State governments remain the largest source of revenue for community colleges, followed by local governments and then tuition, according to an analysis by the American Association of Community Colleges of data from the National Center for Education Statistics.
States contribute $25.9 billion (34.4%) of the $75.3 billion in revenue to community colleges, according to the analysis, which is based on 2022-23 IPEDS Survey data. The $16.8 billion in funding from local governments comprises 22.4% of the community college sector’s revenues, followed by $15.2 billion from tuition (20.2%). The federal government’s contribution makes up 14.7% of the revenue stream ($11.0 billion). Other sources contribute 8.3%, or $6.3 billion, to overall revenue.
With such heavy dependence on state and local coffers, two-year colleges are particularly sensitive to appropriations at those levels. From 2023 to 2024, inflation-adjusted state and local education appropriations decreased 3.3% at two-year institutions, reaching $10,899 per full-time equivalent (FTE), according to the State Higher Education Executive Officers Association (SHEEO), which compiles an annual report on higher education finances. At four-year institutions, education appropriations per FTE increased 1.8% from 2023 to 2024, reaching $10,820. (Editor’s note: Per FTE revenue may be overestimated for community colleges due to limitations of the data available for this analysis.)
SHEEO noted important differences in the sources of two- and four-year public institution state and local funding, despite similar levels of education appropriations per FTE:
- Two-year public institutions received $6,451 per FTE in state general operating appropriations, which is 69.0% of the four-year general operating appropriation ($9,354).
- Local appropriations were 115.1 times higher at two-year institutions ($3,712) compared to four-year institutions ($32 per FTE). There were local appropriations to two-year colleges in 29 states, compared to only eight for four-year institutions.
- Total state and local support at two-year institutions was $10,899, which is 83.9% of the amount at four-year institutions ($12,986).
