Pope Center president Jane Shaw had an interesting article today discussing whether or not college constitutes a “public good,” i.e. whether or not an action taken by individuals benefits just the individuals or society as a whole. The public good idea is used to justify government spending on the military, for instance, since it benefits society as a whole and taxes are a good way to prevent the problem of free riders–those who benefit from the public good but don’t pay their fair share.

Higher education is also traditionally thought of as a public good. However, in today’s piece Jane iconoclastically suggests that college is, in fact, a “bad public good,” failing to live up to the high expectations set for it.

The discussion sheds an interesting light on the funding mechanism for North Carolina’s community colleges, which are thought of as a public good and heavily subsidized. Only about 19 percent of funding comes from the direct beneficiaries of community college education (the students) via tuition and fees.

Most of the rest comes from the North Carolina General Fund–about 66 percent–but that number will likely be coming down soon, as the Governor has asked community colleges to make 10 percent budget reductions. In order to meet this goal, the colleges plan to increase tuition by $10 per credit hour, implement “a cumulative management flexibility reduction of 5%” and “targeted categorical reductions,” and change the funding formula that determines how much community colleges are reimbursed by the state.

Currently, community colleges are reimbursed based on the total number of students they enroll, regardless of what type of training they receive. This has discouraged community colleges from enrolling too many students who seek training in areas such as health care and lab-based science, since it costs more to instruct these students.

The new funding formula would take into account the differences in the cost of instruction for different fields, setting up a three-tiered system for reimbursement based on type of instruction:

  • Tier 1: Reimbursement $3,512.45 per full-time equivalent (FTE) student, 15% higher than Tier 2. Includes health care, technical education, and lab-based sciences.
  • Tier 2: Reimbursement $3,054.20 per FTE. Includes all other curriculum (i.e. not continuing education) classes and continuing education classes “mapped to a third-party credential, certification, or industry-designed curriculum that the scheduled length is 96 hrs or higher.”
  • Tier 3: Reimbursement $2,596.08 per FTE, 15% lower than Tier 2. Includes “all other continuing education” courses.

Free market advocates (and those like Jane who question the value of college education as a public good) will likely see this as a small victory. Yes, less funding will come from the state and more will come from those directly benefiting from the instruction, but the three tier system and the 15% gradations do appear to be arbitrarily set and the whole system is still overwhelmingly funded by taxpayers.

Any potential change has yet to be voted on. Jennifer Haygood, the State Board of Community Colleges’ VP of Business and Finance, writes: “If implemented, we anticipate the State Board would utilize this model to allocate funds to colleges in F[iscal] Y[ear] 2011-12.”