Alaska Education Tax Credit
The Alaska Education Tax Credit (ETC) empowers a highly-effective partnership between business, University of Alaska (ÁùºÏ²Ê»ã) and the State of Alaska to meet the state’s workforce needs and fuel the economy.
The Alaska Legislature established the ETC in 1987 to encourage businesses to make charitable contributions to Alaska’s educational institutions. The State of Alaska reduces certain business taxes[1] in exchange for investments in education.
Today, the ETC incentivizes targeted investments in ÁùºÏ²Ê»ã student scholarships, research,
centers of excellence, facilities, and internships that address industry demands.
Businesses benefit by directing support to their value chain and workforce needs. ETC investments can be tailored to serve the communities where businesses operate, strengthening local economies through education and workforce development.
Alaska benefits by making higher education and workforce training - aligned with the state’s needs - more accessible for students.
ETC provides the ultimate return on investment (ROI). In addition to education, economic and workforce benefits, the current ETC structure leverages $2 in private investment in education for each $1 the state forgoes in tax revenue.[2]
Building Alaska's Workforce
ETC promotes accessible IN-STATE education and training, which is essential to Alaska’s
workforce and future economy.
Alaska is struggling to meet its workforce needs. The lack of available workforce has already constrained the pace of the state’s economic growth.[3]
Alaska high school students who graduate from the ÁùºÏ²Ê»ã system stay in Alaska at rates between 70-90 percent[4] and participate in Alaska’s workforce at higher rates than students who leave Alaska for post-secondary education.
The appeal of out-of-state colleges and universities increases when the ÁùºÏ²Ê»ã system is financially volatile.[5] Incentivizing private investment in the ÁùºÏ²Ê»ã system through the ETC promotes financial stability, diversifies ÁùºÏ²Ê»ã’s revenue, and helps retain Alaska’s high school graduates.
The ETC strengthens ÁùºÏ²Ê»ã system partnerships with important Alaska industries such as seafood, mining, banking, tourism, and energy, and, as a result, provides ÁùºÏ²Ê»ã grads with exciting career opportunities in Alaska’s in-demand jobs of today and tomorrow.
ETC in Action
Hecla Greenscreek Pathway to Mining Careers
The Hecla Greens Creek Mining Company knows that training and hiring local talent is a win, win situation for everyone. Unfortunately, many local young people don't realize the opportunities they have in their own backyard. Through the Education Tax Credit, Hecla partnered with ÁùºÏ²Ê»ãS to develop a career pathway in mining that starts in high school and supports students from classroom to jobsite.
This unique partnership provides students with mentoring, a specialized training academy,
job shadowing and scholarship support for an occupational endorsement that can be
earned in just two semesters here at ÁùºÏ²Ê»ãS.
Students are then ready for positions at Hecla, or they can continue toward an associate’s degree with the help of scholarship support that Hecla provides.
The partnership reduces the time between high school and career ready, has resulted in many Alaskans entering high demand, high earning jobs.
ETC Contributions to ÁùºÏ²Ê»ã
The ÁùºÏ²Ê»ã system is the state’s largest education and workforce training provider and has received as much as $8 million through the ETC in one year. The total amount contributed to the ÁùºÏ²Ê»ã system has fluctuated as the credit calculation changes, and as additional types of recipients are added to the eligibility list.
The Future of the ETC
The ETC’s sunset date is Jan. 1, 2025. To continue to offer benefits to students, businesses, Alaskans and ÁùºÏ²Ê»ã, the credits must be reauthorized via statute by the Legislature. University of Alaska Foundation supports a multi-year reauthorization of the ETC.
Citations
[1] Credits can be used against corporate income tax, fisheries business tax, fishery resource landing tax, insurance premium tax, title insurance premium tax, mining license tax, oil and gas production tax, and oil and gas property tax.
[2] According to the current structure, companies can claim 50% of all eligible contributions, and the total credit may not exceed $1M per taxpayer per year.
[3] From the AEDC 2023 Economic Forecast, Anchorage Economic Development Council
[4] From the Economic Contributions of the University of Alaska, University of Alaska, Feb. 2023, McKinley Research Group LLC
[5] From Alaska Performance Scholarship Program Review and Recommendations, Alaska Commission on Post-Secondary Education, Jan. 2021, McDowell Group