THE STATE’S FUNDING model for higher education should be reworked to better support public and private institutions serving large minority populations, according to a new report from business-backed groups, which cite a tight labor market and employers’ desire for a more diverse workforce.

The Bay State is home to 12 minority-serving institutions, or MSIs, a designation given to higher education campuses where 25 percent or more of full-time undergraduates are Hispanic, or with undergraduate enrollment that is at least 40 percent African American.

Most are public, such as UMass Boston, UMass Lowell, Bunker Hill Community College and Roxbury Community College, while a few are private, like Cambridge College and Benjamin Franklin Cummings Institute of Technology, also known as Franklin Cummings Tech. 

The 21-page report on MSIs, released by the Massachusetts Taxpayers Foundation and supported by the Massachusetts Business Roundtable, said the institutions, which enroll nearly 100,000 students and serve a higher proportion of low-income students of color than other colleges and universities, tend to fly under the radar.

But by coupling more funding from Beacon Hill and better ties with the business community, the institutions could help combat the lack of diversity in several sectors and a shriveling workforce, the report argues. Just under 7 percent of the state’s workforce is Black, while Blacks make up only 2.6 percent of workers in the professional, scientific and technical service sectors.

The report urges changes in the state’s funding formula for higher education that consider socioeconomic factors, as is the case with K-12 funding. In contrast to the way Massachusetts funds public K-12 education, higher education funding doesn’t take into account student demographics or varying levels of need at campuses.

“Put simply, the subsidies that public MSIs receive from the state are blind to the fact that they educate a high proportion of low-income students of color who predominantly attend school part-time,” the report said. “This lack of a coherent approach creates inequities in per-pupil funding between MSIs and non-MSIs. Introducing a funding formula for the public higher education system that accounts for demographics and socioeconomic factors, in addition to the full costs associated with part-time students, is a more equitable approach that could improve outcomes among low-income students of color, increasing the talent pipeline prepared to fill available jobs.”

The state’s public higher education funding also leaves out the state’s three private MSI – Franklin Cummings Tech, Cambridge College, and the Urban College of Boston. The report recommends specifically including them in state funding along with the public MSIs.

In addition to the funding formula recommendations, the report calls on the state’s existing workforce development programs to prioritize engaging with MSIs, and says new workforce programs should set up internships to directly connect employers with workers in industries beyond clean energy and life sciences.

Aisha Francis, president of Franklin Cummings Tech, said MSIs should be a priority for business and government leaders because their students tend to be Massachusetts natives who plan to remain here. 

“They’re already here and it’s more likely they are going to live, work, and thrive in the Commonwealth than transplants,” Francis said. “And they deserve broader access to amazing opportunities that our companies here are providing.”

While Massachusetts is known for its concentration of colleges and universities, the large number of public and private campuses means MSIs are forced to compete with the other institutions and training providers for money and attention. “We have this incredible resource here that we need to organize, support, and more intentionally connect with employers,” said JD Chesloff, president and CEO of the Business Roundtable.

Chesloff said there is an urgency to expanding and diversifying the talent pipeline. The state’s labor force fell by 100,000 between mid-2019 and February 2023. The state’s population is also steadily aging, with retirements up 15 percent in the first quarter of 2023 from the same period of 2019, according to the report.

“When we talk to members of the Roundtable, the top issue we consistently hear year over year is talent – the inability to find talent, how do you recruit/retain talent, and how do you diversify talent?” he said.

Francis said she hopes the report casts MSIs in a “new light.” Her college is a niche technical and trade institution, with a focus on the IT sector as well as construction management. In September 2024, they’re expanding into a new sector: life sciences. The college is offering for the first time an associate’s degree in biotech, aimed at providing access to entry level lab jobs.

Lauren Jones, Gov. Maura Healey’s labor chief and a former executive vice president at the Business Roundtable, called MSIs “collaborative workforce training partners” for unemployed and underemployed jobseekers, and said their role has grown more important since the Supreme Court’s ruling on race-based college admissions. The administration “looks forward to continued discussions with stakeholders” like Chesloff’s group and the Massachusetts Taxpayers Foundation, her statement said.

On the employer side, many may be unaware of MSIs, and there is an opportunity for employers to forge deeper partnerships and build coalitions, rather than one-off collaborations that are unable to scale up, according to the report. “Part of it is on us,” Chesloff said.