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Inventive incentive

National | Business tax-credit law promotes school choice; economic woes drive up down- sizing, drive down lottery revenues; college grads find higher salaries, but fewer offers

Issue: "Don't have a cow," Aug. 11, 2001

SCHOLARSHOPS
It's not school vouchers, but it's pretty close. Pennsylvania Gov. Tom Ridge pushed through the legislature a new law that includes $20 million in tax incentives for businesses to donate money to nonprofit organizations that provide scholarships to middle- and lower-income families. Starting next week, Pennsylvania business owners can start applying for state tax credits of between 75 and 90 cents on the dollar-up to a maximum of $100,000 per business-for contributions they make toward public- or private-school scholarships. The law also sets aside another $10 million in tax credits to encourage businesses to fund new public-school instructional programs. For example, a corporation doing business with Japan might fund a Japanese-language program in its local district. Or a company working in Computer-Assisted Design (CAD) might fund computers or assist in implementing a high-school CAD curriculum. An article in the July 24 Legal Intelligencer, a lawyers' publication, suggested the law encouraging scholarships may be open to legal challenge "on the basis that it provides indirect public support for religious organizations." The Pennsylvania law does not discriminate between nonreligious and religious nonprofit scholarship organizations. The Intelligencer article noted that "a number of private schools that share the same religious or social affinity (Quaker, Jewish, Catholic, etc.) are known to be forming scholarship organizations intended to qualify for the tax credit." The state will award tax credits on a first-come, first-served basis until reaching the budgetary limit. Gov. Ridge called the tax credit a "powerful new tool" that would by 2003 promote an estimated $40 million in school-choice scholarships. Upsizing downsizing
One in five Americans changed employment status during the second quarter of 2001, according to a quarterly survey of more than 1,000 citizens conducted by career services firm Lee Hecht Harrison. More than 5 percent of those whose employment status changed were downsized-nearly twice as many as the Harrison survey showed in the first quarter. Among other job-changers, 6.5 percent voluntarily left their employer for a new job, 6 percent worked for the same company in a new position, and 1 percent became self-employed. Lee Hecht Harrison executive vice president Bernadette Kenny said the findings reflect a growing workforce mobility as workers assess the potential effects of the economic downturn on their futures: "People are looking at their long-term goals and seeking positions that both support those needs and provide stability." Unlucky numbers
States that count on citizens' lottery losses as government "income" may this year wind up losers. Lottery proceeds, which account for as much as 5 percent of budgets in some states, are declining, according to a Bloomberg News report. In Indiana, for example, lottery profits fell by nearly 6 percent over the past 12 months. Lottery administrators blame the nation's economic slump: "People have less discretionary income and that showed in our numbers," said Jack Ross, director of Indiana's Hoosier Lottery. Meanwhile, declining personal income and corporate profits also have cut into state tax revenues. The one-two punch of falling tax collection and declining lottery play this year bit an $869 million hunk out of Pennsylvania's budget. According to the National Governors Association, at least 16 states had to cut spending in 2001. By comparison, only Kansas reduced spending last year. Salaries spike for new grads
Despite the economic downturn, employers ponied up big bucks to attract new college graduates this summer, according to the National Association of Colleges and Employers (NACE.) The NACE Salary Survey, released last month, showed that starting salary offers for new grads topped last year's figures and far outpaced inflation. Economics/finance majors commanded an average starting offer of $40,577, more than 8 percent higher than in July 2000. Average offers for business administration graduates rose nearly 7 percent to $38,449. And computer-science grads commanded an average starting offer of $52,723, an 8 percent increase over last summer. But despite the salary boon, the U.S. economy still showed grads its sluggish underside: During the late 1990s, students preparing to step from campus to corporate often enjoyed multiple, competing offers. Not so in 2001: NACE Executive Director Marilyn Mackes said this year's graduating class "had to work harder than its recent predecessors to get jobs."

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