Aftershocks: How the Pandemic Affected Community College Finances

By Clive Belfield, Thomas Brock, John Fink, and Davis Jenkins

For the community college sector, the COVID-19 pandemic was not like other economic shocks. Traditionally, economic downturns lead students to enroll in college at higher rates: Fiscal shocks are therefore offset by increases in tuition revenue, and college operations and institutional practices are unaffected. But the COVID-19 pandemic did the opposite: Many students stayed away from college, often because of health concerns. Colleges responded by moving teaching and advising online, and they used federal Higher Education Emergency Relief (HEER) funds to increase institutional aid to students and make other investments in campus safety and technology to stem further enrollment declines. It has now been four years since the COVID-19 pandemic broke out. With newly released institutional data from the Integrated Postsecondary Education Data System (IPEDS) (shown in the dashboard below), we can now see how funding for community colleges was affected as the pandemic played out.

In this blog post, we highlight some overall findings from the IPEDS dataset through fiscal year 2022. The IPEDS dataset covers the financial reports for each community college, including revenues per source (tuition, state/local and federal government) as well as expenditures and student aid disbursements. Our review compares community college finances in 2018 (pre-pandemic) to those in 2022 (post-pandemic).

Lower Enrollments Hurt Tuition Revenue

We start with enrollments. In the three years before the pandemic, community colleges were consistently enrolling, on average, 4,700 full-time-equivalent students (hereafter, FTEs) each year. But by 2022, enrollments were 16% lower at just under 3,940 FTEs. (Typically, community college enrollments fluctuate by +/-2% each year). Losing students affects the bottom line. Directly, tuition revenue is reduced (see below). But there are also cost consequences. To the extent that costs are fixed (e.g., in terms of physical campus size, faculty contracts, and support services), fewer students means higher average cost per student. And fewer new enrollees leads to fewer second-year students, perpetuating budgetary pressures.

Average Number of FTEs per Community College

However, not all colleges were adversely affected. One in ten community colleges experienced enrollment increases from 2018 to 2022, although most of these gains were modest (and in at least some cases were due to increases in high school dual enrollment students, who often enroll at a discounted price). On the other end of spectrum, one in ten colleges experienced FTE declines of more than 30%. Some of these colleges now face significant “diseconomies of scale” and will have to make significant institutional changes to remain financially viable. The picture is similarly varied at the state level, with some colleges in Massachusetts, New York, and Oregon experiencing declines of 30%. The college systems in these states may face significant financial pressures in the near future.

Post-Pandemic Drop in Community College FTEs by State: Percentage Change in FTEs Between 2018 and 2022

Federal Funding Boosted Revenue per Student

What ultimately matters for budgets is total revenue per FTE. In the three years before the pandemic, the average total revenue per FTE was stable at $19,610 (adjusted for inflation and expressed in 2024 dollars). However, IPEDS data show that in the two years after the pandemic, revenue per FTE actually increased, and it did so by a significant amount (see figure below). By 2022, revenue per FTE was $23,760, almost one quarter ($4,150) above pre-pandemic levels.

Average Community College Funding per FTE (in 2024 Dollars)

Looking at the sources of funding for community colleges (see figures above and below), we see how this boost came about. Unsurprisingly, this financial boost did not come from tuition revenue. Overall tuition revenue declined along with enrollment, but—even worse for colleges—per student revenue fell. In other words, not only did fewer students enroll and pay tuition, but each one paid less in tuition/fees. (Again, dual enrollment—with high school students paying less—is part of the explanation). Per FTE, tuition revenue fell by $290 on average, and tuition revenue represented only 12% of total revenue by 2022.

Proportion of Funding per FTE by Source

The boost in revenue came from increased government funding. Most important, there was significant and rapid increases in federal funding, with $25 billion allocated to community colleges through the HEER Fund. Federal funding per FTE rose immediately with the pandemic; it amounted to an extra $2,300 per FTE. Federal funding became a much larger proportion of community college revenue: Before the pandemic, it was 16% of revenue; by 2022, it had risen to 21% of revenue. This massive financial infusion more than offset the decline in tuition revenue.

State and Local Funding Stayed Steady

Lastly, state/local funding remained important. The absolute amount of average state/local funding was constant (despite pressures to spend on competing demands to directly address the pandemic). Thus, state/local funding per FTE increased, equating to an additional $2,080 for each student. Because state/local funding is the largest source of community college revenue, this stability in funding helped buffer the budgetary pressures of the pandemic.

Within this broad outline, there are variations by state and (especially) by community college. In only one state—Delaware—was total revenue per FTE lower in 2022 than in 2018 (and by only 1%). Tuition revenue per FTE actually rose in 12 states (including California), although in only three states—Missouri, Wyoming, and Maine—was the increase greater than 10%. The near-universal pattern was federal funding: This increased in every state except Delaware, even as this state received more than $60 million in HEER funds. (See the ARCC Network Pandemic Relief Funding Dashboard for detailed breakdowns of HEER funds awarded and spent). Finally, five state systems—Georgia, Idaho, Kentucky, Nevada, and South Dakota—had lower state/local funding per FTE.

When viewed at the individual college level, budgetary pressures also varied over the 2018-to-2022 period. Eight percent of colleges had lower revenues per FTE in 2022, 29% had higher tuition revenue per FTE, and 20% experienced declines in state/local funding per FTE. Again, the one near-universal trend was federal funding: Only 5% of colleges saw declines in federal revenue per FTE during the pandemic.

Finances Remain Challenging Post-Pandemic

Despite the rise in revenue per FTE, few community colleges are likely to be in a better financial position than before the pandemic. First, even as revenue per FTE increased, cost per FTE likely also increased. (Cost is defined as the amount needed to deliver a given quantity and quality of education.) In response to the pandemic, organizational changes led to new and additional costs for administration/management, for information technology, and for support services. Colleges used federal money to provide financial support for students that will be difficult to replace with other sources. Costs may have risen by as much as (or even more than) revenue. Second, the extra federal funding that covered the shortfall was temporary. As HEER funding ended in June 2023, federal funding may soon revert back to being a more modest part of community college revenue.

Finally, the demographic trend of fewer high school graduates continues. Hence, colleges will be competing for a smaller pool of available students and will find it harder to exploit economies of scale and defray their fixed costs. Thus, the pandemic may have helped entrench long-run budget pressures on many community colleges. Some states and colleges may be more successful in adjusting to economic and social changes. The data tool above can help leaders better understand the trends for their states and colleges in the immediate aftermath of COVID-19 and thus be better positioned to develop fiscal plans that ensure their institutions thrive in the post-pandemic era.

This blog post also appears on the CCRC Mixed Methods blog.

The research reported here was supported by the Institute of Education Sciences, U.S. Department of Education, through Grant R305X220022 to Teachers College, Columbia University, and by Ascendium Education Group. The opinions expressed are those of the authors and do not represent views of the Institute, the U.S. Department of Education, or Ascendium.