Obama to propose $2.5 billion tax credit for community college investment

By Jeff Mason

WASHINGTON (Reuters) – President Barack Obama will propose a $2.5 billion tax credit over five years for businesses that invest in programs at local community colleges and hire their graduates, administration officials said on Friday.

The proposal, dubbed the Community College Partnership Tax Credit, would require businesses to donate funds for equipment, instruction, or internships related to programs in areas such as healthcare, energy and information technology.

Employers that hire students from such programs would get a one-time, $5,000 tax credit per individual brought aboard.

The program, to be proposed formally in the president’s fiscal 2017 budget on Tuesday, is meant to shore up community colleges’ educational offerings, while helping businesses find high-skilled workers in certain fields.

“Employers can define those skills and help colleges develop the curriculum that teaches them,” said James Kvaal, White House deputy director of domestic policy. He estimated the initiative would produce 500,000 highly skilled graduates over five years.

Obama’s budget requires congressional approval, which is unlikely. Administration officials expressed confidence, however, that the proposal would garner bipartisan support and the idea could gain traction.

“The idea of … bringing together community colleges and the local employer base is a very powerful one and really doesn’t break along party lines,” said Ted Mitchell, under secretary at the U.S. Department of Education.

Obama’s final budget is likely to garner less attention than in previous years. Washington’s focus is moving to the 2016 presidential campaign and the Republican-controlled Congress does not want to hand legislative victories to the White House.

Administration officials are aware similar proposals by the president have had limited success. Though his proposals to raise the minimum wage and make community college tuition free have not been enacted nationally, they say his championing of such ideas has spurred action on the state and local level.

Under his latest proposal, states would get part of the tax credit money and be responsible for selecting businesses and community colleges based on a competition for applications.

Employers could be involved in designing curriculums on advanced manufacturing, for example, or donating instruction time and equipment. Community colleges would get needed capital investment and businesses would recoup their investments through the tax credits gleaned from hiring graduates.

(This version of the story was refiled to correct spelling of surname in paragraph 5)

(Reporting by Jeff Mason; Editing by Kevin Drawbaugh and Andrew Hay)

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