February 7, 2008
MICHIGAN PROMISE ZONES
By: Soncia Coleman, Associate Legislative Analyst
You asked for information on the Michigan Promise Zones legislation.
The Kalamazoo Promise is scholarship program that provides Kalamazoo Public School (KPS) graduates with the opportunity to attend a Michigan public post-secondary institution with up to a 100% scholarship (on a sliding scale based on years of KPS attendance). It is a 501 (c)(3) non-profit corporation funded entirely by a small group of anonymous donors (see OLR report 2007-R-0527). During her 2007 State of the State address, Michigan Governor Jennifer Granholm introduced the idea of implementing a similar program statewide and legislation was subsequently introduced in the House and Senate.
The House bill, HB 5375, was introduced on October 25, 2007 by Representative Tim Melton, House Education Committee Chair. The bill would allow the Michigan Department of Treasury to approve a request by the governing bodies of high poverty communities (i.e., those with a higher percentage of poor students than the state average) to establish and manage Promise Zones. If approved, the governing bodies would create a Promise Zone Authority to produce “Promise Zone Development Plans” that would ensure financial assistance for postsecondary education to public and private high school graduates who live and go to school within the zone. The authorities could structure the program as they see fit, so the scholarships could be restricted based on grade point average or years of residence in the zone.
During the first two years of the program, the Promise Zones would have to raise funds through private donations. Subsequently, they would also be eligible to receive public funds through an arrangement similar to tax increment financing that is sometimes used for development. Currently, 6 mills are levied on all property for the State Education Tax (SET). Under the bill, there would be a capture of a percentage of the increase in the SET revenues to continue the program. The idea is that the Promise Zones would create economic development. When property values increase, the SET revenue would rise and the Promise Zones would receive half of the increase in revenue. The Michigan Department of Treasury would oversee the program.
According to the Michigan House Fiscal Agency's legislative analysis of the bill, opponents of the bill expressed concern with the high level of community fundraising necessary to sustain the program indefinitely. The House passed the bill on December 13, 2007, by a vote of 71 to 34. The House referred the bill to the Senate on January 9, 2008. The Senate has not acted on the bill. The bill and accompanying detailed legislative analysis are attached for your use.
A version of the bill was also introduced in the Senate. In a November 30, 2007 Grand Rapids Press article, it was noted that Senate Education Committee chair Wayne Kuipers had not decided whether he would move it forward.