Sunday, December 23, 2007

Promises

Since recent strings were found attached to UMPC’s Pittsburgh Promise gift, I decided to give a closer look to the program itself. No, I’m not looking a “gift horse in the mouth”. But having heard how the Pittsburgh Promise was modeled upon the Kalamazoo Promise, and how the Kalamazoo Promise has virtually turned that ailing city around, I thought it might be interesting to compare and contrast the two. Especially since things in Pittsburgh have a funny way of not being exactly like they first appear to be. And especially, especially since we’ve come to hope that the Pittsburgh Promise will be the magic seed that, when planted, will attract all the suburbanites back to the city, bringing their much-needed tax dollars with them.

My bottom-line conclusion is that if The Promise does not deliver on its promise, it will be because of the program’s complexity. Because with complexity comes a certain level of uncertainty.

Kalamazoo's Promise is so very simple and straight-forward: “If you live here and you send your kids to our public schools, then we GUARANTEE we will pay ALL their college tuition, no matter how much it costs, so long as they maintain a modest GPA.” Period. This GUARANTEED, easy-to-understand, easy-to-acquire, easy-to-calculate-the-financial-benefits scholarship has proved to be an irresistible enticement for folks to relocate to Kalamazoo.

The Pittsburgh Promise, on the other hand, is a scholarship “of last resort” which is not guaranteed at this point and has caps which may or may not provide enough “last monies” to cover tuition costs 100%. In addition, because the amount of Promise monies awarded to a student depends on what the student needs AFTER receiving their Federal Student Aid (FSA) ….. And because they cannot apply for their FSA or know what they’ll be getting from The Promise until its time to go to college……And because the student will have had to have been a Pittsburgh Public School student since Kindergarten in order to have a chance (because of FSA) to receive the maximum $10,000 per year Promised…. How can a suburbanite calculate if a move to the city NOW will be worth the financial payout 13 years from now? If The Promise is still in existence at that time?

Let’s take a look at a hypothetical family where both parents are working and their combined annual income is presently $60,000. Assuming they get cost of living increases or raises of 3% per year, over the course of 13 years (K-12) Mr. & Mrs. Suburbanite will pay $18,741 more in wage taxes to the City of Pittsburgh than they would have paid to the suburban community where they presently live. IF The Promise is still alive in 13 years and IF the gap between FSA and college tuition is large enough at that time, Mr. & Mrs. Suburbanite’s child could receive the maximum total Promise scholarship of $40,000. This is a net benefit to the parents of $21,259. (They got $40,000 but had to pay $18,741 in city wage taxes to get it) Which is not bad, not bad at all. About a dollar-for-dollar match toward their child’s college education.

But is this enough? With all the IF’s involved …. is this enough to entice the suburbanite out of his safe, clean, pot-hole-free neighborhood, where the schools are also safe and clean and test scores are good? I don’t know. In fact, I think maybe not.

By the way, the break-even point for Mr. & Mrs. Suburbanite above is $128,000. Meaning anyone in the suburbs now making a combined income of $128,000 or more a year will pay as much in additional city wage taxes over the course of the next 13 years as they will get back from The Promise for college tuition.

Of course, it’s not just as straight-forward as Mr. & Mrs. Transplanted Suburbanite handing the city extra wage taxes and 13 years later the city hands it back. No, at this time Pittsburgh Promise money actually comes from the pockets of UPMC (and others?). Unless, of course, UPMC (and others?) gets the tax credit they’re angling for. In that case, the “gifted” Promise money would come from UPMC, but the city would then “pay UPMC back” by way of granting them a tax credit in the same amount. A tax credit the city could afford to give because of the extra wage taxes paid by Mr. & Mrs. Transplanted Suburbanite.

So yes, bottom line is if annual income is $128,000, Mr. & Mrs. Transplanted Suburbanite will in essence gift themselves their own tuition grant. But as with most things Pittsburgh, you can't just go directly from point A to point B. No, money around here has to loop around in circles so many times that “at the end of the day” no one can remember where it came from, where it was going and why it started circulating in the first place.

The comparison details between Kalamazoo and Pittsburgh are below. Read and see how successful you think our Promise will be.


Who is eligible?
Kalamazoo: All students who graduate from the city’s public schools, are residing in the district, and have been a city public school student for 4 years or more. Enrollment and residency must be continuous.
Pittsburgh: The above requirements apply plus: 1) Graduates of the Class of 2008 must have a minimum 2.0 GPA. 2) Graduates of the Class of 2009 must have a minimum 2.5 GPA and have 85% attendance in high school. 3) Graduates of the Class of 2010 and later must have a minimum 2.5 GPA and have 90% attendance in high school.

How much scholarship money is given to each student?
Kalamazoo: Tuition benefit is on a sliding scale with a 100% payment for any post-secondary school the student attends if the student has attended city public schools continuously since Kindergarten. The bottom of the sliding scale is a 65% payment if the student has only attended city schools since 9th grade. 10th grade and higher receive no tuition benefit.
Pittsburgh: Starting with the Class of 2008, the maximum Promise monies an eligible graduate can receive is $5,000 for each year of post-secondary school attended. This maximum amount jumps to $10,000 in 2012 if the student passes a graduation exam which the state will implement starting that year. Actual Promise monies paid, however, will be calculated by first considering monies available to the student through FAFSA (Federal Student Aid). An eligible student’s yearly Promise Scholarship will be equal to their yearly tuition needs, less their FAFSA grant monies, up to the maximum $5,000/$10,000 referenced above. The Promise Scholarship will be further decreased on a sliding scale percentage based upon the number of continuous years the student has lived and gone to school in Pittsburgh. 100% of the Promise Scholarship will be paid if the student has continuously lived in Pittsburgh and gone to Pittsburgh Public Schools since Kindergarten. The percentage decreases to 75% for those who have lived/been schooled in Pittsburgh since 9th Grade. Nothing is paid to those students residing/schooled in Pittsburgh since 10th Grade or higher.

What are the grant terms?
Kalamazoo: Kalamazoo will provide up to 4 years of tuition and mandatory fees for post-secondary education. 4 years is defined as receipt of a bachelors degree or 130 credits towards a degree, whichever comes first. Students must be full-time, maintain a 2.0 GPA and take a minimum of 12 credit hours per semester. If GPA drops below 2.0, a student may be reinstated once the GPA is brought back to 2.0. Post-secondary education must be completed within 10 years of high school graduation with exceptions made for military service. Funds are paid directly to the educational institution and not to the student.
Pittsburgh: Will provide up to 4 years of Promise Scholarship monies. Students have up to 5 years to avail themselves of the Promise monies. School enrollment does not have to be continuous, but eligibility expires after 5 years of high school graduation. The 5-year time limit can be deferred for students entering military service, however. Students must maintain a minimum 2.0 GPA while making “adequate progress” toward a bachelor, associate or equivalent two-year degree. Students must submit a FAFSA every school year so that the Promise scholarship can be recalculated each year. Promise monies are paid directly to the educational institution and not to the student.

Which schools are eligible?
Kalamazoo: Any public State of Michigan university or community college.
Pittsburgh: All Pennsylvania state-funded schools, community colleges and most private schools in Allegheny County that offer two or four year degree programs, including many trade schools.

8 comments:

Mark Rauterkus said...

Great recap. Thanks. You are doing a lot in this topic area to advance the conversation and understanding.

Keep up the good work.

Anonymous said...

Does the Kalamazoo program have a board that can change the rules? We still don't know much about how the seven member board overseeing the Pittsburgh Promise would operate, and what latitude they would have to make changes to the program.

Char said...

Information in the Kalamazoo link I provided in my post says:
"The Kalamazoo Promise is a 501(c)(3) non-profit corporation funded entirely by a small group of anonymous donors."

An additional FAQ asks who the donors are. The answer: "A small group of VERY NICE people."

So I presume that small group of very nice anonymous donors made up the original rules and so they can change them at will if they choose.

HOWEVER, Kalamazoo makes a very important guarantee:

FAQ: How long will the Kalamzoo Promise be available?
A: The Kalamazoo Promise is set up to go on indefinitely. If the decision is ever made to discontinue the program the donors have Promised to fund all students in the Kalamazoo School District at that time, K-12.

In my humble opinion, its going to take something solid and substantial, like that which Kalamazoo has put forth, to lure suburbanites back to the city.

TrolleyRider said...

"is this enough to entice the suburbanite out of his safe, clean, pot-hole-free neighborhood, where the schools are also safe and clean and test scores are good? I don’t know. In fact, I think maybe not."

Think again. The answer is "no".

This is a great roundup of the differences and the reasons why the PP won't lure anyone from anywhere into the Pgh Public Schools.

I live in Bethel Park and my wife and I don't even want to send our kids to Bethel because we think the high school kids here are out of control at times. What in the world would it take for us to find the cesspool that is the Pgh Public Schools acceptable?

It isn't just low test scores, almost half of the kids attending Pgh Public Schools don't even GRADUATE. From the test scores it looks as though most of them can't even read.

Can city officials really expect a POSSIBLE 10k per year for a kid going to college (which at most good schools in the state won't even pay a semester, let alone a year) minus the additional city wage taxes would be enough to lure a person living somewhere like BP to put their kids at risk everyday in a Pgh Public School??? No way.

TrolleyRider said...

Hit submit a little too soon :)

Want to know what would really make parents from the suburbs think about moving their kid to the city to attend Pgh schools? Make the schools in Pittsburgh better than the suburb schools.

That would mean actually disciplining or expelling trouble kids. Paying teachers more and basing their wages on actual ability not tenure (which the unions probably won't allow).

You aren't going to lure suburbanites to the city with pocket change like possible 10k. You could lure them with markedly better schools though.

Mark Rauterkus said...

Right on (above postings).

It would be a great start to get the sports teams in the city to play the teams from suburban high schools on a day to day basis.

We need to begin to lift that "iron curtain" the circles the city and its school district from the rest of the region.

We need to compete with city and suburban districts.

Anonymous said...

UPMC drops tax credit bid
Goes forward with pledge of $100 million to Promise
Thursday, December 27, 2007
By Matthew P. Smith, Pittsburgh Post-Gazette
Citing the controversy that has embroiled its $100 million pledge for a city high school scholarship program, the University of Pittsburgh Medical Center yesterday said it was dropping its request for a possible tax credit in exchange for its commitment to the Pittsburgh Promise.

On Dec. 5, UPMC said it would give $100 million over 10 years to fund the Pittsburgh Promise, an effort by the city and the Pittsburgh Public Schools to ensure that city high school graduates have the money needed to go to college.

Several days after the much ballyhooed announcement, Mayor Luke Ravenstahl on Dec. 17 asked City Council to ensure that if UPMC was ever required to make payments to the city, it would get what a proposed resolution calls a "tax credit equal to certain payments which may be made by UPMC to the Pittsburgh Promise."

His request generated controversy and drew immediate criticism from City Council members who balked at the idea of giving the medical giant a tax break. There was no mention of a tax credit or tax break at the time UPMC made its pledge to the Pittsburgh Promise.

Last week, the city school board voted to give UPMC possible tax credits in exchange for its commitment. But City Council members have balked at passage and called for a public hearing on the matter.

In a statement yesterday, however, UPMC said it was waiving the tax-break condition and would make its initial $10 million contribution and $90 million in matching donations to the Pittsburgh Promise.

Jeffrey Romoff, UPMC president and CEO, said UPMC was waiving the provisions of its commitment that would have required City Council approval.

"The initial outpouring of enthusiastic support for The Pittsburgh Promise speaks to its immense value to the community and our children," Mr. Romoff said. "With our decision to move forward without requiring City Council approval, we ask that everyone refocus attention on what is truly important -- building and sustaining widespread and financially significant public support for The Pittsburgh Promise, which is essential for the program's success."

City and school officials said the tax credit agreement would be invoked only if the state Legislature or courts took the unlikely step of taxing nonprofit organizations such as UPMC or required them to make payments in lieu of taxes.

By removing its requirement for Council approval, UPMC believes it has eliminated the source of controversy surrounding its commitment, UPMC's statement said.

"We believe it is more important to move forward with the program than to worry about a hypothetical situation, which is highly unlikely to arise," UPMC general counsel Robert Cindrich said in a statement.

Pittsburgh Public Schools Superintendent Mark Roosevelt said last night he was pleased to hear that UPMC had moved to end the controversy surrounding its pledge.

"It certainly should put it (controversy) to rest but I didn't think there was anything to put to rest in the first place," Mr. Roosevelt said. "There was a slim chance of them being taxed anyway.

"I think their comittment to the promise is very real and I think it got labeled as something else."

Mr. Ravenstahl could not be reached for comment last night.

UPMC said it would continue contributing to the Pittsburgh Public Service Fund, which the city established to seek money from nonprofits to bolster its finances. UPMC has voluntarily given around $25 million to the city since the mid-1980s, including $1.5 million a year the last three years. The nonprofit will give another $1.5 million in 2008, according to Mr. Cindrich.

UPMC said it could withhold its contribution to Pittsburgh Promise if the hospital system encounters a deficit in any year. UPMC earned a record $618 million in fiscal 2007.

"We encourage business leaders, foundations and individuals to join us in attaining the dual objectives of The Pittsburgh Promise: making higher education achievable for Pittsburgh's public school students and their parents, and enhancing the growth, stability and economic development of the City by providing a substantial incentive for families with school-aged children to reside in the City," said Mr. Romoff.

Matthew P. Smith can be reached at msmith@post-gazette.com or 412-263-1738.
First published on December 27, 2007 at 12:07 am

MRS. College Ready said...

i am currently enrolled at John. A Brashear high school, i just need some one to tell me how exaactly does one sign up for the Pittsburgh Promise for graduates of the year 2009