Connecting Workforce Education Investments and Community College Business Models

By Donna Desrochers and Mike Daly

Colleges and universities are under increasing pressure to align their educational offerings with workforce needs while maintaining financial sustainability. Workforce programs—particularly short-term, noncredit ones—play a critical role in meeting regional labor market demands, expanding access for adult learners, and supporting local economic conditions. However, few institutions have a clear understanding of the true costs and revenue structures of these programs, limiting their ability to plan strategically and assess long-term sustainability.

To address this gap, rpk GROUP partnered with Progressive Policy Institute (PPI) and ten community colleges to build a workforce education cost model and analyze 39 short-term subbaccalaurate workforce education programs at those colleges. The goal was to identify program costs and their drivers, how enrollment and program scale affect financial sustainability, how an understanding of revenue and expenses can inform pricing, and what practices can strengthen the financial and operational aspects of workforce education. These findings provide valuable insights into the realities of creating and sustaining workforce education programs and offer a roadmap for other institutions looking to do the same.

Key Analytical Findings

Program, enrollment, and financial information for the 39 community college workforce education programs revealed three key data-informed insights:

1. Workforce education programs costs vary widely. The median program cost was approximately $215,000, but individual program costs ranged significantly from less than $20k to more than $1M (see Figure 1) depending on type of program, delivery model, course materials required, infrastructure requirements, and whether program development costs were included. Compensation was identified as the primary cost driver, representing about 70% of total program expenses, emphasizing that staffing and instructional models have the greatest impact on financial sustainability.

2. Scale is a key driver of efficiency. Programs with higher enrollments, or those offered multiple times per year that generate higher annual enrollments, often more easily achieve lower per-student costs. When the type of program content and geography are taken into account, scale emerges as the dominant factor influencing cost efficiency.

• Organizing the 39 workforce programs into nine broad content areas shows that manufacturing and transportation are among the most expensive program types. However, on a per-student cost basis, manufacturing is less expensive to deliver than the average program, while transportation remains the most expensive, because it only enrolls an average of 57 students (see Figure 2).

• Examining program costs at each of the ten colleges also reveals wide variation. Some colleges face higher costs because they operate in high-cost areas or experience structural constraints that drive up expenses (e.g., facilities, union agreements). Some programs are more expensive because the base price includes the cost of additional services—support services such as access to library resources or mental health counseling, for example—or the college might cover the cost of an industry certification assessment.
• Notably, the three colleges with the highest total costs had the lowest per-student costs. And the three colleges with the lowest total costs had much higher per-student costs—again demonstrating the powerful impact of scale on costs, and ultimately on program pricing strategies.
  

3. Financial sustainability and cost recovery are uneven across programs. While just over 60% of the programs generated positive net revenue, the remainder operated at a deficit. Colleges may be operating their current workforce programs at a loss because they underestimated their full program costs, leading to misaligned pricing, or their recruitment and enrollment is insufficient to cover costs. They also may have designed programs that are costly to operate, and students or employers are unwilling to pay the price necessary to recover the full program cost. Some colleges know a program operates at a deficit but believe it’s important to offer the training and cover the lost revenue with a cross-subsidy from other revenue sources (e.g. revenue-producing programs).

Success Stories

Several colleges shared stories that demonstrate how a better understanding of workforce program costs can strengthen colleges’ noncredit operations and offerings. All of the changes highlighted below occurred after the colleges used the cost model to develop a better understanding of their program financials.

•  ‘Full Cost’ Capture: County College of Morris in New Jersey has expanded its capture of program ‘cost’ beyond that of the instructors in the classroom. It is now including the full program costs such as equipment, facilities, and overhead costs related to campus support services. For example, while equipment is often donated by employers or paid for with grant dollars, there is a cost to maintaining that equipment each year and writing proposals to secure grant funding.
• Informed Responsiveness to Shifting Student Demand: Northern Virginia Community College recognized a shift in student enrollment away from traditional lower-cost transfer programs and toward industry-aligned workforce development programs, which are often more expensive to operate. Modeling program costs facilitated a deeper awareness of financial constraints and flexibilities in a rapidly shifting portfolio.
• Cost Transparency in Pricing: Central New Mexico Community College highlighted the adoption of these new cost models when setting prices with employers. They help demonstrate the true cost of training programs that were already successfully implemented, and helped set financially sustainable prices for new courses offered for a local law enforcement agency.

Action Steps Moving Forward

The ten participating colleges are applying the insights from this work to strengthen their workforce programs and institutional business models. Their action plans share several common priorities:

1. Lobby for Funding Parity
Colleges’ workforce programs are generally not supported with any state appropriations, despite their contribution to the state economy and industry. Institutions are advocating for funding parity between credit and noncredit programs with solid information on the cost of delivering these programs and their widescale economic benefits.

2. Strengthen and Diversify Revenue Streams
Institutions are pursuing new funding sources such as employer sponsorships, infrastructure, or equipment contributions, public grants, and philanthropic investments. Several colleges are also developing blended credit–noncredit pathways that appeal to adult learners and improve enrollment and revenues on the for-credit side of the college.

3. Increase Efficiency and Cost Control
Participating colleges intend to compare differences in credit and noncredit program costs, and identify opportunities to right-size instructional and support staffing relative to enrollment. They are reviewing compensation structures, scheduling, and shared services to reduce overhead while maintaining quality.

4. Enhance Return on Investment Through Student Success
Colleges are focusing on improving completion and job placement rates, recognizing that student outcomes are a key measure of program success. This involves reinforcing advising, career counseling, and academic supports that directly affect student persistence and success.

5. Align Workforce Strategy with Institutional Mission
Finally, colleges are using cost model insights to align workforce program growth with institutional priorities. They aim to focus resources on programs that meet demonstrated workforce needs and contribute to both regional economic development and institutional financial sustainability. And importantly, some colleges actually closed programs once they understood the cost and re-considered their priorities.

The findings from this initiative reveal both the promise and complexity of sustaining workforce education offerings in higher education. With enhanced business intelligence, including data systems and analytic capacity to track true costs and revenues at the program level, colleges can make more informed decisions about program expansion, redesign, or discontinuation.

Workforce programs offer strong value to students and employers, yet their financial sustainability requires intentional design and pricing, transparent cost management, and alignment with market demand. When those elements intersect, workforce programs can thrive—supporting student opportunity, economic growth, and institutional resilience.