Rising tuition and private-sector growth will aid demand, despite state funding constraints
Los Angeles, California (PRWEB) September 22, 2013
The Community Colleges industry moderately expanded over the past five years. This industry provides postsecondary education services to individuals and is highly dependent on government education funding. Over the past five years, the recession and slow economic recovery resulted in bulging state government deficits. In response, state governments slashed education appropriations. Local government funding also suffered due to low property tax revenue. As a result, government funding for universities fell 5.4% in 2012 and 4.7% in 2013, leading to revenue declines over the two years. In the five years to 2013, industry revenue is estimated to rise at an average annual rate of 0.3% to $59.2 billion, including a decline of 5.7% over 2013.
Over the past five years, a high unemployment rate urged individuals to improve their employment prospects through higher education. “Downstream demand was especially high for technical training in healthcare, electrical work and other skilled professions,” says IBISWorld Industry Analyst David Yang. Public four-year institutions were unable to support the demand for education due to declining government funding, causing students to turn to community colleges. However, industry operators also had difficulty meeting the demand for postsecondary education. As a result, many students turned to for-profit institutions for increased flexibility and course availability. Online education growth helped industry institutions expand enrollment and course offerings. Community colleges also slashed wages and turned to part-time faculty to lower costs. Operating costs moderately decreased, though any surplus profit was spent on education services like scholarship funds.
In the five years to 2018, this industry is projected to return to growth due to renewed government education funding. The economic recovery will narrow state and local government budget deficits through increased tax revenue. While the recovering labor market will cause some individuals to forgo higher education, steady demand for skilled professions like nurses and electricians will stimulate enrollment in technical and vocational courses. More widespread implementation of online education will also allow community colleges to expand education services without constructing new facilities, thus reducing long-term costs.
The Community Colleges industry is highly fragmented, with the four largest institutions accounting for less than 5.0% of industry revenue. However, the concentration of community colleges is much higher on a regional basis. Many cities and states have community college systems to which each campus belongs. As a result, a city might only have one community college, even if the school has a dozen campuses. The majority of community college students attend college in their home state, which limits their choice of institutions. According to Yang, “Most community colleges charge higher tuition fees to out-of-state students, providing another incentive for students to attend local community colleges.” Among private institutions, market share concentration is even greater because accreditation barriers have limited the number of for-profit community colleges.
For more information, visit IBISWorld’s Community Colleges in the US industry report page.
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IBISWorld industry Report Key Topics
Community colleges are post-secondary educational institutions offering college transfer courses and programs (including the first two years of college instruction); vocational, technical and semiprofessional occupational programs; and general educational programs. Community colleges confer associate degrees, certificates or diplomas below the baccalaureate level. This industry includes public, private nonprofit and for-profit community colleges.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
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