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Snyder seeks boost in Detroit Promise funding

Crain’s Detroit Business 

By Chad Livengood 

February 5, 2017

Gov. Rick Snyder wants businesses and philanthropic foundations to boost the Detroit Promise college scholarship program with up to $24 million to fill gaps in a tenuous tax-capturing mechanism that remains two years away from generating revenue.

Detroit’s citywide reassessment of all commercial, industrial and residential property value is expected to set 2017 as the baseline year for the Detroit Promise Zone Authority to begin collecting 50 percent of all revenue growth in the 6-mill State Education Tax in 2019.

The Michigan Education Excellence Foundation has raised $6 million for the Detroit Promise scholarship program and has a goal of generating $30 million in donations, according to the foundation’s president, Peter Remington.

The Detroit Promise college scholarship covers the difference between a student’s federal financial aid Pell Grant and the cost of tuition. There are about 760 Detroit high school graduates attending community colleges in Wayne County this year and 290 enrolled in four-year universities under the program.

Snyder prodded the business leaders and philanthropists in his Jan. 17 State of the State address to help sustain the program.

“I am calling on our philanthropic and business communities to join in and help (Mayor Mike Duggan) and I support the Promise and continue the path to give awesome opportunities to these great, young people from Detroit,” Snyder said in the speech.

The fundraising drive for the Detroit Promise is designed to ensure the scholarships are sustainable as Detroit’s property values rebound, Remington said.

“We’ve got to be able to raise it because even when the tax recapture start there’s still going to be philanthropy needed,” said Remington, CEO of The Remington Group.

The Detroit-based Skillman Foundation has contributed $150,000 to the scholarship and college access program, but has held back contributing more because of uncertainty over long-term taxpayer support, foundation CEO Tonya Allen said.

“It feels like it’s a really, really big burden on our community to raise those revenues and we don’t really know how long we’re doing it,” Allen said. “If we’re saying we’re going to be able to do this for young people in Detroit, I want us to be able to do a real promise — not a cautionary promise.”

Projecting revenue

Duggan is convinced rising property values in Detroit will fuel the tax revenue needed to sustain the scholarship program in the future. Tax assessments on 112,482 residential properties — about 44 percent of the city’s parcels — rose this year, according to city assessment data.

“If you look at the projections … every year, the revenues that are coming in on the tax side go up faster than we believe the demand will be,”Duggan said. “So we feel really good about those projections. So Detroit Promise is rock solid.”

A Crain’s analysis of state Treasury Department data shows the Detroit Promise could collect about $300,000 in 2018, $670,000 in 2019, $1.16 million in 2020 and rise to $4.9 million by 2026.

Those revenues depend on property values and state education tax collections rising annually, according to one of the architects of Michigan’s promise zones, which were designed to create a taxpayer-subsidized version of the popular Kalamazoo Promise college tuition guarantee.

“The earliest Detroit would qualify for tax capture … would be the fall of 2018,” said Chuck Wilbur, senior policy consultant at Public Policy Associates in Lansing. “But then they have to actually have growth to capture (taxes), and we don’t know with certainty yet that that’s going to happen.”

Wilbur helped craft the original Promise Zone legislation as former Gov. Jennifer Granholm’s senior adviser in 2006 and has continued to consult organizations in the implementation of the community-based college scholarship programs.

The law spurred the creation of ten promise zones around the state in Baldwin, Battle Creek, Benton Harbor, Detroit, Hazel Park, Lansing, Muskegon County, Newaygo County, Pontiac and Saginaw.

For Detroit, the annual cost of the program is hard to pinpoint.

It depends on how many students enroll in the community college program — which has no academic criteria — and the university scholarship, which requires a minimum 3.0 grade point average and ACT score of 21, Remington said.

If Detroit’s high school graduation rate goes up, the annual cost will rise with demand, Remington said.

“That to me is not an unpleasant thing,” Remington said. “It would be the best thing that can happen.”

‘Success coaches’

Remington raises money for the Detroit Promise through the Michigan Education Excellence Foundation, which was originally set up by Snyder’s office to direct private donations to the Education Achievement Authority to run 15 chronically failing schools in Detroit.

The Detroit Regional Chamber administers the Detroit Promise scholarships on behalf of the Michigan Education Excellence Foundation.

In addition to awarding scholarships, the Detroit Promise program is paying for five full-time counselors at the five community colleges where Detroit students are attending: Wayne County Community College District, Oakland Community College, Macomb Community College, Henry Ford College and Schoolcraft College.

The counselors, who are dubbed “success coaches,” meet with the Detroit Promise scholarship recipients twice monthly to keep an eye on their academic progress and offer career advice, said Greg Handel, vice president of education and talent programs at the Detroit Regional Chamber.

Handel said the career coaches take a “proactive approach” to helping the students stay focused on their associate degree or technical certificate.

“We’re trying to make sure students don’t just go into community college, but they’re actually completing,” Handel said.

View the original article here: http://www.crainsdetroit.com/article/20170205/NEWS/170209893/snyder-seeks-boost-in-detroit-promise-funding