It turns out that community colleges, which often struggle for financial support, actually have rather perverse funding structures. According to an article by Joanne Jacobs at Community College Spotlight (published by Teachers College at Columbia University):
[Community college] funding rewards enrollment, not success.
[For instance,] Broome Community College’s three-year federal graduation rate is nearly 28 percent, above the national average of around 23 percent. It’s ranked 15th in the nation for student retention out of 210 colleges that submitted data in the National Community College Benchmark Project. Some 87 percent of Broome graduates who transfer to a four-year institution complete a bachelor’s degree, the best performance among New York’s 30 community colleges.
But Broome was hit by a 15 percent cut in state funding.
The trouble, as Broome’s president explained to Inside Higher Ed, is that New York State’s funding formula (like that of other states) allocates money to schools based on enrollment. This means that if students earn their degrees reasonably swiftly and get jobs or transfer out, the school loses money. The school would get more funding if students stayed in the system longer.
Now obviously no school wants to fail; community colleges don’t work to keep students in without degrees. But as it is now there’s not much incentive for colleges to do a good job helping students complete their programs. Colleges simply aren’t rewarded for such behavior.