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N.C. community colleges face revenue shortfall during COVID-19 pandemic

North Carolina’s community colleges are struggling to avoid revenue shortfalls and payroll problems. 

Uncertain registration and online-only classes to enforce social distancing are resulting in community colleges collecting half their expected revenue. Shortfalls could reach $25 million across the state’s 58 community colleges serving 700,000 students. 

The federal government is sending $120 million directly to community colleges —  roughly 10% of current state appropriations. Some $60 million will go to student aid; the rest will help colleges pay costs associated with the shift to virtual learning. The money will become available within weeks.

That federal money will become critical as state tax revenue plunges. North Carolina could lose $1.5-$2.5 billion this year, said Peter Hans, president of the N.C. Community College System. 

“That will essentially wipe out the money that is on the bottom line right now,” Hans said. “Everyone has been crystal clear with us that funds will be very, very tight, especially recurring dollars.”

Complicating matters, the state delayed the tax filing deadline until July, clouding the availability of tax revenue. Hans doesn’t expect lawmakers to move on normal short session agendas until July, when revenue levels become more clear.

“COVID has changed everything, really, and our legislative priorities are somewhat adjusted,” Walter Dalton, president of Isothermal Community College. “We know with all of this that there are challenges ahead, but the challenges also give us opportunities.”

Community college leaders once hoped to give their employees a 5% pay raise. Full-time community college professors earn some $2,500 less than the average salary of K-12 teachers. Their average pay of $51,478 ranks six places from the lowest in the nation. The vetoed 2019-20 budget included a 4% raise for community college employees, but pay raises now look unlikely. A 5% pay raise would cost $62 million.

“Both of those items are incredibly important. They are big-ticket items,” Hans said. “Unlike the federal government, the state government has to run a balanced budget. The federal government essentially has a printing press available … but the state government is going to be more strained.”

The college system’s request for more enrollment money appears endangered, too.

“The recurring enrollment growth funds are critical, critical, critical to stability and capacity to meet those newly unemployed who will likely be arriving at our colleges,” Hans said. “We’ve got to spend federal funds wisely because it is highly unlikely that the General Assembly will be willing to fund anything that federal funds could be used for.”

Rating agencies will also be more cautious in lending money, State Treasurer Dale Folwell said.

“Revenues are going to be down, expenses are going to be up,” Folwell said. “We have to challenge assumptions. Rating agencies have told me they want to see evidence of cost being cut, and if money has to be borrowed, there’s a plan to pay it back.”