Revenue Dynamics of Non-Degree Programs

Our research showed that non-degree programs can sit within or outside the academic infrastructure of their institution. They typically, though not always, are placed in the non-credit suite of offerings. Where a non-degree program is placed within the academic infrastructure of its institution has implications for the types of funding a program relies on, as well as the reliability and autonomy of funding streams.

Often times non-profits and colleges seek to know what is the right mix of revenue sources for their organization, with the assumption that diversifying revenue streams will increase their financial sustainability. While there is no one-size-fits-all mix of revenues for nonprofits or colleges, we do hold to several guiding tenets.

First, colleges, like nonprofits, need regular, recurring revenues to fund ongoing operations, as well as periodic infusions to cover periodic or one-time needs, like capital expenses and change capital. They also need flexibility in their funding. For this reason, we focus on the reliability and autonomy of funding streams. Reliability refers to the stability or volatility of the funding source. For example, how accurately can funding streams be predicted in financial projections, and will they be renewed from year to year? Autonomy refers to restrictions tied to the funding source. For example, does the money need to be used for certain types of expenses, or are there certain compliance requirements tied to it? And, while there is no right mix of revenues, when an organization or program is reliant on one or two funders or funding streams, it does run the risk of instability and potential interruptions to service delivery if a funding source changes, is no longer available, or is delayed.

Programs Within the Academic Structure

Programs that fit within the academic infrastructure of their institution have a mix of revenue similar to that of the college, which typically includes local and/or state funding based on enrollment, and tuition and/or financial aid. In this context, there are always some factors contributing to funding uncertainty—for example, fluctuations in enrollment and constrained public budgets. But most programs leaders we talked to were able to project their funding from year to year with some degree of certainty.

• The ideal example of reliability comes from Bates Technical College in Washington State, which is a partner for machinist training for the state’s Aerospace Joint Apprenticeship Committee (AJAC). Bates receives a permanent tuition allocation for 20 full-time equivalent (FTE) students, which covers about half the cost of tuition, with the other half paid for by employers of apprentice machinists.
• A more typical example of revenue reliability is Dallas College, which is funded by a mix of state funding, a local funding source based on property taxes, and tuition and financial aid. While there is some fluctuation in state and local funding, together these sources provide a relatively stable revenue stream that covers instructional costs.

Programs Outside the Academic Structure

Programs that sit outside of the academic infrastructure—for example, in divisions of continuing education or workforce development—are typically under pressure to be financially self-sustaining and raise money to support their programs. Their mix of funding looks more like a typical nonprofit organization, which includes a mix of private or corporate philanthropic sources and public grants and contracts.

1. Brazosport College’s Jumpstart program covers its tuition, fees, and student services with external funding sources, though the majority of the classes offered in the program are credit courses for which the college receives state funding. However, those funds are not redirected to cover costs for the Jumpstart program. Instead, the program for pipe fitters has relied on successive rounds of public funding over the course of its six years. The college piloted the program with a grant from the Texas Workforce Commission’s Self-Sufficiency Fund, which provided funding to train low-income Texans. But the fund had rigid eligibility requirements about who could be served and how the funds could be used. Follow-on state and federal funding—for example, a federal Department of Labor grant, and state grants for adult education and literacy—have provided multi-year support that covers instructional costs and wraparound services. Still, the program has relied on close partnership with the college’s foundation to secure donations from local philanthropists and philanthropic organizations to help meet students’ need for services like transportation, food, and other incidental costs that can become barriers to program participation if not met.

Regardless of where a program sits in a community college, program leaders are leveraging and blending resources from different sources and places in order to cover the full range of costs that are critical to student success. Resources come from the institution itself, as well as external sources, and different sources tend to cover different types of costs. We heard about the following types of support and practices for securing support for non-degree program from our interviews with college workforce leaders.

Leveraging Internal Resources

Most programs are relying on some resource contribution from the college itself. Space and equipment are probably the most common institutional resources that programs leverage. Most program leaders we interviewed said that students in non-degree programs are eligible for support from student services departments, which can provide some of the wraparound supports necessary.

Other types of institutional support include communications, marketing, and outreach for programs, as well as the institutional infrastructure that supports recruitment and enrollment and grants management. For programs that are required to be self-sufficient, these institutional contributions are paid for through indirect rates charged to grants and contracts.

Traditional Philanthropy

Program leaders cited a range of philanthropic sources, including individual, corporate, and private foundations, used to cover costs. Leaders also cited various ancillary costs that they need philanthropic support to cover. Sources tended to be local, rather than national.

1. Monroe Community College is an example of a school where non-degree programs must be financially self-sufficient. The Certified Nursing Assistant (CNA) program, run by the Economic and Workforce Development Center, has received money for student scholarships from a range of local sources, including community foundations, the county, and support organizations.
2. Dallas College believes that having coaches with the Cisco A+ networking certification offers an advantage to students enrolled in its Cisco Networking Academy training program. These coaches can help them with troubleshooting and problem-solving as they develop the critical thinking skills needed for success as an IT professional. The program leaders have seen positive results from having these certified coaches, but cited them as a challenging cost to meet with institutional funding streams, so they seek outside support to cover the cost. Similarly, if the program leaders want to include the cost of certification exams that students take but have a hard time finding the resources internally, they may seek philanthropic resources to cover the cost.

Government Grants and Contracts

Government is the largest funder of social and human services, including workforce development and job training.

We identified several examples of community college non-degree programs securing one or more grants or contracts for their non-degree programs from public funding streams falling including adult basic education, literacy, social welfare and public benefits. There were also sources outside the human services arena, including regional and state economic development agencies. Examples of government funding for non-degree programs include:

1. Brazosport College has secured successive rounds of public funding for its Jumpstart program, including multiple streams of funding from the Texas Workforce Commission (e.g., the Texas Self-Sufficiency Fund and the office for adult education and literacy), as well as funding from the U.S Department of Labor. Current funding comes from the Texas Workforce Commission’s Accelerate Texas VI program, which does not cover the cost of wraparound services.
2. Mesa Community College secured a multiyear grant from the Arizona Commerce Authority, a statewide economic development agency, for its Cable Harness Wiring Boot Camp training program. The grant allows the college to reimburse students who complete the program successfully for the full cost of their tuition. State funding covers the cost of instruction sources based on enrollment.

Industry and Employer Support

High-quality programs are responsive to labor market conditions and industry and employer needs in order to ensure good outcomes for program participants. Partnerships with employers can be another source of financial and non-financial support for non-degree programs. We found that the scale and scope of employer support exists on a spectrum, from sustained partnership with significant financial contributions to ongoing or episodic in-kind support.

• Miami Dade College is one of 10 colleges nationwide that has partnered with electrical vehicle manufacturer Tesla to offer the Tesla START program, a 16-week program that prepares students for jobs as service technicians with the company. Tesla makes a significant financial contribution to the program’s operations, providing the program curriculum, instructors, and equipment for use during training, as well as a stipend to students for the time spent in the program.
• Mesa Community College in developed its Cable Harness Wiring Boot Camp program in partnership with the Boeing Company, the aerospace giant that is one of Arizona’s 50 largest employers. Boeing identified a need for 450 wire harness assemblers in a two-and-a-half-year period and approached Mesa’s Arizona Advanced Manufacturing Institute for help. Together, the two entities designed an innovative program model—a nine-day boot camp with 36 hours of hands-on instruction. Since the program launched, Boeing has continued to partner with Mesa by participating in program recruitment, student hiring, program evaluation, and continuous improvement.
• Monroe Community College secured the commitment of local long-term care facilities to pay for 20 percent of the cost of training new certified nursing assistants as well as wages for CNAs in training to help address a labor shortage and persistent staff turnover. Employers can be reimbursed by Medicaid for most of this training expense. In return for Monroe securing 80 percent of tuition funds and training their students, employers committed to pay students at least minimum wage while in class and higher wages upon employment as a CNA, to create career pathways, and to provide more schedule flexibility to allow CNAs to take part in ongoing professional development.