Tax Credits for Business Working with Community Colleges: An Idea Worth Spreading

In early February, the Obama Administration announced a new plan to cut taxes on businesses willing to work with community colleges. The Community College Partnership Tax Credit would connect community colleges and businesses in an effort to address the great need for more skilled workers with technical training and credentials. Through these partnerships, colleges and businesses would create or expand quality programs that prepare students for in-demand fields.

While President Obama’s budget proposal will likely not pass, creating incentives to connect community colleges and businesses is a strong idea the federal government ought to consider.

Getting a good job remains one of the top reasons people decide to go to college, and community colleges are a good place to start on this path. They enroll over 10 million students annually, many of whom are pursuing a path for a good career. During the 2015–16 academic year, community colleges are expected to award 952,000 associate’s degrees.

For students who came to college with a career in mind, it’s important that colleges have a curriculum that provides a pathway to such a career. This pathway is often made more robust when there’s a partnership between industry and academia. Creating these relationships and connections is one way we can restore America’s promise of education as the pathway for upward mobility and a good life.

The 1,108 community colleges in the United States offer students an affordable education and training opportunities in their local community. Because they are local and offer flexibility in scheduling, community colleges are viable options for some students who are raising children, working, in need of remedial classes, or can only take classes part-time. They are also uniquely positioned to partner with employers to create tailored training programs to meet the economic needs of their communities.

The Community College Partnership Tax Credit detailed in President Obama’s FY 2017 budget proposal, which builds on legislation introduced last fall by Senator Al Franken of Minnesota and Representative Tammy Duckworth of Illinois, includes four main points:

  1. Employers would strengthen community and technical colleges through contributions like designing curriculum, donating instructors and equipment, and creating job-based learning opportunities;
  2. Once students complete the program, employers would be eligible for a tax credit for hiring them. Employers can earn a one-time $5,000 tax credit for hiring a qualifying community college student graduate full-time;
  3. States will designate eligible partnerships between community colleges and employers through a competitive process. They will be encouraged to focus incentives on contributions that support low-wage workers in moving into higher skill, higher wage jobs; and
  4. A total of $500 million in credits would be available for each of five years, from 2017 through 2021.

President Obama likes community colleges, and policies for supporting them are not new for this Administration. In fact, this proposal is just the most recent example the Administration’s work to support and expand the reach of community colleges. Past efforts include support for in-demand training programs, free community college, dual enrollment and apprenticeships.

What can we learn from the past?

Partnerships between higher education and business are also not a new idea. Following World War II and for much of the last century, partnerships between industry and academia flourished at four-year institutions across the United States, as economists Nathan Rosenberg and Richard Nelson documented for the journal Research Policy, in the article, American universities and technical advance in industry.

Two important pieces of policy allowed for this work to occur. First, the Bayh-Dole Act of 1980 allowed the federal government to grant ownership of patents developed through research grants to higher education institutions. Essentially, the act demonstrated Congressional support for exploiting results of federally funded university research for commercial purposes. Second, the National Co-operative Research Act of 1984 provided funds to incentivize joint research ventures between the academy, industry and agencies like the National Science Foundation, which drastically increased funding for such activities.

This type of engagement resulted in increased research activity between universities and industry and made significant contributions to U.S. economic growth. Industry and academia partnerships are standard practice at our nation’s research institutions, but it doesn’t have to be limited to only those institutions.

In a recent piece for The Atlantic, James Fallows identified 11 signs that a city will succeed. These signs include public-private partnerships and the presence of a community college. He points to Fresno, California, where Fresno City College works with local tech firms and Cal State to train students for high-tech jobs in agribusiness.

It’s time to learn from these experiences and create a pathway for more industry and academia partnerships — specifically at community colleges.

Good idea…will it pass?

The likelihood of President Obama’s budget proposal passing is slim to none. The last time Congress passed a budget was in 1997. The closest thing to a budget that Congress has passed since then was an omnibus spending bill, in 2009 and 2011.

Despite all these odds stacked against President Obama’s budget proposal, the man still presented a strong plan. Let me tell you why.

Community colleges are the backbones of many communities. Despite the current political conditions and unharmonious state of affairs in Congress, it’s important to note that these partnerships stand to benefit businesses, communities, community colleges and students. Closer and more deliberate connections between academia and industry will create the conditions for community colleges to incorporate more industry expertise, technology and real-world learning opportunities into their programs. Currently, this connection doesn’t happen as much it should, and this is exactly why it’s a good idea worth spreading.

Check out other resources on higher education on the Public Agenda website.

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