|
|
|
The views expressed on this page are
solely
those of the author and do not
necessarily represent the views of County
News Online
|
|
"Numbers And Finance" by Ken Teegardin
Education Dive
Community colleges entered pandemic with costs in check: report
Natalie Schwartz
Sept. 30, 2020
Dive Brief:
Community colleges with revenue-backed debt largely controlled expenses
in the 2019 fiscal year as enrollment and income flagged, according to
a new report from Moody's Investors Service.
Median operating revenue and expenses grew by 0.5% and 0.1%,
respectively, across the sector. The ability to keep revenue and
expenses aligned will be key as community colleges address
pandemic-related challenges, the analysts contend.
Two-year schools are also staring down enrollment declines and potential decreases in state support.
Dive Insight:
Like other public institutions, community colleges have been investing
in online learning and bracing for shrinking state support because of
the pandemic. Yet the Moody's report asserts two-year schools "have a
track record of adapting to market fluctuations."
Diversified funding sources can help. Community colleges that received
property tax revenue saw median revenue growth of 0.6% in the 2019
fiscal year, compared with a decrease of 0.9% among those that didn't.
That's in part because property tax revenue increased 28.3% over a
recent five-year period while net tuition revenue fell 0.5% during that
time. And property taxes may be less vulnerable to the pandemic. Robert
McClelland, a senior fellow at the Urban-Brookings Tax Policy Center,
wrote in a June blog post that property tax revenue remained relatively
stable during the last economic downturn.
Much of the growth in property tax revenue Moody's observed was driven
by Texas community colleges, which receive about 40% of their funding
from that source, The Texas Tribune reported last year. A new law,
however, requires community colleges to obtain voter approval before
increasing property tax rates by more than 8% a year.
California could head the other direction. Voters will decide on a
ballot measure this November that would significantly raise property
taxes for businesses and potentially give more money to community
colleges.
Income from tuition revenue could be more variable. One preliminary
report found that community college enrollment is down 7.5%
year-over-year this fall. However, higher education experts have noted
it took about a year after the Great Recession's onset for colleges to
see enrollment upticks.
While Moody's found the sector's liquidity is "solid," pension
liabilities add another wrinkle. When including pension and other
post-employment benefits, the median debt of colleges Moody's analyzed
increases from $29 million to $69 million. Community colleges with high
levels of pension liabilities will be more at risk to economic
disturbances, the report notes.
|
|
|
|
