Community colleges play an important role in educating students for whom beginning their postsecondary education at a four-year institution is not an option—or not their best option—and providing them with a path to economic mobility. To ensure students from different racial and ethnic groups all have these opportunities, community colleges need equitable funding, but comparing funding levels across groups of students is not straightforward.

Smaller institutions, technical programs within those institutions, and students with weaker academic backgrounds require more resources per student than larger institutions, general studies programs, and students from more privileged backgrounds to produce similar results. In other words, equal funding does not ensure equal opportunity. Inequities in funding levels could result from unequal local property tax revenues, political forces, or formulas allocating state funds. If states want to center equity in their funding formulas, they need to examine the demographic distribution of students across community colleges of different sizes and with different programmatic and geographic characteristics.

Using data from the 2018–19 academic year to estimate per student funding, we investigated whether community colleges that enroll large shares of Black and Hispanic students, as well as students from low-income backgrounds, have the same level of resources as those that enroll more white and higher-income students. Our analysis sought to determine if the most vulnerable students were concentrated in the least-funded community colleges. Though we find no consistent visible patterns of inequality in community college funding across the nation, we do find concerning patterns in a few states.

Statewide funding variation by race, ethnicity, and economic status

In many states, there are no measurable differences in average funding levels across demographic groups. In some states, funding levels favor one group, and in other states, that same group receives less funding. In California, funding levels are relatively equal across the groups we studied. But in Virginia, Hispanic students receive 11 percent less funding than others, and in Colorado, they receive 14 percent more.

The patterns within states sometimes differ across groups. In West Virginia, which has relatively fewer residents of color, funding per student is lower for Black and Hispanic students than for others—but is significantly higher for Pell grant recipients than for others. Overall, in states with significant Black and Hispanic student populations, funding per full-time-equivalent student across racial and ethnic groups is largely equal—sometimes even higher for the underrepresented groups. This finding doesn’t indicate that funding levels are necessarily equitable or adequate for providing sufficient opportunity to all students, just that the overall levels are generally equal.

The role of local funding

About one-third of community college funding comes from local, as opposed to state, sources. The exact share varies considerably by state, with local shares in 2018–19 ranging from no local funding in 17 states and less than 10 percent in 3 more, to 94 percent in Arizona and more than 50 percent in 10 others.

For community colleges within a state, local funding levels sometimes vary dramatically, but some states have mechanisms for addressing the inequalities arising from differences in available local resources. A 2013 study of community colleges in California found that because of the economic circumstances of their communities, institutions with more students of color received less local funding than those with fewer students of color. Yet California, like other states including Illinois, Oregon, and Wisconsin, has policies designed to diminish the differences in total per student funding at community colleges. Since local funding largely comes from property taxes (residential and commercial), these state adjustments to compensate for local disparities are important tools for mitigating unequal funding levels for students from low-income households.

Although we find no consistent patterns between the share of local funding and the degree of unequal funding levels by race or ethnicity, we do find, on average, states that rely more on local sources to fund their institutions tend to have more funding overall. Specifically, a 10-percentage-point increase in the share of local funding is associated with an increase of $458 in total funding per full-time-equivalent student at the state level.

Accounting for economies of scale

Some states purposely vary funding levels depending on enrollment to compensate for the higher per student costs that smaller campuses experience, which can lead to funding differences among demographic groups. If, for example, Black students are concentrated at larger institutions, they are likely to experience lower per student funding than other groups more concentrated at smaller institutions. We see this effect in Virginia, with Hispanic students concentrated at large institutions, leading to less funding per student.

We looked closely at variation in funding across institutions in seven states: Arkansas, California, Colorado, Missouri, Texas, Virginia, and West Virginia. In Arkansas and Virginia, the smaller 50 percent of institutions received about 1.5 times the per student funding of the larger 50 percent. In Colorado and West Virginia, the smallest 25 percent of community colleges received more than twice the per student funding allocated to the largest 25 percent. In California and Texas, the difference was relatively small, but smaller institutions still received more funding per student. Missouri—which relies heavily on local funding—is an outlier, with the smallest institutions receiving less funding per student than the largest institutions.

More evidence is needed to determine appropriate funding adjustments

Per student funding varies dramatically among community colleges within states (it ranged from $3,302 to $9,799 in Virginia), and the concentration of students facing steep barriers to success at certain institutions could lead to inequitable funding patterns, exacerbating their challenges. As a result, focusing on the adequacy of overall community college funding within states is insufficient to capture potential inequities.

Our failure to find systematic funding gaps for Black, Hispanic, and low-income students is encouraging, but it does not mean community college funding patterns are equitable. As states modify their funding patterns, increasingly to incorporate some performance-based criteria, studying the demographic distribution of students across institutions and gathering more evidence about the appropriate adjustment sizes for differences in costs because of programs, as well as size or rural/urban status, could lead to more equitable outcomes.