Afternoon Jolt: Payout or Payoff?

By Afternoon Jolt June 6, 2011

Today's Supposed Winners: Kids.

Microsoft and Boeing announced today that each company is contributing $25 million over five years to the Washington Opportunity Scholarship program created as part of Gov. Chris Gregoire's higher-ed bill.  The plan is to raise $100 million in scholarship money for low- and middle-income students.

Facing a dramatic budget shortfall this year, Gregoire passed a bill allowing local universities to set their own tuition while the state cut higher education funding by $500 million.

If you believe the press release spin from Gregoire and Microsoft, they've sparked an innovative new way to fund schools.

And here's Microsoft exec Brad Smith hyping Microsoft's commitment on his blog:

Today’s pledge by Microsoft – the largest the company has made in Washington State – is another example of our work to enhance educational opportunities for students of all ages. It’s a cause we support around the world, and not surprisingly, with additional vigor in the state in which we have our headquarters and 40,000 employees. In Washington State alone, our company has donated more than $35 million over the past five years to early learning, K-12 and higher education programs.

Today's Real Winners: Microsoft and Boeing

Call Jolt cynical for criticizing $5 million a year in contributions from the company coffers, but Microsoft ($14.5 billion in profits in 2010) and Boeing ($1.3 billion) helped fund the campaign against Initiative 1098, a high-earners' income tax that would have raised $3 billion annually for education, including higher ed.

Had 1098 passed, someone like Microsoft CEO Steve Ballmer, who made $1.35 million last year, would have contributed $61,500 a year toward education funding in the state (not counting the additional tax from his investment income). Other Microsoft and Boeing employees who make more than $100,000 a year would have contributed thousands more.

The executives at companies such as Microsoft and Boeing helped kill a stable funding force, protecting their own handsome incomes, and came out on top today looking like heroes. Ballmer himself gave $425,000 to the defeat I-1098 campaign while other Microsoft employees contributed more than $60,000.

In that context, here's an even more galling take from Smith's post:

Historically, the higher education system for public colleges and universities has relied on two sources of money – direct state funding and student tuition bills. A two-legged stool is never sturdy, and that’s the problem for public higher education funding. As the recession and subsequent historic declines in state revenues eroded direct state financial support for our public universities, rising tuition levels have become inescapable.

The PI's Chris Grygiel has been all over this story.
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