Nine years ago, Kalamazoo, Mich., officials realized that something had to be done to draw people back into the city. In 2005, they created a program that is being duplicated across the country: the Promise scholarship — a free ticket to college for any student graduating from Kalamazoo's schools.

Kalamazoo's population had been declining in recent years, says Ron Kitchens, CEO of Southwest Michigan First, a private, non-profit economic development organization. "The school system was seeing about a 10 percent decrease in population every year," he says. "Since we were already saying education was one of the five tenets of a strong community, it made great sense to form a scholarship program that is an enticement for new people to move to the community."

Kalamazoo Promise is completely funded by private sector donations. Residents who live in the district for 12 years receive full tuition coverage and mandatory fees at any Michigan public college or university, and those who have lived in the city for the past five years receive 65 percent coverage. "In three years, we've had 1,600 new children [move] into the school district," Kitchens says. About 1,300 current college students are receiving Promise scholarships, and the annual cost of the program is $8 million, which is expected to increase to $12 million by next year when there are four full classes in college.

Kalamazoo's success in attracting residents through the scholarship has spurred 24 other cities, including El Dorado, Ark., to develop similar programs. El Dorado began its program in January 2007 with funding from locally based Murphy Oil. The El Dorado Chamber of Commerce manages the scholarships, which can be used at any public or private two- or four-year accredited college in the country. More than 730 new students have moved to the southwest Arkansas school district since the Promise program began, with many of them coming from other states and countries.

The Payoff

Since Kalamazoo, Mich., adopted its Promise scholarship program, per capita-based state school funding has increased, new homes are being built for the first time in a generation, and home values in the region over the last three years have grown 2 to 3 percent.