How about an education tax credit with a return on investment instead?

Since the Kentucky General Assembly seems intent on giving away tax credits during this session, I thought, as a former superintendent and economic development professional, that I could offer a bit of advice as to how to offer an education tax credit with an economic return. The proposed education scholarship is a frivolous waste of resources. The members obviously know this is bad public policy by the way they are trying to deceptively push it across the finish line unnoticed as House Bill 563 or Senate Bill 170. It is a far cry from a return on investment, rather it is a giveaway of existing revenues to more affluent families at the expense of the most disadvantaged families in our Commonwealth.

Instead of shrinking the pie the General Assembly ought to be looking at ways to grow the pie and help the Commonwealth become more competitive. Economic competitiveness in the early years of the 21st century is all about "density and degrees." States and cities winning this economic arms race focus on talent and place. Kentucky has lagged behind with this sort of economic development for more than a generation.

Many states and municipalities are already adapting to this trend with tools to attract highly educated remote workers through innovative tax credit programs. In the rust belt enclave of Port Huron, Michigan the “Come Home Award,” of $15,000 offsets student loan debt in “STEAM” fields for associates, bachelor’s and graduate degrees. According to recent U.S. Census Bureau data, Port Huron had the highest net migration of college-educated people in the state of Michigan. In Maine, a statewide Education Opportunity Tax Credit offers a $377 per month credit for a bachelor’s degree or higher. "Tulsa remote," established three years ago, pays remote workers $10,000 plus access to affordable housing. The program has attracted over 1,200 highly educated workers. Northwest Arkansas, Rochester, New Orleans, and Rocky Mount, NC have recently gotten into the game in establishing "remote work hubs."

Small cities in Kentucky will have a window of opportunity in the post pandemic era to make gains in the race for density and degrees—especially with the growth of remote work. Regions with the winning formulas will act more like larger cities than small towns. They will diversify their economic bases and approach to community development. Tax credits helping them attract educated people would be a useful tool and a much stronger return on investment than private school tuition vouchers.

The brain drain is a primary challenge facing Kentucky. Urbanist and author Richard Florida, a pioneer of the idea that jobs follow people, is fond of saying “cities need a people climate even more than they need a business climate.” Let's take advantage of this opportunity and invest our scarce tax resources into the people climate of our Commonwealth. The so-called opportunity tax credit is an unproven old anecdote that will accomplish very little for a high price tag. There is a cost-benefit calculus with all tax credits and this one is a big loser. It does nothing but waste the resources of the Commonwealth that could be utilized in better developing, attracting or retaining talent in Kentucky.

Mark Twain is often quoted as saying when the world is coming to an end, he is moving to Kentucky because it is always 10 years behind the times. Embracing school vouchers rather than talent vouchers does nothing but reinforce Twain's view of Kentucky being 10 years behind the times.