Federal Oversight Grants and Community Colleges: A Comprehensive Overview

Community colleges play a vital role in the American higher education system, providing accessible education, workforce training, and community services. The federal government has long recognized the importance of these institutions and has implemented various policies and funding mechanisms to support their missions. This article delves into the landscape of federal oversight grants for community colleges, exploring their purpose, impact, and potential challenges.

The Role of Community Colleges

Community colleges enhance access to higher education for millions of students through low tuition and broad admission policies, support their communities through continuing education and other service programs, and contribute to economic development by providing job training and partnering with regional employers. Echoing current policies of about half of the states, President Joseph R. Biden and First Lady Dr. Jill Biden, have been long-time supporters of community colleges.

Federal Support for Community Colleges: A Historical Perspective

The federal government has supported community colleges in various ways throughout history. From the Truman Commission’s call for the expansion of community colleges in 1947 through more recent federal investments in community college workforce programs, the US government’s policy on community colleges has helped to shape the role and trajectory of these institutions.

Mechanisms of Federal Oversight and Funding

The federal government employs several tools to influence policy and provide financial support to community colleges. These mechanisms can be broadly categorized into direct funding, federal-state partnerships, and regulatory oversight.

Direct Funding

Direct funding occurs when the federal government provides grants, payments, appropriations, or financial aid directly to a community college. Such funding occurs in a wide variety of contexts, often in the form of student financial aid, veterans’ benefits, and research funding, frequently following a competitive call for proposals or requiring that certain conditions be met. Some community colleges that are recognized as Minority-Serving Institutions (MSIs) receive direct appropriations from the federal government through Titles III and V of the Higher Education Act, too. Numerous other federally funded programs aid community colleges all over the country, including in New York. Some of the most notable ones pointed out by the American Association of Community Colleges are the TRIO programs aimed at promoting student success (funded through the Higher Education Act), career and technical education programs (funded through the Carl D.

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Federal-State Partnerships

The second major tool the federal government uses to effectuate its policy on community colleges are federal-state partnerships. These partnerships could be direct relationships between states and the federal government, or they could be indirect, as when the federal government’s relationship with another entity indirectly influences states and prompts them to act. Partnerships with the federal government could primarily involve regulation, or they could primarily involve funding, although the receipt of federal funding is often conditioned upon adhering to federal regulations. Federal policy on community colleges has existed within and across each of these categories of federal-state partnerships. An example of a direct-funding partnership affecting community colleges is the maintenance-of-effort provision in the American Recovery and Reinvestment Act of 2009, which required states to maintain their public funding for higher education at a certain amount or risk losing the federal portion of that funding. An indirect-funding partnership is the separate funding provided by the federal and state governments (and other entities) to colleges as part of institutional revenue streams. These are not direct partnerships, as each entity’s funding of institutions is independent; however, these funding streams influence each other. A direct-regulatory partnership between states and the federal government involves these entities working together to develop federal policy regarding higher education. These partnerships are sometimes advisory, as when President Barack Obama convened a White House Summit on Community Colleges, in which federal and state officials, representatives of community colleges, and others met to discuss and make recommendations for how to improve community college success. Finally, indirect-regulatory partnerships occur when the federal government regulates higher education institutions and the regulation indirectly impacts states, leading them to take action in some way. An example of this was when the US Department of Education issued its “state authorization” regulation, requiring institutions-including community colleges-to be duly authorized in every state in which the institution enrolls students.

Key Federal Policies Affecting Community Colleges

Although there are numerous federal laws and regulations that affect community college funding and tuition, several federal policies are particularly impactful.

The Higher Education Act

One is the Higher Education Act, which arguably is the most significant federal policy for the entire higher education sector. Millions of college students each year receive federal student financial aid under Title IV of the Higher Education Act, including more than $10 billion to over three million Pell Grant recipients who attend community colleges. Also, as described above, community colleges that are recognized by the federal government as MSIs receive additional funding through Titles III and V of the Higher Education Act, and included among these are several community colleges in New York.

The Carl D. Perkins Career and Technical Education Act

Another significant federal policy for community colleges is the Carl D. Perkins Career and Technical Education Act (Perkins). Most recently reauthorized as the Strengthening Career and Technical Education for the 21st Century Act, Perkins provides funding to support technical and career education at the secondary and postsecondary levels. Community college programs focused on career and technical education, as well as students enrolled in those programs, often benefit from federal Perkins funds.

The Workforce Innovation and Opportunity Act (WIOA)

The Workforce Innovation and Opportunity Act (WIOA) is an example of a federal-state partnership that also involves local government entities. This Act provides federal support for workforce development programs that advance the skills of job seekers and align with the workforce needs of employers. WIOA provides funding to many community college workforce development programs, including the Gaining Occupational Academic and Leadership Skills (GOALS) program at SUNY’s Niagara County Community College.

The Trade Adjustment Assistance Community College and Career Training (TAACCCT) Grant Program

The Trade Adjustment Assistance Community College and Career Training (TAACCCT) Grant Program, administered by the US Department of Labor, provided federal funding to community colleges in every state to develop short-term programs for the purpose of updating workforce skills in fields such as healthcare, energy, information technology, and more. The TAACCCT program also funded researchers to conduct evaluations of these programs. Between 2011 and 2018, nearly $2 billion in TAACCCT funding went to over 700 community colleges across the country. In New York State, TAACCCT has provided more than $40 million across dozens of community colleges, with more than 30 new programs launched to serve more than 10,000 participants, according to Department of Labor data.

Strengthening Community Colleges Training Grants Program

Finally, the Strengthening Community Colleges Training Grants Program provides funding to community colleges for the purpose of assisting students from underserved communities to develop job-relevant skills through technical and career education programs. According to the US Department of Labor, which administers the program, in February 2023, approximately $50 million was provided to 15 community colleges in the third round of grant funding.

Strengthening Community Colleges Training Grants: A Closer Look

The Department of Labor (DOL) has implemented the Strengthening Community Colleges Training Grants program through multiple rounds of funding. Sector-based career pathways programs, which evidence shows support employment outcomes, are foundational to the grant program. These grants aim to build community colleges’ capacity to meet the skill development needs of employers and support students in obtaining good jobs in in-demand industries.

Strengthening Community Colleges Training Grants - Round Five (SCC5)

In December 2024, DOL awarded $65 million in SCC5 grants to 18 colleges. This funding will support a total of 41 colleges, including 18 lead institutions and an additional 23 consortia members. These colleges will work in multiple sectors, including advanced manufacturing, healthcare, IT, agriculture and infrastructure-related sectors, including transportation and broadband.

Strengthening Community Colleges Training Grants - Round Four (SCC4)

In April 2024, DOL awarded $65 million in SCC4 grants to 16 colleges. This funding supports a total of 41 colleges, including 16 lead institutions and an additional 25 consortia members. These colleges will work in multiple sectors, including advanced manufacturing, healthcare, IT, and infrastructure-related sectors like construction, transportation, broadband expansion, and renewable energy. Grantees announced received $55 million in initial funding. Following a feasibility study, a subset of grantees was identified to participate in an impact or outcomes evaluation, and those grantees shared the remaining $10 million in funding, which was awarded in the fall of 2024.

Strengthening Community Colleges Training Grants - Round Three (SCC3)

The third round of the Strengthening Community Colleges Training Grants Program aims to help students overcome barriers to career and technical education programs they need to connect with quality jobs. In February 2023, DOL awarded $50 million in SCC3 grants to 15 community colleges, including eight consortium grants and seven single institution grants in 14 states. The industry sectors represented by grants include healthcare, advanced manufacturing, information technology, clean energy, and education. SCC3 used the same Funding Opportunity Announcement as SCC2.

Strengthening Community Colleges Training Grants - Round Two (SCC2)

The second round of Strengthening Community Colleges Training Grants aims to help students overcome barriers to career and technical education programs they need to connect with quality jobs. In September 2022, DOL awarded $45 million in SCC2 grants to 13 community colleges, including seven consortium grants and six single institution grants in 12 states. Industry sectors represented among grants include Advanced Manufacturing, Healthcare, Information Technology (including Cybersecurity), Supply Chain, and Construction.

Strengthening Community Colleges Training Grants - Round One (SCC1)

The first round of Strengthening Community Colleges Training Grants (referred to as Strengthening Community Colleges or SCC1) built the capacity of community colleges to collaborate with employers and the public workforce development system to meet local and regional labor market demand for a skilled workforce. The grants also build the capacity of community colleges to address challenges associated with the COVID-19 health crisis, such as expanding online and technology-enabled learning and migrating services to a virtual environment. In January 2021, DOL awarded $40 million in grants to 11 community colleges, including seven consortium grants and four single institution grants in 10 states. Industry sectors represented among grants include Advanced Manufacturing, Healthcare, Information Technology (including Cybersecurity), and others. Most of the grants ended January 31, 2025.

The Pell Grant Program and Community Colleges

Community colleges serve as an access point to higher education for many low-income students, many who use Pell Grants to offset costs. The federal government's need-based grant provides money to students to help cover tuition and other costs related to their education. While there are some limitations, Pell Grants make community colleges even more accessible for low-income students.

What Is the Pell Grant?

Title IV of the Higher Education Act of 1965 created the Pell Grant program along with other federal student aid programs. This program provides aid to low-income undergraduate students and, according to a report from the Congressional Research Service, is the largest source of grant aid for postsecondary education funded by the federal government. Depending on need determined by the Free Application for Federal Student Aid, or FAFSA, students, as of the 2023-2024 academic year, can receive up to $7,395 annually. These funds can be used to cover direct costs at the institution, such as tuition and fees, and the remainder is refunded to the student to cover any education-related expenses (i.e., transportation, living expenses, etc.). Students can receive Pell Grants for a maximum of 12 full-time (12 credit hours or more) semesters. If the student attends an institution part-time, then they receive a prorated Pell Grant award.

Pell Grants at Community Colleges

Community college students tend to rely on Pell Grants more than students at four-year institutions. Using data from the Integrated Postsecondary Education Data System, or IPEDS, we see nationally that 46.4 percent of first-time full-time degree-seeking students at community colleges receive Pell Grants, compared to four-year public and private universities where these figures are 35.5 percent and 31.9 percent, respectively. The Pell Grant significantly reduces the cost that students must pay to attend community colleges. On average, according to a report from the Education Data Initiative, a Pell Grant can cover 57.4 percent of tuition to attend a public two-year institution. In some cases, it can cover up to 100 percent of tuition.

Pell Grant refund dollars that are spent on books, equipment (i.e., a laptop), and required supplies are considered "qualified education expenses." These dollars are provided to students tax-free. Additional refund dollars may be spent on other expenses, such as transportation, child care, food or housing, but these "unqualified education expenses" must be claimed as income for tax purposes. The refundable aspect of the Pell Grant is important because it gives low-income students support beyond covering tuition to help manage other expenses related to attending college.

Pell Grants represent a significant funding mechanism for community colleges.

Pell Grant Limitations and Policy Considerations

One of the current limitations of the Pell Grant is that students enrolled in non-credit coursework (i.e., commercial driver's license, phlebotomy, certified nursing assistant, etc.) are not eligible to receive the Pell Grant. Title IV federal financial aid, including both the Pell Grant and federal student loans, is only available to students enrolled in credit-bearing degree and certificate programs with at least 16 credit hours. This may provide students who are Pell-eligible a disincentive to enroll in non-credit programs, many of which, while short term, require intensive coursework that might limit available work hours. Without access to additional funding outside of state workforce grants, which typically only cover tuition, low-income students may not be able to afford the short-term opportunity cost to attend these programs.

There have been many attempts to expand Pell Grants to non-credit, workforce programs. The Pell Grant is vital to expanding access to postsecondary education for lower-income students. This is especially true at community colleges where Pell Grants can fully, or close to fully, cover tuition. The movement toward covering more community college students and programs via the Bipartisan Workforce Pell Act, or similar legislation, would be significant both for institutions and the students they serve.

Federal Grants to State and Local Governments

Federal funding through grants has a great impact on the communities we live in. This funding-along with other federal aid programs-totaled $1.2 trillion last fiscal year and plays an important role supporting everyday life in communities across the country.

Challenges in Accessing and Managing Federal Grants

While grants are an important source of funds for community needs, state and local governments and organizations can face barriers to obtaining and effectively managing this funding. Communities may also have challenges navigating the wide range of federal grant programs that span across many federal agencies. Some of the programs even result in duplicative or overlapping federal support, which also can create difficulties for communities attempting to obtain federal grants.

If a community is able to successfully navigate the grant process and get a grant, they may also struggle to manage this funding. Communities that receive federal grants must administer them as stipulated by the federal agencies that award them, and in the case of economic development grants, often must conduct additional strategic planning efforts. The federal government could help mitigate these and other challenges local communities face by providing technical support and covering the cost of administering the grant.

Efforts to Streamline Grants Management

The federal government has taken some steps to streamline grants management and reduce the burden on communities. For example, in response to the Grant Reporting Efficiency and Agreements Transparency Act of 2019 (GREAT Act), federal agencies are working on efforts to reduce of burden and compliance costs faced by recipients of federal grants.

Transparency and Oversight

A lack of transparency and oversight also contributes to federal funding challenges. For example, challenges related to the timeliness, completeness, and accuracy of grant data on USAspending.gov, the federal government’s official source for spending data have been identified. To address these issues, recommendations to the Office of Management and Budget (OMB) and the Department of the Treasury on ways to improve the quality of information provided on USAspending.gov have been made.

Federal Grants: Data and Trends

In FY2022, the federal government sent state and local governments a total of $1.258 trillion. The vast majority of that funding came through federal grants. Of that total, $1.112 trillion went directly to state governments-36.1% of total state government revenue (in some cases, portions of this funding must be passed through to local governments). The federal government also sent $146.3 billion directly to local governments in FY2022, or 6.2% of total local government revenue.

OMB estimates that state and local governments will receive at least $1 trillion in federal grants annually through FY2029. In both nominal and constant (adjusted for inflation) amounts, the value of federal grants to state and local governments has increased over recent decades.

Federal grants to state and local governments as a share of federal spending in the last few years is also greater than it was during the mid-20th century. Federal funds were estimated to represent 34.2% of total state expenditures in FY2024 (the vast majority of such funds are grants).

Federal grants to state and local governments are used for a variety of purposes. Of these categories, grants for health-driven primarily by Medicaid-comprise by a large margin the majority of dollars for federal grants to state and local governments.

Categorical Grants, Block Grants, and General Revenue Sharing

The three general types of federal grants to state and local governments are categorical grants, block grants, and general revenue sharing. Categorical grants can be used only for a specifically aided program and usually are limited to relatively narrowly defined activities. Block grants can be used only for a specifically aided set of programs and usually are not limited to relatively narrowly defined activities. The four types of categorical grants are project categorical grants, formula categorical grants, formula-project categorical grants, and open-end reimbursement categorical grants. Project categorical grants are awarded on a competitive basis through an application process specified by the federal agency making the grant. Formula categorical grants are allocated among recipients according to factors specified within enabling legislation or administrative regulations (e.g., population, median household income, per capita income, poverty, and number of miles driven). Formula-project categorical grants use a mixture of fund allocation means, typically involving the use of a formula specified within enabling legislation or administrative regulations to allocate available funds among the states, followed by an application process specified by each recipient state to allocate available funds on a competitive basis among local governments or other eligible applicants. Of the six grant types, project categorical grants typically impose the most restraint on recipients.

Navigating the Federal Grant Lifecycle

The lifecycle of a federal grant starts well before the agency makes an award. Much of the pre-award activity can be relevant for shaping the grant award and disputes after award. The typical lifecycle of a grant is as follows:

Authorization and Appropriation

Congress authorizes the grant program through legislation. Congress then appropriates funds for the program, either in the same bill or through annual (or other periodic) appropriations.

Agency Planning

The Federal agency develops an implementation strategy based on statutory mandates and executive orders, memoranda, or other guidance. The agency develops policies, goals, and eligibility criteria.

Notice of Funding Opportunity (NOFO)

The Federal agency announces and publishes the funding opportunity on grants.gov. The announcement contains information for applicants to apply for the funding, including the criteria for eligibility, key dates, total amount of funding expected, number of awards, and the goals and objectives of the program. Potential applicant institutions evaluate their eligibility for award, register their entity on SAM.gov and grants.gov (if necessary), and prepare and submit their applications.

Award Selection

The Federal agency reviews applications for completion, technical and programmatic substance, and cost. The agency then makes recommendations for award. The applicants may communicate with the agency to track application status during this phase.

Award Finalization

The agency issues a notice of award. The institution provides assurances and certifications required by the grant award or the NOFO. The Federal agency assesses recipient risks and the need for specific conditions before issuing the final award. The selected institution and the agency clarify and negotiate the proposed budget and the terms and conditions of the award.

Grant Performance

The institution performs grant activities, including complying with relevant obligations, drawing down funds, submitting the required reports, and participating in audits. The agency oversees the institution’s compliance and performance of the award.

Closeout of the Grant

As dictated by the grant, after the period of performance is completed, the institution completes the activities required for closeout, including submitting final reports, liquidating remaining funds, and completing any other closeout actions listed in the award. Financial reconciliations, which may be payment or collection (both of which may happen after closeout as well) occur. A failure to complete required closeout activities can result in adverse actions against the institution.

Grant Budget and Relationship to Legal Considerations

Budgeting is often viewed as something that does not require the legal department’s input, but it is important for legal departments and, when legal staff is limited, administrators to be involved in and understand. Attorneys and senior administrators at institutions should understand: How indirect cost rates and budgets’ inclusion of staff or faculty members’ time or effort impact compliance and internal controls and institution-wide policies and procedures. That the budget may impact the institutions’ and Government’s interest in real, physical, and intangible property and what costs are recoverable compliance costs.

Baseline Regulatory Compliance Obligations

Regulations such as 2 CFR Part 200 and 45 CFR Part 75 outline common responsibilities of grant recipients and subrecipients. Key compliance areas that institutions should pay particular attention to include: Property standards, Procurement standards, Subrecipient monitoring and management and Cost principles, including time/effort reporting.

Subrecipient vs. Contractors vs. Program Beneficiaries

Under Federal awards, in addition to the grant recipient, there may also be subrecipients, contractors, program beneficiaries, and participants. Institutions that receive Federal awards and then award lower-tier funding must distinguish between these groups because different requirements will apply based on the category of the lower-tier entity.

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