The financial data from Michigan community colleges were obtained primarily from the state's Activity Classification Structure Data system.4 According to the report, "1998-99 General Fund Cost Per Student Contact Hour and Student Credit Hour," state government gave community colleges $21,824,016 for "developmental and preparatory" instruction. But state monies represent only 33 percent of community college revenues, with the other two-thirds coming from tuition, local property taxes, the federal government, and grants and donations.5 If state money covers one-third of community college remedial education expenditures, as the Michigan Department of Education estimates, then community colleges in Michigan spend a total of $65.4 million on teaching students basic skills.

In all likelihood, this estimate of community college spending on teaching students skills that they were supposed to have acquired in high school is considerably lower than the actual expenditure. Three pieces of evidence suggest this estimate is conservative. First, the nearly $22 million figure from the state of Michigan only covers operating expenses and does not include any capital expenditure required by offering remedial education. The capital requirements of providing remedial education are not trivial since community colleges have to build offices and classrooms to house remedial education activities and purchase computers and software to assist instruction.

Second, the figures we have used only cover those expenditures that the schools and state describe as remedial education. It is clear that the teaching of basic skills at community colleges occurs throughout their curricula and not just in courses officially identified as remedial. As George Swan, dean of arts and humanities at Wayne County Community College, put it: "A great deal of developmental education occurs at the college level that is not labeled as such.. Such a large part of what we do here is developmental that I don't see the distinction [between college-level and developmental work]."6 Katie Smith, director of transitional studies at Lake Michigan Community College, concurs: "Quite a bit of developmental education occurs in classes not labeled as developmental. Faculty say that today's high school students are unprepared for college-level work and that it is becoming increasingly evident in their performance in college courses. In almost all college courses, some degree of developmental education occurs."7

This impression that much of what community colleges define as college-level work might more accurately be described as remedial education is confirmed by an examination of the colleges' course catalogues. Michigan community college catalogues list courses such as elementary algebra, intermediate algebra, and trigonometry as college-level courses when these are courses that are normally taken by high school students. The lowering of the definition of college-level work understates the level of expenditures devoted to remedial education.

And third, a fairly large percentage of students who are in need of remedial education never enroll in developmental courses, even if they attend community college. According to a study by the Michigan Department of Education, between 45 percent and 79 percent of community colleges require entering students to take tests that would identify their need for remedial services, depending on the degree program. And only 48 percent of community colleges require students to take remedial courses if the tests show that they need them. In fact, of the 52,473 students who took the placement tests and demonstrated a need for remedial education, only 38,178 (73 percent) actually enrolled in any remedial courses.8 If many students who lack basic skills are not enrolling in courses to address those deficiencies, then our estimate of the cost of the skill gap would be seriously understated.

Given all of these factors, it would not be unreasonable to assume that about a third of what community colleges do is really addressing the lack of basic skills resulting from inadequate preparation in high school. Instead of our more cautious estimate of $65.5 million, the true cost in community colleges alone could conceivably be as high as $350 million. However, we are choosing to use the conservative estimate in which remedial education costs represent only 6.3 percent of community colleges' operating budgets instead of more aggressive estimates that could place the figure as high as 33 percent.