When North Carolina lawmakers finally passed the long-delayed budget this summer, they changed how the state’s 58 community colleges are funded. 

Previously, two-year schools received money largely based on how many instructional hours students took. Community college leaders said it was to a school’s advantage to enroll degree-seeking students who would likely take more hours than someone in job-training courses.

Under the new model, called Propel NC, schools will receive more money for short-term courses that train students for good-paying jobs, even if they don’t lead to degrees or college credit. Courses in certain high-demand fields, like healthcare, advanced manufacturing and the trades, are prioritized.  

This year, every state community college will get more money under Propel NC, according to the North Carolina Community College System.

System and school leaders have been pushing for this new model since 2024.

Several states, like Texas and Tennessee, have adopted funding structures that award dollars based on graduation rates and job placement rather than enrollment. But system officials say North Carolina’s labor-market-driven approach is very different. It still considers how many students show up to class, but it encourages schools to invest in specific programs where workers are needed the most. 

“Propel NC is going to ask us, ‘How can we be more intentional about where we invest our funds?” said Brian Merritt, chief academic officer with the North Carolina Community College System. “It’s a whole new business model for us to change our mindset about how we serve North Carolina’s workforce needs.”

Sarah Pingel, vice president at the National Center for Higher Education Management Systems, a nonprofit working with states on higher education policy, said Propel NC fits into a larger national narrative around the role colleges and universities should play in meeting workforce needs.

“It is a way to more tightly align with what many state lawmakers — and federal lawmakers, too — want to see from higher ed,” Pingel said, “which is the production of credentials that lead to more prosperous lives for the people that have them.”

How does this new funding model differ from the old one? 

For more than a decade, the state funded community colleges based on enrollment, how much it cost to run a program and some student outcomes. While the system also considered workforce needs, it wasn’t the main priority.

“Everybody was incentivized to offer degrees, whether the degree had a labor market value or not. You would see degrees in welding,” Dale McInnis, a former Richmond Community College president who now serves on the state Community College System’s board, said. As a result, prospective welders would be required to take welding classes alongside general education courses, like history, but that wasn’t needed to learn the skill and land a job.  

“A lot of the students would take the welding courses they needed to get that skill set,” McInnis said. “Then they go to work, but they wouldn’t finish their degree.”

With Propel NC, schools no longer have to worry about losing funding if they launch a workforce program that’s shorter than a traditional associate degree program. The hope, he said, is that it will save students time.

“That’s the real asset,” McInnis said. “Instead of somebody saying, ‘I’ve got to spend two years, maybe two and a half years, to get this degree,’ you’re telling them ‘we can knock this thing out this year — maybe knock it out this semester.’” 

How are schools changing because of Propel NC? 

Despite its reputation as a top state for business, North Carolina doesn’t have enough skilled workers to meet labor market demand in sectors like healthcare, especially given the state’s rapidly growing population.

Many such training programs require expensive equipment to teach students. And it’s difficult to find qualified instructors, limiting how many course sections schools can offer. 

Schools will now be able to use the extra funding they receive to make targeted investments in programs with major employment needs.

Laura Leatherwood, president of Blue Ridge Community College in the western part of the state, said the school wants to expand skilled trade programs to boost construction as the region continues to rebuild after Hurricane Helene.

Meanwhile, Wake Tech Community College, the state’s largest community college, is getting $4.6 million in additional funding under Propel NC — the most of any community college. Wake Tech leaders want to use those dollars to hire more instructors and expand the number of course sections in high-demand fields like respiratory therapy, dental hygiene and cardiovascular sonography, as well as heating, venting and air conditioning.

“The limits of our enrollments in so many of these areas is only defined by how many instructors we have the ability to hire,” Wake Tech President Scott Ralls said, noting several programs have student waitlists. 

What does this mean for courses and degree programs that don’t fit into the prioritized workforce sectors? 

McInnis, who helped develop Propel NC, said one of the most important features of this new model is it doesn’t take from one program to pay for another. 

“We didn’t reduce the value of English and math and science to increase the value of these technical courses,” he said.

Transfer and academic degree programs will continue to receive the same level of support they did under the old funding model, but McInnis said that now, colleges can be more nimble and alter programs to match demand.  

“If I’m in a program that otherwise might be dropped due to low enrollment or low completion rates, you’re going to tell me we’re going to save the program by converting it to a noncredit, nondegree program — I’m going to be happy,” he said.

Ralls, at Wake Tech, said a large part of their mission still centers around helping students transfer to four-year universities and that many workforce programs still include English and math courses. 

Wake Tech, he said, is hiring just as many English teachers as electrical instructors. 

How much more money are community colleges getting?

Overall, the state Community College System asked for close to $100 million to support the funding shift in this year’s budget. Most of that ask was to help schools realign their offerings within these priority workforce sector programs.

Lawmakers allocated $57.5 million for that purpose, about $10 million short of the legislative request. This year, most schools are receiving between $200,000 and $2 million in new money.

The state also kicked in an additional $6 million to help schools address potential “enrollment spikes” that might occur during the school year, rather than waiting for the next budget to adjust funding.

But they did not fund a $24.4 million request to increase funding for student support services, non-curriculum support that the colleges provide to help students persist and complete their programs.

Merritt at the system said the formula to determine that funding, which is typically distributed evenly across community colleges despite their size or location, has not changed since the early 1980s, even as student needs have evolved.

“As a system, we probably need to tell a better story about why that funding is so critical to today’s students,” Merrit said, noting some students, like single parents, require extra help from an admissions counselor or academic advisor. 

Will Carroll, a higher education policy analyst at the consulting firm, HCM Strategists, said allocating money for support services alongside an infusion of new money is key to successfully sustaining a new funding approach. 

“Even if you get more money through the formula for this sort of thing,” he said, “it does take some upfront investment of time and staff to think about how to shift your college in a way that will be successful under the new model.”

Are there risks or drawbacks to this new model?

Higher education experts who reviewed Propel NC shared broad concerns about the funding model’s sustainability: can it withstand possible budget strains or political headwinds? 

Robert Kelchen, a University of Tennessee, Knoxville professor who studies higher education finance, said new funding initiatives are typically cut first when state budgets tighten.

“If Propel NC is successful, it will cost more money to fully fund the system,” Kelchen said. “This is happening right now in Texas, where even large increases in funding were unable to keep up with improvements in demonstrated outcomes.” 

Another concern, Kelchen said, is whether this system will help the state address workforce shortages in high-demand jobs that don’t pay well, such as childcare and some healthcare jobs. 

Matt Richmond, an education policy expert with experience helping states develop post-secondary funding models, said it can take time to convince students to pursue the exact career paths the funding models prioritize.  

Yet college and system leaders say they’re seeing a demand now in many of these fields across the state. There are programs with waitlists. And, broadly, the interest in short-term credentials is clear. Federal data shows more young students have been pursuing certificate programs in recent years, with people ages 18-20 earning more certificates during the 2024-2025 academic year than in any other year in the last decade.

But across the country, research shows that students who get these credentials often don’t make significantly more money over time. Meanwhile, the lifetime earnings of those with a degree continue to outweigh those who have some college, but no degree. The return on investment for certificate programs can vary greatly depending on the technical trade. 

Still, community college leaders say Propel NC could provide several benefits for students.

At $76 a credit hour, North Carolina community colleges are already some of the most affordable in the nation. McInnis said Propel NC will give schools more flexibility to move programs out of its curriculum or credit-bearing side, which will reduce course cost for students and shorten program length.

He said he hopes the new system will help rural colleges — where it’s even harder to find quality faculty — get more creative in how they offer programs where employers need them to help train workers.

“They can experiment,” he said. “They can come up with new solutions and new programs that are truly meeting local and regional employer needs.”

What’s next for Propel NC?

State Community College System leaders say Propel NC will change the way they talk about their success with state leaders. Rather than focusing on enrollments, the conversation will center around whether students completed a credential, get a job and increase their earnings.

“Are we getting an appropriate return on the resources that we’ve invested?” Merritt, the system’s chief academic officer, said.

Policy experts like Richmond say it makes sense that leaders would prioritize labor market needs. Still, he believes students need skills to navigate a rapidly changing world given the explosion of artificial intelligence and automation.

“What you really need to educate students on is how to learn,” Richmond said. “You need to educate students on how to shift, how to be dynamic. If you’re putting them into a path where they’re learning how to do a very specific skill, that skill could disappear in six months.” 

For now, community college leaders say they’re celebrating this state investment as an endorsement of their role in the state’s economy.

Ralls, the president at Wake Tech, said he once told a former governor that “the people who appreciate you politically make you a line in a speech but people who champion you make you a line in the budget.”

“Propel NC is a line in the budget,” he said. “We have been championed.”

This story is a collaboration between NC Local and Open Campus.

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