of more in-depth assistance
      • How can new or existing academic programs be delivered cooperatively by colleges in order to align college program inventories with needs of the service area and conserve resources.

The Taskforce will be chaired by Dr. Robert Templin, president of Northern Virginia Community College, and co-chaired by Dr. Jack Lewis, president of New River Community College. The work of the Taskforce should be completed in time to report to the State Board at its Annual Meeting in November, 2010, however it is anticipated that as recommendations surface during the course of its work that can and should be implemented earlier, those recommendations will be forthcoming.