R62I0001 Aid to Community Colleges House Appropriations Subcommittee on Education and Economic Development March 4, 2010
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1 Martin O Malley Governor Anthony G. Brown Lt. Governor Kevin M. O Keefe Chairman James E. Lyons, Sr. Secretary of Higher Education R62I0001 Aid to Community Colleges House Appropriations Subcommittee on Education and Economic Development March 4, 2010 Responses to Recommended Actions Raised in the Department of Legislative Services Analysis 1. Strike contingent reduction on the Cade formula MHEC concurs with this recommendation on the basis that it is consistent with the Governor s Allowance as submitted in the Budget Reconciliation and Financing Act of Reduce the community college formula by $23,085,062 MHEC concurs with this recommendation on the basis that it is consistent with the Governor s Allowance as submitted in the Budget Reconciliation and Financing Act of MHEC opposes the recommendation on page 16 of the analysis to use the estimated fiscal 2012 statutory formula percentage of 20 percent in fiscal 2013 and thereafter to slow mandated growth in the State budget and to leave the option to the Governor and General Assembly to enhance funding through the budget or subsequent legislation when economic and budget conditions improve. MHEC concurs with the Governor s plan to restore funding to the community colleges through graduated increases in the percentage of funding per FTE through the Cade formula as presented in the Budget Reconciliation Act of Adopt the following narrative: The Costs of Developmental Education: The budget committees are concerned about how much Maryland s colleges and universities and students are spending on developmental education. The Maryland Higher Education Commission (MHEC), in conjunction with the Maryland Association of Community Colleges (MACC), the University System of Maryland (USM), and Morgan State University (MSU) should submit a report detailing the instruction costs of developmental education at each of the State s colleges and universities. The report should include comparable developmental education costs on a per-section, per full-time equivalent student, and per-hour basis and an explanation of what the costs pay for and how the courses are delivered. MHEC concurs with this recommendation and will work in conjunction with MACC and the colleges, USM and Morgan State University to provide as much information as it can obtain, study and compile into a response report for submission to the committees on November 1, MARYLAND HIGHER EDUCATION COMMISSION 839 Bestgate Rd Suite 400 Annapolis, MD T F TTY for the Deaf
2 Secretary s comments to issues raised in the Department of Legislative Services Analysis 1. The Secretary should comment on efforts to improve successful persister rates at Maryland s community colleges. In their recent Performance Accountability Reports, the community colleges acknowledged that many of their new students are required to take developmental courses, and that not completing these courses has a detrimental affect on students progress. To address this issue, many campuses have established policies and initiatives to increase the number of students who complete their developmental requirements. At Wor-Wic Community College, students who need developmental coursework must enroll in at least one class in any semester during which they take more than one course. In addition, Wor-Wic offers fast-track developmental beginning and intermediate algebra courses which allow qualified students to complete their developmental mathematics courses at an accelerated pace so that they can begin college-level math courses during their initial fall semester. To encourage students to complete their developmental courses, in 2005, Baltimore City Community College (BCCC) began issuing certificates of completion for developmental education. Since the program s inception, over 2,500 certificates have been awarded. BCC has also provided funding for six faculty members to attend the Kellogg Institute of certification in developmental education. Several of the community colleges have also developed innovative partnerships with their local school districts to ensure that students are adequately prepared to complete college-level work before they graduate from high school. For example, the Better Education Together (BET) Initiative is chaired by the president of the College of Southern Maryland, and the school superintendents from the local counties. BET Teams develop detailed plans that identify common goals and objectives for student preparedness and success. Through BET, a pilot of a reading, math and English skills diagnostic testing program was created which assesses all high school juniors to determine their levels of preparedness for college. Testing is done prior to the development of students senior year schedules so that they can enroll in courses that will redress any academic deficiencies. 2. The Department of Legislative Services (DLS) recommends using the estimated fiscal 2012 statutory formula percentage of 20% in fiscal 2013 and thereafter. This action will slow the mandated growth in the State budget to help bring general fund spending and revenues into balance. The Governor and General Assembly will always have the option of enhancing funding through the budget or subsequent legislation when economic and budget conditions improve. MHEC opposes this recommendation and concurs with the Governor s plan to restore funding to the community colleges through graduated increases in the percentage of funding per FTE through the Cade formula as presented in the Budget Reconciliation and Financing Act of The Secretary should comment on efforts to increase affordability at Maryland s community colleges despite the challenges presented by current economic conditions.
3 Over the past four years, the Governor and General Assembly have provided State funds to the public four-year institutions of higher education to allow them to freeze resident undergraduate tuition levels. This added funding has benefitted the community colleges as it worked through the Cade formula, which is tied to funding to the public four-year institutions. During the same period, Maryland community colleges have limited increases to tuition and fees. As a result, Maryland community colleges have moved from being the 12 th highest-priced community colleges in the nation in 2006 to the 16 th highest in 2009, increasing their affordability for Maryland students. As the following table shows, the gap between the average community college tuition and fees between Maryland and the National Average has significantly shrunk during the past three years. $3,600 Maryland Average Community College Service Area Resident Tuition and Fees Compared to National Average: Fall 2005 to 2009 $3,400 $3,200 $3,000 Tuition and Fees $2,800 $2,600 $2,400 $2,200 $2,000 Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Source: The College Board Maryland Average National Average Reductions in Cade State funds within the past two years and pressure on local governments to limit or reduce county appropriations to community colleges will increase the pressure on colleges to raise revenue from other sources. The third major source of funds, or third leg of the stool, is tuition and fee revenue. While the colleges will try to continue controlling their student costs, MHEC is concerned that the pressure caused by economic circumstances and recent budget developments will force colleges to increase tuition and fees at a greater rate than has recently helped Maryland community colleges become more affordable. 4. The Secretary should comment on when decisions regarding maintenance of effort will be finalized and how any required reductions will be implemented. Decisions regarding maintenance of effort for fiscal 2010 Cade funds are being made this week.
4 The final payment for fiscal 2010 Cade Aid to the community colleges is scheduled to be released in March 2010 and MHEC has begun the process of notifying the General Accounting Division of the Comptroller s Office to release the funds to the colleges. Before submitting the requests for payment, MHEC required the community colleges to provide updated appropriations from their supporting local governments. MHEC is reviewing the revised fiscal 2010 local appropriation for each college and reconciling them to the fiscal 2009 appropriation to ensure compliance with the Maintenance of Effort requirement. If a college s total fiscal 2010 Cade funding is higher than the fiscal 2009 level, but the college s fiscal 2010 local government appropriation has been revised to a level below the fiscal 2009 appropriation, the final payment of fiscal 2010 Cade funds will be reduced so that total funds released to the college will not exceed the total Cade funds provided in fiscal The Secretary should comment on the confidence MHEC has in the quality of the enrollment data submitted by community colleges. As described in MHEC s September 2009 Report on the Auditing of Community College Enrollments in response to the 2009 Joint Chairmen s Report, MHEC follows a rigorous process to ensure that enrollments submitted by the colleges as eligible for Cade funding are correct. The process involves three steps: College registrars and continuing education departments report eligible credit FTE enrollments on the MHEC CC-2 and approved non-credit enrollment on the MHEC CC-3 forms each fall. These enrollments are reported in compliance with COMAR regulations that specify eligibility criteria for credit enrollments. These regulations and concurrent MHEC policies also limit Cade funding eligibility for noncredit enrollments to those courses that provide workforce training only. Each college president submits an annual MHEC CC-4 financial report that includes all credit and approved non-credit enrollment that is eligible for Cade funding. As required by COMAR 13B , full-time equivalent student enrollment shall be audited with the same diligence as applied to the financial statement, that is, the general standards and standards of field work apply to the enrollment audit. The specific tests of the enrollment records and the auditing procedures to be applied to the enrollment records are the responsibility of the independent certified public accountant. Enrollments submitted by the colleges on the MHEC CC-2 and CC-3 reports are then compared to and reconciled by MHEC staff against the enrollments reported in the colleges audited MHEC CC-4 reports. In addition to the certification by the college auditors and cross-check of registration reports performed by MHEC staff, MHEC is audited by the Office of Legislative Audits (OLA) each year on the Aid to Community Colleges programs to assure that all procedures pertaining to oversight of State Aid to Community Colleges have been followed.
5 Given these safeguards, MHEC has a high level of confidence in the quality of enrollment data submitted by community colleges. 6. The Secretary and college presidents should also comment on community college revenue structures and their ability to withstand reductions in noncredit enrollments. State-supported noncredit enrollments at Maryland community colleges increased at an overall rate of 26 percent between 1999 and 2008 and represented 23 percent of total 2008 FTE students. Funding from these enrollments provide an important and growing revenue source. MHEC projects that state-supported noncredit enrollment will continue to grow at an overall rate of 17 percent between 2009 and 2018, and the enrollments at every community college will increase during that time period. Based on these projections, MHEC does not anticipate reductions in community college revenues from noncredit enrollments. 7. The Secretary and college presidents should comment on the cost of developmental education and how it affects the budgets of Maryland s higher education institutions. One of the recommended actions in this analysis is for MHEC to work in conjunction with the Maryland Association of Community Colleges (MACC), the University System of Maryland (USM), and Morgan State University (MSU) to submit a report detailing the instruction costs of developmental education at each of the State s colleges and universities. MHEC will commit to work with the community colleges and public four-year institutions following this year s legislative session to study the issue during the interim with the goal of providing the requested report.
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Martin O Malley Governor Anthony G. Brown Lt. Governor Kevin M. O Keefe Chairman James E. Lyons, Sr. Secretary of Higher Education R62I0001 Maryland Higher Education Commission House Appropriations Subcommittee
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