Scholarship plan likely to be a hard sell
Mayor Jim Newberry wants to model a proposed community-funded scholarship program after the granddaddy of such programs, the Kalamazoo (Mich.) Promise.
The Kalamazoo program, which has spent $3.2 million and sent about 700 students to college, has quickly become a model for communities across the country that are now rushing to start their own scholarship funds.
But there’s a key difference between the Kalamazoo Promise and what Newberry proposes — public money versus private money.
That might be one of the biggest reasons why Newberry’s proposal faces an uphill battle when he presents it to the Urban County Council on Tuesday.
Nearly all of the scholarship programs that are up and running around the country are financed by private citizens, companies and other organizations. Kalamazoo relies entirely on private donors. The one program nationally that uses public money is funded with casino gambling revenues.
Newberry wants his program to be a public-private partnership, but so far the city doesn’t have any private donations lined up.
After Newberry announced the program, council members quickly questioned whether taxpayer money should be used to fund the scholarships. Newberry’s timing couldn’t be worse, with Lexington facing a tight budget year and a projected $25 million to $30 million deficit in the fiscal year that begins July 1.
“We’re looking at a potentially large revenue shortfall,” said Councilwoman Linda Gorton. “The question is, how could we afford to put any money into scholarships when we can’t afford basic services?”
The tight budget year is exactly why the program is needed, said Shaye Rabold, Newberry’s chief of staff. “We’ve got to do whatever we can to make sure we have high-paying jobs in Lexington.”
Newberry’s proposed Lexington First Fund aims to do that by using education as an economic development tool to create a highly trained work force and to attract businesses, she said. The program would offer four-year scholarships to any Lexington high school graduate majoring in science, technology, engineering or math, or planning to teach one of those subjects.
It’s unclear how much the program would cost. That depends on the number of students who choose to major in one of the target subjects and decide to attend a college or university within an hour’s drive of Lexington.
The amount of money the city plans to set aside for the program will be announced Tuesday as part of Newberry’s budget address. The program must be approved by the council.
The Kalamazoo Promise
Newberry’s Lexington First Fund is roughly based on the Kalamazoo Promise, which began with the graduating class of 2006.
The premise of the Promise is to provide each Kalamazoo Public Schools high school graduate with a scholarship to a Michigan public university or community college. The students can choose to study whatever they like at 43 eligible two-year and four-year institutions.
“Eighty percent of all jobs in the United States now require postsecondary education,” said Bob Jorth, executive administrator of the Kalamazoo Promise. “Ninety percent of the fastest-growing jobs require postsecondary education. That’s the philosophy behind the Promise. Everybody is going to need this training, and that’s why we’re making it available to everybody.”
The amount of an individual scholarship is based on the amount of time a student has spent in the Kalamazoo school system. A student who has attended kindergarten through 12th grade can receive a 100 percent scholarship. A student who attends all four years of high school in Kalamazoo receives a 65 percent scholarship. Students have 10 years to access the scholarship after graduation.
Since the program is so new, it’s difficult to measure the economic impact it’s had on Kalamazoo, Jorth said. “The only thing we have solid numbers about is school enrollment numbers, and those we can directly track to the Promise.”
The school district, which had been losing students for the last 17 years, has seen 1,200 new students, a jump of about 11 percent, Jorth said. The district has added new teaching positions and is building the first new school in Kalamazoo in 35 years, Jorth said.
Similar programs arise
The Kalamazoo Promise has sparked a wave of similar community scholarship programs. Across the country, the basic principles of the program are being studied, copied and tweaked. More than a dozen communities have announced plans to begin a Promise program. The concept is particularly popular in the Midwest in places such as Michigan, Iowa and Ohio.
Kalamazoo’s program is fully funded by a group of anonymous donors.
About 78 percent of the students who are eligible for a Promise scholarship have received one. The program is currently funding about 600 students for the spring semester. The Promise will spend about $4.5 million for the 2008-09 academic year when a third class is added in the fall, Jorth said.
Nationally, all but one of the scholarship programs that have been started are being funded by private money. Those programs include the El Dorado (Ark.) Promise, the Peoria (Ill.) Promise and the Pittsburgh Promise.
In Peoria, using public money wasn’t even a consideration, said Julie Hammond, Peoria’s program manager. “The reason we went with the private funding is because it’s actually the local citizens and local businesses that stand to benefit from the economic development as the outcome.”
Peoria Promise plans to fund scholarships to the local community college for between 400 and 450 students this fall at a cost of more than $500,000, Hammond said.
Taxpayer-subsidized scholarships are more controversial to start, said Michelle Miller-Adams, a visiting scholar at the W.E. Upjohn Institute for Employment Research in Kalamazoo. Miller-Adams is writing a book about the Kalamazoo Promise. “It’s trickier when it comes to public revenue,” she said. “It’s a lot easier when it’s private money or foundation money.”
Several communities are seeking public financing for their scholarship programs, but so far only Hammond, Ind., has been successful, Miller-Adams said.
College Bound, Hammond’s program, uses tax money from the Horseshoe Casino, a riverboat casino. The program began cutting checks in fall 2006. So far, it costs about $500,000 per graduating class.
Hammond receives about $35 million a year from the Horseshoe, which is usually used to finance infrastructure improvements such as sewer lines, curbs and sidewalks.
Using casino revenue was a much easier sell since it didn’t involve property or sales taxes, said Hammond Mayor Thomas McDermott. As more kids joined the program, taxes would have had to go up, he said.
College Bound and programs like it are “something you’re going to see more common in government 20 years from now,” McDermott said. “We’re in the beginning stages of something government is trying to provide.”
Some communities, such as Davenport, Iowa, and Newton, Iowa, are pursuing local sales taxes for their scholarship programs. In Newton, the city council was asked to approve a sales tax, but the council wanted to see the Newton Promise funded privately, said Newton Mayor Chaz Allen.
Private fund-raising for the Newton Promise is under way, but it’s “really kind of stalled right now,” Allen said.
The new plan is to fund the program using a public-private partnership with the initial focus on private donations, said Kim Didier, executive director of the Newton Development Corp. The goal is to raise at least $5 million privately before reapproaching the city about a sales tax.
“Kalamazoo got it exactly right with private funding,” Allen said. “They can do whatever they want and send whoever they want to college. Public dollars come with rules and regulations that you have to abide by.”
A public-private venture
Newberry plans to fund the Lexington First Fund with taxpayer money and private contributions. So far, the city hasn’t collected any private donations for the program.
“The mayor has had conversations with some folks in the private sector,” Rabold said. “There certainly is an interest.”
Councilman Kevin Stinnett said he isn’t opposed to using city money for the Lexington First Fund, but it has to be in combination with private dollars.
Citizens have already been hit hard with tax increases — a property tax increase for the school district, a doubling of the sanitary sewer user fee over the next two years and a soon-to-be-created storm-water fee, Stinnett said.
Councilman Ed Lane said he is confident the community will support the scholarship program with private donations.
“I don’t think the city government should fund it all because this is an economic development tool, and the community at large ought to support it.
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