From Theory to Practice: Implementing a State-level Comparator-Based Finding Request and Allocation Model.

Community colleges have become among the most popular public higher education institutions in the nation to provide transfer, technical, developmental, business and industry, and community service education. Once considered the junior partner in the higher education enterprise (and on average receiving less state aid per student than their four-year counterparts), public community colleges now provide education to more than one-half of all citizens enrolled in postsecondary education. In the last decade, they have also become the core workforce development institutions of our nation. In many ways, these institutions have seen their role and mission evolve to the point that they now have goals that in many respects resemble those defined for land grant universities, established by the Morrill Act during the nineteenth century (Cohen & Brawer, 1996).

Public community college leaders often lament that their institutions are "low on the food chain" when it comes to their state's funding priorities. This may be due partially to the lack of attention paid to cost-and-benefit analyses in funding requests. Policymakers around the nation will likely find themselves spending increasing amounts of time validating fair and equitable funding allocation criteria (Burke & Serban, 1998). As the squeeze on available state aid becomes increasingly oppressive, comparing costs outlays to the investment returns gained by states were they to invest more in community college education will become a higher priority for community college leaders.

Yet barriers exist to promoting this position (Goodchild, Lovell, Hines, & Gill, 1997), among which include the following: (a) a noticeable inability of college leaders to demonstrate that community colleges are underfunded, especially in the context of their sizable contributions to life in America, (b) the lack of consensus among policymakers regarding efficient and equitable policy options that a state's higher education systems might choose in making resource requests and allocation decisions, (c) a dearth of consistent and timely research that explores, tests, and develops functional theories of state funding, and (d) the absence of ongoing examinations of how existing funding model practices affect postsecondary education institutions and the broader society they seek to serve.

Literature Review

As the new millennium begins, a variety of methods exist for requesting and allocating state funds to support the operation of public community colleges (Breneman & Taylor, 1996). Practitioners and scholars with an understanding of the theories, practices, and nuances in the finance and funding strategies employed by community college systems recognize that one approach to state aid does not fit all. Indeed, a plethora of forces unique to each state environment shape how funding requests and distributions are made.

The rationales and methods that state policymakers use to allocate financial support for higher education can be nearly as important as the amount of that support (Richardson, Bracco, Callan, & Finney, 1999). More pointedly, an acceptable sense of fair play must exist in any funding allocation model. Moreover, the methods selected for allocating state funds typically must be viewed as affordable as well as politically acceptable to those approving and those receiving state financial support. Funding can be complex, highly politicized, and not prone to easy solutions (Kane, 1999). Although seldom discussed in a scholarly framework, politicizing of funding practices can be potent: The history of "political parties in power" and the relative pecking order of the various sectors consuming public funds, including higher education, play a major role in funding allocation decisions (McKeown & Alexander, 1986).

Currently, in many states, the responsibility for establishing state funding allocations to public institutions of postsecondary education lies directly with each state's legislative bodies. In some states, this significant responsibility is delegated by legislatures using block allocations to postsecondary boards, state boards of education, and, in some instances, other state higher education system governing or coordinating boards. Because education remains a state responsibility, the final word on funding levels always rests with the state. Sometimes these decisions are made with gubernatorial concurrence, and sometimes without it (Hashaway, 1999). Local support in the form of mill levies or bond issues provides varying levels of ongoing and project-specific support for community colleges. Ongoing local funds are often included (either directly or indirectly) in the calculation of state aid and make a significant impact on state funding levels. Because of this wide variation in local funding policies, local funding is outside the scope of this article.

Garms (1977) set forth several criteria he believed could be used to judge the adequacy of financing plans for community colleges. To summarize, he believed all effectively financed community colleges would do the following: (a) enhance student access, programs of study, and community service; (b) help preserve the integrity and viability of other public and private sector institutions; (c) keep the expansion of colleges within the bounds of fiscal reality and prevent wasteful duplication among all education sectors; (d) encourage colleges to operate efficiently and provide student equity; and, (e) ensure equity to taxpayers who support community colleges. He further noted that, as near as he could determine, no public community colleges within any state met all the criteria.

Wattenbarger and Starnes (1976), in their early nomenclature of funding models, identified four fundamental approaches to financing community colleges. There has been little change in these four approaches over the years. Although in practice practically no model mutually excludes any other, the four approaches include the following: (a) In the negotiated budget, the political process, availability of funds, and a state's special expectations, such as the need for accountability, serve as primary drivers. (b) In the unit-rate formula, allocations are based on defined units, such as the number of full-time-equivalent students or square footage of existing (or planned new) facilities. (c) In the minimum foundation plan, colleges receive funding based upon a combination of state and local wealth, with an ebb and flow of state and local resource funding ratios depending upon such factors as enrollments and differential (between college taxing districts) tax-base wealth. (d) Finally, the cost-based funding model generally provides funding based upon actual expenditures, wherein colleges are funded on specific program operational objectives and costs; local dollars may or may not be used as funding streams.

Breneman and Nelson (1981) presented a fifth, unique, and economic-theory-based approach to constructing a rationale for funding public community colleges. Using efficiency and equity as the principle constructs in their studies and proposals, they contended the core issues in any analysis should address the following questions: (a) How should scare resources be allocated in the economy? (b) Who should receive them? (c) What should the economy produce and for whom? More specific to community college finance, they contended, useful analyses of community college finance must determine the following: How much (if any) subsidy is justified for community colleges? And how should the finance burden be allocated among students, federal, state and local governments, and other interested parties?

Breneman and Nelson (1981) noted that applying the concept of efficiency in community college finance is more inclusive than simply producing a good or service at the lowest cost. They observed that an efficient allocation of resources takes place when the total benefits of producing some good or service exceed-by as much as possible-the total costs of producing it. The authors noted, however, that applying a classical economic theory definition of efficiency-and its measures-to community college finance presents many problems. They presented results from national data bases that explicated outcomes using students as the unit of analysis. Among their many conclusions, they observed that using efficiency concepts community college finance decisions must be tempered with some realities: the availability of valid and reliable data about these institutions and the idiosyncrasies of state and local politics. Although efficiency clearly serves as a key element in their preferred approach to examining effective levels and sources for finance of community colleges, they recommend using the concept with any eye toward existing realities.

With regard to defining equity in financing community colleges, Breneman and Nelson discuss three theoretical approaches: (a) the net effect of taxes and benefits on lifetime income, (b) the distributional implications for current income, and (c) the costs separate from the benefits of a set of subsidies, with taxes judged according to their progressivity and benefits and according to their contribution to equalizing educational opportunity. The authors selected the progressivity and benefits approach because they believed it to be the most functional and pragmatic way to examine equity in financing community colleges.

On the equity construct, they noted that a higher tuition or other fiscal support strategies could also provide more equitable opportunities. Interestingly, they did not find that students attending public community colleges (as compared to those attending public universities) were at any disadvantage in either state or local subsidies. Breneman and Nelson concluded that the problem of determining appropriate models for the funding of community colleges would be best accomplished when understood and explained in classical economic theory parameters. Such parameters would properly define and drive appropriate funding levels using equity and efficiency as core concepts. Not surprisingly, the authors observed that an ideal system of finance could not be defined based upon their exhaustive work because "correct" answers vary depending upon the goals set by local and state governmental bodies.

Fiscal Challenges Facing Public Community Colleges in the States

In a recent listserv survey of statewide higher education fiscal officers (SHEFO), state postsecondary education fiscal officers reported on a host of funding challenges facing their state and community college systems (Henry, 2000). The results indicate that many states are working to address what they defined as "real" equity (the funding differences among in-state institutions) and parity (the funding differences between in-state and out-of-state comparator institutions) in their current funding allocation policies. Some states are examining the differential effects of revenue stream ratios and their influence on student access, retention, and graduation. Still other states are trying to create new avenues to cope with legislatively mandated fiscal growth restrictions. In some instances, states are grappling with how to relieve local community college taxing districts of the excessive burden many taxing districts suffer in order to keep their "local" community colleges open. Some states also reported new and stronger demands on community college systems from state legislatures and governors to report measurable outcomes predicated on each state's investment.

Simultaneously, college leaders in many states are attempting to address (using funding formula) what they interpret to be new and unfunded mandates and expectations of community college operations. For example, some community colleges have added workforce development to their core role and mission. Some college leaders report that adding this broad new and important change is having a negative fiscal impact on their institutions because they are unable to keep up with inflation associated with existing program support, let alone identify funds that can be counted on to sustain new core mission program commitments. Because most institutions of postsecondary education are organized and managed along more traditional lines with less than flexible employee contracting practices, new workforce development initiatives and other demands make it difficult for some institutions to respond acceptably to business and industry expectations. Few institutions have the luxury of "seed" money to respond in a capital venture manner to requests for services. The negative result can be that other institutions view community colleges as unresponsive. In some instances, community colleges lose further ground in their efforts to garner critically needed support from corporate entities that need their services.

In many states, competition for scarce public dollars among corrections, health, welfare, and sectors of public education will continue to increase. Many leaders recognize this reality and are working to create state funding request and funding allocation models aimed at strengthening the ability of community colleges to more fully deliver their role and mission (Jones, 1999).

One relatively new strategy for state funding of community colleges, the comparator-based model, addresses some aspects of Breneman and Nelson's equity construct and is not mutually exclusive of the approaches outlined by Wattenbarger and Starnes (1976). Too, the model meets some but not all of the criteria outlined by Garms. The model recognizes and exemplifies the importance of working within the political, social, and economic environment in any given state in crafting and implementing pragmatic and viable frameworks for funding community colleges.

This paper was written with two purposes in mind: to clarify the differences in historical approaches to requesting and distributing state funds to higher education and to describe one state's experience with using a new strategy to justify requests for state aid to higher education- the comparator-based funding model. In addition, some implications will be articulated that may benefit state policymakers and college leaders as they explore the philosophies and practices that determine state funding for public community colleges.

The Comparator-Based Model

In the 2000s, a sixth and eclectic approach, the comparator-based funding model, has become operational in at least 8 of the 50 states (Henry, 2000). Other states are considering this approach at the time of this writing in November 2000. For example, the West Virginia state legislature approved legislation in the spring of 2000 and the governor signed into law a bill that directs the state's new higher education system to move to a comparator-based model. Comparator-based funding requires institutional leaders within a state to agree upon institutional criteria by which similar colleges in other states can be selected to serve as peer or comparator colleges to that state's institutions. After the comparator college selection criteria are agreed upon and matching institutions in other states are identified, the final task involves identifying the gap in funding levels between the institutions in a state and their comparator institutions. The current funding level (base) plus the financial gap thus become the amount requested in state aid. Experience suggests that agreeing on criteria for comparator college selection and the subsequent selection of similar institutions can be tension-filled. Nevertheless, these tasks are the first necessary and critical steps toward implementing a comparator-based funding model.

In some states, the comparator-based model has been augmented with base-plus funding wherein a state targets additional funding (performance-based) beyond the base increases needed to bring institutions to the level of funding received by comparator colleges. Plus funding is typically targeted to encourage institutions to address specific areas of high interest to the state, such as distance learning, workforce development, or reduction of unnecessary program duplication between institutions.

Funding histories at the identified comparator institutions in other states are documented using the most currently available information from the Integrated Postsecondary Education Data System (IPEDS surveys, conducted by the National Center for Education Statistics). Once completed, the respective institutions in a state's community college system are compared, using data from comparable institutions in other states to establish equity and parity benchmarks and planned milestones that will support state funding requests and distributions. Comparator-based funding should not be confused with such practices as using salary or tuition comparative data to make decisions in specific areas of institutional operations expenditures. The concept is based on assumptions that differ considerably from the five other approaches discussed earlier.

The rationale for using a comparator-based model for requesting state aid to community colleges centers on several principles outlined by the early but seminal National Commission on the Financing of Community Colleges report to Congress (1973). Thus, in developing the state model discussed here, comparator institutions were selected using those principles: (a) universal student access, (b) broad student choice, (c) student opportunity by virtue of appropriate support for the student to achieve educational objectives, (d) educational diversity, (e) excellence in institutional programs and services, (f) institutional independence, (g) institutional accountability, and (h) adequate financial support. The colleges selected as comparator institutions to create the benchmarks in the comparator-based funding model had common comprehensive public community college roles and missions.

Although the concept of comparator-based models is used in a variety of ways in the states, the core principles appear to be consistent. Some states use it to request funding, as well as for fund distribution among institutions within a system. Other states use the approach for state aid requests only. The approach discussed here-to make fiscal requests for state aid and distribution-has been conceptualized and advanced in practice more recently by the National Center for Higher Education Management Systems (Jones, 1999).

Methodology Used in Model Development

Jones (1999) outlined five design principles for implementing a comparator-based funding model: (a) simplicity (use constructs in the model that are explainable, logically connected, and defensible in utilization); (b) consistency with governance or coordination arrangements (facilitate accomplishment of both local and statewide priorities, such as distance education and workforce development); (c) treating institutions equitably (address different characteristics in institutional programs); (d) recognizing demographic realities (consider the demographics of populations served in the state for resource planning and use); (e) holding institutions financially harmless (ensure that no college in the state system loses state aid in implementing the distribution of the funding model).

Implementing the Comparator-Based Funding Model

The "Old"

The state implementing the new model was experiencing structural changes in the economy and demographic shifts resulting in decreased demand for community college programs and services. In the absence of a valid comparative revenue model to request and fund the system's colleges, institutions faced the daunting prospect of being partially disassembled or, in some cases, possibly even closed. The existing student FTE and square footage drivers for institutional funding had simply outlived their usefulness in assuring the state could maintain its strategic investment in comprehensive community

college operations in times of decreased demand for college programs and services.

With the old budget request model, a state-level coordinating body provided oversight of a state community college system, consisting of seven member institutions, on behalf of the state's governor and legislature. The coordinating body held statutory responsibility for requesting state appropriations for the colleges and distributing appropriated funds to the colleges. The major drivers of this funding distribution model were square footage and FTE enrollment. With this model, each college in the state system had to compete with each of the others for new students and, where at all possible, to increase square footage. Achievement of these two outcomes would result in a college obtaining a larger slice of the state-aid pie. Neither driver contributed to cost-efficient and effective management cultures at the colleges. For example, if new state appropriations were not forthcoming, a growing college's new share came out of the existing budget at the expense of the other colleges. Major shortcomings of this model were included but were not limited to the following: (a) some institutions being left vulnerable in times of enrollment declines; (b) creation of incentives for competition in the public sector, when collaboration was preferable; and (c) significant inequities in funding between the seven colleges of the state system (Jones, 2000).

Moreover, the old model for requesting and distributing state aid placed the coordinating body in the role of seeking funding for line-item improvements (for example, using regional data to prove that faculty salaries were substandard). Inevitably, the process sometimes resulted in often-unjustified augmentation of the appropriation during the legislative session by pork-barreling local college district administrators and their legislators. Once appropriations were set, the total state appropriations, local appropriations, and projected institutional revenue were filtered through a complicated, virtually inexplicable, three-component distribution model with formulas within formulas.

The "New"

The new model was predicated on the concept of base funding. Base budget funding established a target-funding base amount (request) for each college using comparator college groupings (peers) for each of the seven respective colleges of the system. The state coordinating body's goals were, for each college of the system, to achieve parity with comparator groups and to achieve equity among the seven colleges in the state system. Two new terms were defined in implementing the new model: parity (each college of the state system should receive a level of funding equivalent to that of its respective peer group) and equity(each college within the state system should receive an equitable level of funding when compared to each other within the state community college system).

Thus, the method for developing the specific funding model relied upon external comparator institution benchmarks as standards for requesting funding for the colleges, rather than requesting salary dollars for equipment funding or other specific line items. Under the new model, the coordinating body expected each local college board to address local issues such as salary, equipment, or maintenance needs within the block funding provided to each college.

Assumptions in Model Implementation

Several assumptions were established for validating the new model: (a) the model would use externally validated benchmarks (institutional comparators) to establish funding adequacy levels; (b) the distinction in roles between local governing boards and the state coordinating body would be recognized; (c) the Standard Budget Request as determined by the state would be directly linked (full disclosure by all colleges of all revenues) to college budgets; (d) the budget requests would be targeted to achieve parity with comparators and equity within the colleges of the state system; (e) the targets for the model would be defined with the expectation that the comparator colleges were not necessarily over-funded nor under-funded; (f) using the median of the comparator group would provide an acceptable funding level target; (g) the allocation model would use new state funding to address gaps in parity and equity; (h) the budget request model and the allocation model would be linked to the same comparator institutions; (i) the model would operate with greater simplicity than did the old request model and distribution formula; and, (j) the model would rely exclusively upon attaining two primary goals: parity and equity in funding for the system's colleges.

Information provided by all public community colleges to the National Center for Education Statistics (NCES) through the Integrated Postsecondary Education Data System (IPEDS) was used in the comparative analysis. The most recent available years of data (fiscal year 1996 and fiscal year 1997) were collected by The National Center for Higher Education Management Systems to identify fiscal data elements from the comparator colleges located in other states, for use in preparing state funding requests for their sister colleges in the state system. Because the state college system is funded on a biennial basis, the fiscal years 1996 and 1997 data were averaged to account for revenue peaks or valleys in the first or second years of a biennium.

Model Framework

The conceptual framework is shown in Figure 1. Part I of the conceptual model determined the comparators. The comparator institutions were chosen based on four selection criteria: (a) size of the comparator colleges by FTE enrollment, (b) part-time and full-time student mix, (c) instructional program mix (academic and technical), and (d) population within the college service area. Funding was not used as a criteria in selecting comparators. The comparator groups formed for each of the seven colleges were composed of each of the state colleges and their respective 11 comparator colleges. Further, the model was driven using revenue at the comparator colleges rather than expenditures.

[Figure 1 ILLUSTRATION OMITTED]

In the model, unrestricted Education and General Revenue and Student FTE were used to determine the Unrestricted Education and General Revenue per Student FTE as the basis of comparison. In the example illustrated by Figure 1, the ratio of the state college to the median of its comparator group is 96.2%. The gap for the state college to its comparators was 3.8 %, and that factor was used in the budget request, as shown in Part II on the left side of the figure. The budget request was based on the continuing budget and the added budget request. The added request was for funding to close the gap between each system college and its comparators.

Because each of the seven colleges had a different fee structure for community service and for continuing education, an "Adjusted Unrestricted Education and General Revenue per Student FTE" was also calculated in the comparator calculation of Part I. The adjusted figure neutralized the fees and was used only for the Funding Allocation Model in Part II. In the conceptual example, the ratio was 92.3 %, and the allocation of appropriated state funds (or new local appropriations) was made using that percentage. The right hand side of the model displays the allocation, with 50% of new funds (state or local) allocated according to a proportional share (parity) for all colleges of the state system and 50% allocated to achieve equity (raising the lowest college to the level of the next lowest, then both colleges to the level of the next and so on).

In practice, the comparator calculation was first completed as shown in Table 1. Row 1, Table 1, contains the Unrestricted Education and General Revenue per FTE for each of the state colleges while Row 2 contains the same information for each college's comparator group. Row 3 provides the relative position of each college to its comparator group, and those percentages were used in making budget requests (the inequities in funding between colleges of the system was apparent). Row 4, the Adjusted Revenue per FTE Percentage of Comparators, provided ratios after adjustments for continuing education, community service, and fees. The percentages in this block were used for allocating new state or local funding.

[TABULAR DATA 1 NOT REPRODUCIBLE IN ASCII]

Base Budget Request

The base budget request was predicated on college budgets as of June 30 of the budget request year, with adjustments for one-time appropriations or other unique changes in agreement with the state budget office. Essentially, the colleges retained for the next biennium the state aid (held harmless) they had in the current biennium, a condition that did not exist under the old formula. This provision allowed for essential fiscal planning and commitments to take place at each of the colleges.

Gap Budget Request

The gap budget request addressed the shortfall between the amount of funding the colleges already had and the amounts they "should" have if they were funded at the same level as their respective comparator institutions. The new base funding in the concept would equal, in ensuing biennium budget requests, the base budget plus the gap budget. For the system of colleges, the gap was 4.8 % (or $5.7 million)-and that was the amount requested by the coordinating body in the gap Budget Request made to the governor and legislature.

Funding Allocation under the New Model

The allocation policy applied to new funding, whether from state or local levels. In the case of local appropriations, which could not be moved between college districts, the allocation was achieved by recapturing and redistributing state appropriations. The model allowed for that recapture and redistribution, but the allocation of local funds is not shown here because it might confuse this presentation. The example shown in Table 2 displays the distribution of new state funds as appropriated by the legislature.

[TABULAR DATA 2 NOT REPRODUCIBLE IN ASCII]

New local funding could be positive or negative (assessed valuation and mill levies can and do change). Accordingly, the colleges shared negative distributions proportionately. When new funding was positive, 50% of new funds were allocated proportionately, according to each college's percentage of the budget established as of June 30 of the budget request year. The proportionate distribution percentages remained constant throughout the next biennium. This provision was designed to bring colleges closer to their comparators (parity) and to cover some inflationary costs. Each college was allowed to achieve up to 105 % of its comparator college cohort.

The remaining 50 % of new funding was allocated to achieve equity across the college system. The funding allocation model used the information from row 4 of Table 1 of the comparator calculation to neutralize the incentive-disincentive factors attributed to different college policies for fees, community service, and continuing education. The equity allocation was distributed to bring the lowest funded college up to the funding level of the next college (using the bottom line percentages shown in row 6, Table 2) then to bring the two lowest colleges to the level of the next lowest, and so on. In the allocation displayed in Table 2, five of the colleges were raised to the level of 95.1%. Two of the colleges already exceeded that level. In the direct comparison relationships, the percentages were close to or exceeded 100%.

Results Based Upon Model Adoption and Implementation

For the 2001-02 biennium, the legislature appropriated $4,686,610 in new funding to the coordinating body's program of state support for the colleges to help partially fund the gap between the seven colleges of the state system and their respective comparator institution groups. In conjunction with an additional $2,245,525 from new projections of local resources, the funding allocation to the colleges achieved 101.3 % for the system, thus achieving parity with the comparator college cohort groups and equity among the colleges within the state system.

A review of the comparator groups will be conducted prior to each ensuing biennium budget request to recalculate the gap and set new funding targets for legislative consideration. It is projected there will be a new gap with regard to parity. Nevertheless, with the exception budget funded, the differences in equity are expected to be substantially reduced.

Advantages to the Model

The new comparator-based model does not represent a "silver bullet." It cannot fully address all of the issues both implicit and explicit in constructing and implementing an acceptable state-funding mechanism. The new model discussed here offered some clear advantages over the old model. The advantages included externally validated benchmarks and the following, among others: (a) Budget requests in the base were oriented toward parity with the institutional comparators and equity among the colleges. (b) Because the comparator colleges were assumed to be representative of their sister institutions, and thus not necessarily over- or under-funded, using the median of the respective comparator groups provided acceptable funding targets for the colleges of the state system. (c) The model used new funding to address gaps in parity and equity. (d) The budget request and the allocation elements of the model were each linked to the same comparators. (e) The model operated not only in a more defensible fashion (insofar as face validity), but with greater explanatory value than the old formula. (f) The model relied on achieving the goals of parity and equity, leaving local college governing boards (devolution of state coordination) responsible for addressing college concerns in the operational, day-to-day management of state aid allocations.

Implications and Challenges

In setting out to examine community college funding models, one quickly discovers one's provinciality and naivety. Understanding the multiple factors at work in developing a new and more defensible funding request and allocation model involves a complex process. Collaborating with experts in the field, in particular the National Center for Higher Education Management Systems, accelerated the timeline of model implementation and improved the quality of the product. Strong and consistent collaboration among the state coordinating body, local governing boards and their management teams, and the state legislature and governor ensured agreement on the criteria used to select comparator institutions. Thereafter, the task became a matter of comparing the baseline data of the state's colleges with their respective comparator institutions using equity and parity in state funding as the primary desired outcomes. Although all of the system's college leaders were not unanimous in accepting the model's outcomes, they achieved a strong consensus; and the results to date have been well-accepted by the state coordinating body, local college governing boards, the state legislature, and the governor's office.

I did not come away from the process and outcomes described without a heightened perspective on the major challenges facing states and local governments in coming to grips with implementing fair, equitable, cost-effective, and cost-efficient strategies for requesting and distributing state and local aid to community colleges. I believe that the vast majority of public community colleges in America do not get their fair share of public finance (state or local). This may well be because college leaders have not documented their institutions' needs in funding requests based upon sound management information that would demonstrate to local taxpayers, state legislators, and governors the wisdom of increasing the investment, bused upon the impacts of the outlays.

Breneman and Nelson (1981) appear to make the most sensible case for defining a more defensible and desirable approach to constructing a rationale to promote increased public finance of the community college. Their notion of efficiency, wherein an institution must be able (with valid and reliable data) to show the benefits of the investment beyond the costs to produce the educated citizen, remains central to any logical discourse on the subject of appropriate funding levels for public community colleges. Their equity construct is equally persuasive in that the institution must be able to show the net effect of taxes and benefits for a lifetime of income, and address the extent to which the public investment in the community college is equalizing educational opportunity.

State and local college administrators, working together, can operationally define efficiency and equity. But doing so will require a different kind of effort by community college leaders and key state policymakers. Clearly defining and costing the role and mission of the public community college should become a first-order priority. At the same time, state policymakers and college administrators must be willing to jointly define and produce data that clearly demonstrate the efficiency of college operations. These steps will produce return-on- investment information that can be used for management decisions and to demonstrate to taxpayers and elected officials the efficacy of continuing to support the role and mission of the community college with increased funding levels. New demands from state and local government for solid and consistent evidence of fiscal responsibility, accountability, and validation of a good return on the public's investment will require solid data.

The comparator-based funding request and distribution model outlined in this paper represents still another step toward building a more accountable approach to funding community colleges within a state system. Regardless of the model used to justify public support for community colleges, one conclusion seems clear: Pertinent and detailed facts about major public investments are available, and they will be used to create and sustain comprehensive management information systems. College administrators and state policymakers will either participate in the design of performance indicators or have designs thrust upon them. In any case, readily available electronic data on institutions is increasingly being collected and analyzed, and that information will be critical to community colleges funding levels.

References

Breneman, D.W., & Taylor, A.L. (1996). Strategies for promoting excellence in a time of scarce resources. San Francisco, CA: Jossey-Bass.

Breneman, D.W., & Nelson, S.C. (1981). Financing community colleges. Washington, DC: The Brookings Institute.

Burke, J., & Serban, A. (1998). Current status and future prospects of performance funding and performance budgeting for public higher education: The second survey. Albany, NY. The Nelson A. Rockerfeller Institute of Government.

Cohen, A.M., & Brawer, F.B. (1996). The American community college. San Francisco, CA: Jossey-Bass Publishers.

National Commission on the Financing of Community Colleges. Financing postsecondary education (1973--Public Law 92-318). Washington, DC: Author.

Garms, W. (1977). Financing community colleges. New York.: Teachers College Press.

Goodchild, L., Lovell, C., Hines, E., & Gill, J. (1997). Public policy and higher education: ASHE Reader. Needham Heights, MA: Simon & Schuster.

Hashway, R.M. (1999). An evolutionary approach to formula funding, fiscal, and program management in higher Education. San Francisco: Austin & Winfield.

Henry, T. (2000). Listserv survey of statewide higher education fiscal officers (SHEFO). Unpublished report. Cheyenne, WY: Wyoming Community College Commission.

Jones, D. (1999). Funding and financing adequacy of Wyoming Community Colleges: Findings and recommendations. Boulder, CO: National Center for Higher Education Management Systems.

Jones, D. (2000). Funding formula. Boulder, CO: National Center for Higher Education Management Systems.

Kane, T.J. (1999). The price of admission. Washington DC: Brookings Institution Press & Russell Sage Foundation.

Luck, M.F., & Tolle, D.J. (1978). Community college development: alternative fund-raising strategies. Indianapolis, IN: R & R Newkirk.

McKeown, M.P., & Alexander, K. (1986). Values in conflict: Funding priorities for higher education. Cambridge, MA: Ballinger Publishing.

Richardson, R., Bracco, P., Callen, P., & Finney, J. (1999). Designing state higher education systems for a new century. Phoenix, AZ: The Oryx Press.

Wattenbarger, J. L., & Starnes, P.M. (1976). Financial support patterns for community colleges. Gainesville, FL: University of Florida, Institute of Higher Education.

Thomas C. Henry is president of Azaliah University in New Mexico. He previously served as executive director of the Wyoming Community College Commission. The author expresses special gratitude to William Lovejoy, dean of Information, Planning, and Policy Analysis at the Wyoming Community College Commission, the fiscal officers of the colleges of the state system implementing the model discussed, and Dennis Jones, president of the National Center for Higher Education Management Systems, for their Herculean efforts in working out the details of the new model.