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July 8, 2020

Policy Brief: Keeping the Promise

Financial Sustainability in the Face of the COVID-19 Pandemic

This blog post is part of a series of introductions for our College Promise Policy Briefs, which aim to critically analyze Promise related research and program experiences in order to offer recommendations for actions or evidence-based policies to leaders of the College Promise movement.

This week, Martha Kanter, CEO of College Promise, writes on Keeping the College Promise: Financial Sustainability in the Face of the COVID-19 Pandemic.

In times of economic crisis, earning college certificates and degrees matters now more than ever for our nation’s students. During the last recession, according to the Georgetown University Center on Education and the Workforce, nearly four out of every five jobs that were eliminated were held by workers with a high school diploma or less. As the global economy responds to the impacts of the COVID-19 pandemic, the need for affordable and accessible postsecondary education grows more important. Postsecondary education and employment are critical to economic mobility, and efforts to expand college access, affordability, and success must be lasting and dependable.

Promise programs offer a commitment to fund a college education and student supports for every eligible, hardworking student advancing on the path to earn a college degree, a postsecondary certificate, credits that transfer to a four-year university, and/or competencies needed for success in college, career, and community. These programs have experienced a groundswell of bipartisan support in recent years, with nearly a 570% increase in the number of programs since 2015.  Yet, as Promise programs continue to expand, they must also become financially sustainable, and the COVID-19 pandemic -- for many -- may be their first major financial stress test.

Implications of COVID-19 on Promise Program Financial Sustainability

Promise programs that depend on only one funding stream -- government sources, college funds, business investments, or individual donors -- are likely most at risk financially due to the pandemic. Roughly 60% of Promise programs utilize some form of government funding, and with expected future reductions in government revenue, these programs will likely require program design changes or supplemental funding to sustain service quality. As economic shifts rearrange legislators’ funding priorities, programs relying on the year-to-year reallocation and appropriation of funds run a high risk of being defunded as resources shift towards more immediate COVID-19 related needs. The exception is lottery-funded programs -- such as the Tennessee Promise -- as the lottery market is predicted to grow by $30.12 billion (6%) between 2020-2024, despite the pandemic. Programs that are financed through government sources that have been dedicated in advance such as entitlements, endowments, or tax-increment funding will also be more resilient, as they continue to provide a predictable and consistent source of funds, and could benefit from supplemental funding to sustain Programs at pre-COVID economic levels.

Promise programs directly funded by a college or college foundation may also face potential budget cuts as postsecondary institutions face rising costs and enrollment declines. Funds that were previously earmarked for Promise scholarships could risk reallocation to meet other institutional needs. Historically, economic downturns have driven more students to pursue higher education, yet one in ten high school seniors who were planning to attend a four-year college or university before the pandemic have already made alternative plans, and nearly half of those have said they will enroll at a community college. Over 60% of Promise programs support students at community colleges, putting further demand strains on Promise programs at a time when additional funds and student supports are sorely needed.

As the economy takes a hit, organizations and individuals that have historically supported the Promise will likely bring greater scrutiny to their investment opportunities. A lack of formal fundraising plans and fundraising staff in most Promise programs will make responding to funding disruptions more difficult and will increase the time needed to identify and pursue alternative funding, both to make up for any shortfalls in expected revenue and to reassess program design, especially in regard to supports for addressing COVID-19 related impacts. The new normal will probably catalyze greater competition for philanthropic funding in sectors including and in addition to healthcare and emergency support, criminal justice, and food insecurity -- increasing challenges for Promise programs that lack a fundraising infrastructure.

In the months ahead, locally funded programs that employ a mix of public-private funding from a variety of sources are likely to be among the most resilient and sustainable Promises. These programs are already engaged in executing strategic funding plans and continuous fundraising. They often support their College Promises with significant stakeholder commitments across all sectors of the community or state, ideally positioning them to pivot towards identifying and accessing sustainable funding streams. Local Promise leaders will typically have secured fundraising staff and a robust infrastructure, enabling them to take advantage of favorable conditions in philanthropy to harness new funding opportunities that have formed in response to COVID-19.

State Promise funds will also face pressures as governors and legislatures look for ways to balance their budgets through and hopefully beyond COVID-19. States that have built strong bipartisan support for Promise with protected multi-year funding allocations will be better positioned to keep the Promises made to their students and communities. And it will be essential for Promise leaders to document the benefits to their students who are ready and able to rebuild and grow the state’s economy in the recovery period ahead.

Recommendations

1) Promise programs should aim to diversify sources of funding and seek partnerships both within their community (public and private) and at the state level.

Programs that pursue a variety of funding streams to sustain their Promise will be the most resilient regardless of how any individual funding opportunity is impacted by COVID-19. Not only does a diverse fund development strategy ensure all potential funding streams are identified, it can help engage Promise stakeholders from all sectors of the community, ultimately improving outcomes. Local programs could particularly benefit from partnering with their respective statewide Promise if they are in one of the 29 states currently administering a statewide program. In these partnerships, local programs can provide targeted services that improve Promise outcomes, while states can provide funding and large scale infrastructure support.

2) Promise programs should invest in developing and continuously updating a long term strategic plan for financial sustainability with clear fund development goals. This includes investing in the administrative infrastructure and support needed to carry out such a plan.

The near and mid-term future for Promise program funding is likely to feature heavy variability in funding opportunities. Promises need to clearly examine their programmatic goals and set clear estimates of target funds to be raised, as well as conduct a thorough examination of potential funding sources in their community and state in order to meet their targets. The administrative burden to be agile enough to respond to changes in revenue streams or to secure and sustain adequate levels of funding is essential for ensuring Promise programs are not forced to cut services or disband all together should a particular funding source become unreliable.

3) Promise programs should gradually scale their programs up to full target functionality over the course of multiple years to fully account for program costs and growth in demand, as well as to build “proof of concept” evidence to support their ultimate program goals sustainably.

In the face of reduced funding alongside the possibility of increased demand, Promise programs now more than ever should utilize gradually scalable models for their programs. By properly assessing and  adjusting the size of the Promise award, the wrap around services offered, or any number of other programmatic features, Promise leaders can avoid overcommitting to a program they are unable to fiscally sustain. With strong  infrastructure and outcomes data, College Promise leaders will better assess trends in demand, prospective program costs, and how best to meet the needs of their community or state for future cohorts. As the unforeseen economic impacts progress, Promise programs will likely be more successful in securing investments by demonstrating positive program outcomes and clearly outlined responsive plans for scalability and improvement.

For more information on the impact of COVID-19 on College Promise programs, read the full policy brief.

If you are in need of support due to the pandemic, check out our COVID-19 Resource Guide.

Dr. Martha Kanter leads College Promise, a national initiative to increase college access, affordability, quality, and completion in American higher education, starting in America’s community colleges. She is also a Senior Fellow at New York University’s Steinhardt Institute for Higher Education Policy. She specializes in policy efforts to identify and apply innovative, evidence-based education interventions, financing models, and behavioral incentives to raise America’s high school and college graduation rates. From 2009-2013, Dr. Kanter served as the U.S. Under Secretary of Education, overseeing all federal postsecondary statutory, regulatory, and administrative policies and programs, including the $175B annual federal student aid programs, higher education, adult education, career-technical education, international education, and 6 White House Initiatives. From 1993-2009, she was president of De Anza College and then chancellor of the Foothill-De Anza Community College District in Silicon Valley, California. She began her career as an alternative high school teacher in Lexington, MA. Dr. Kanter holds a B.A. degree in Sociology from Brandeis University, an M.Ed. from Harvard University, and an Ed.D. from the University of San Francisco.

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