States Work to Plug ‘Brain Drain’

By: - July 25, 2007 12:00 am

A “brain drain” problem is plaguing a number of states in the Midwest, Great Plains and Northeast. Young, educated people flee, taking high tax revenues and economic potential with them.

To reverse the loss of such a valuable asset, states are trying solutions that veer from granting financial incentives to stay, to trying to create jobs to keep and attract new workers, to improving the quality of life for young people.

The problem for states is there’s no sure-fire solution.

“There is an argument of what comes first – the businesses who hire the graduates, or the graduates who lure the businesses? I don’t think the research on that is definitive,” said Dan Hurley, the director of state relations and policy analysis for the American Association of State Colleges and Universities.

Maine will become the first state to give future college graduates a hefty tax credit to help pay back their student loans if they stay and work in the state. The incentive could amount to a yearly tax credit of just under $5,000 a year over the course of 10 years.

But will it work? Yes, says Andrew Bossie, a recent University of Southern Maine graduate who led a successful grassroots effort that convinced lawmakers to pass the tax incentives this year. Several friends wanted to stay in Maine but had to leave for higher-paying jobs elsewhere to begin paying off their loans, Bossie said.

“The economy is going to have the benefits of a more-educated workforce,” Bossie said. “It’s a really smart way to get more bang for our buck.”

 But others question whether financial incentives alone will keep the young from leaving.

Bruce Vandal, the director of post-secondary education and workforce development for the Education Commission of the States, a nonpartisan think tank, pointed out that if the jobs aren’t there for graduates, “there’s no reason … they would stay, even with the financial incentives.”

Many rural states have a natural disadvantage when it comes to a quality of life that appeals to the young. They don’t have Colorado’s ski slopes, California’s beaches or the glamour of cities such as Atlanta and Las Vegas. Omaha, Neb., has been ranked by Forbes and Money magazines as one of the country’s best cities to live in, and yet young people who live there often feel the need to leave, said Richard Baier, Nebraska’s director of economic development.

“It’s part of the ‘big-city syndrome,'” Baier said. “It’s a cultural thing.”

According to a U.S. Census Bureau report, states that lost the biggest percentage of single, college-educated residents ages 25 to 39 from 1995 to 2000 were North Dakota, Iowa and South Dakota. At least 33 states were “net exporters” of young people, or lost more of that demographic than they gained.

The beneficiaries were in the West and South, home of the top 10 states that took in more young people than they lost. Nevada, Colorado and Georgia – with major cities such as Las Vegas, Denver and Atlanta – led the list.

Maine’s is one of the most ambitious attempts to dangle financial incentives to stem the brain drain.

Other states have experimented with forgiving the loans of college graduates who remain in-state, but those programs usually have been targeted at specific jobs such as doctors or math and science teachers or directed at rural areas. The Pennsylvania Legislature, for example, currently is weighing a bill to forgive doctors’ medical school tuition if they practice in the state for 10 years.

Both North Dakota and Iowa in recent years flirted with proposals to exempt residents under 30 from paying the state income tax. This year, lawmakers in Iowa debated but didn’t pass a proposal to give tax credits to employers if they pay employees’ student loans. Indiana Gov. Mitch Daniels (R) tried but failed to get approval for a scholarship program for technology graduates who promise to work there after graduation.

In December, a Wisconsin higher education commission recommended what it called the “big bang”: free college tuition for graduates who live in the state for at least 10 years after college. However, the state took no action on the idea.

Other states instead are focusing on jobs, especially in the technology sector, as a chief draw.

Pennsylvania attracts some of the highest numbers of out-of-state students to its colleges, but four years later, most of them take their degrees and run. Three years ago, the state set up Keystone Innovation Zones (KIZ) to give grants to partnerships between universities and their surrounding communities, including businesses and private foundations. The zones were designed to create new businesses and jobs. There are now 26 zones, with 647 Pennsylvania graduates and interns working at companies inside the zones.

Nebraska is trying to link people and jobs in a brain re-gain effort. In the last 10 years, the state has targeted alumni through its Nebraska-focused job site,, and by contacting Nebraskan expatriates with mailings, luncheons and job fairs.

A little more than a decade ago Oklahoma unveiled Project 1000, asking a thousand of the state’s companies to hire one more Oklahoma college graduate than they planned to hire; the state even held a job fair at the Capitol the following year.

States also are trying to figure out how to spice up their quality of life. This year, the Iowa Legislature created the Generation Iowa Commission to tap 18-to-35-year-olds for ideas on how to keep them in the state. More than 250 people applied for one of the commission’s 15 spots.

New Hampshire’s “55% Initiative” – so named because the state hopes to raise the portion of college graduates who stay in the state from the current 50 percent to 55 percent – plans to mount a tourism-like marketing campaign. Step one: State colleges will survey students and alumni on why they chose to leave the state or stay put. 

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