KALAMAZOO, Mich.—When economists and civic leaders discuss ways to revive this economically buffeted state, the talk quickly converges on the need to dramatically increase the number of high school students who continue their education and graduate from college.

Thanks to a group of anonymous donors, no place in Michigan, and perhaps no place in America, has achieved that goal as quickly and effectively as this mid-sized, post-industrial city. The donors' novel philanthropic fund pays up to 100 percent of the college tuition and fees for graduates of Kalamazoo’s three public high schools—as long as they attend a community college or state college or university in Michigan.

Last June, in the first year of the program, known as the Kalamazoo Promise, 400 students graduated from the three schools and 80 percent took advantage of the offer.

Yet the Promise does far more than help out disadvantaged kids in a town where two-thirds of public school students qualify for federal free or reduced-price lunch programs. It is also helping out the school system and the city itself, boosting school enrollment by almost 10 percent and reversing once-falling home prices by drawing students and their families back into the community. In short, the program is already helping to put a struggling Rust Belt city back on the road to global competitiveness.

Those and many other positive effects of the Promise are winning it wide praise in almost every corner of the city, and in a growing number of other communities, as a remarkably cost-effective economic and social policy innovation. The program will spend less than $2 million on tuition this year for the 2006 class. When the program peaks at four collegiate classes, it will cost about $10 million to $12 million annually, say school administrators—about half the cost of building a typical highway interchange. And it may well hold a much larger promise within its bold concept—a way to help the entire state’s recovery.

Wave of the Future?
Timothy Bartik is one local economist who sees the Promise as a sign of good things to come.

“This is a cutting-edge example of the kind of economic development strategies that state and local areas will increasingly want to pursue,” predicted Mr. Bartik, a member of the school board and an economist at W.E. Upjohn Institute for Employment Research, a local non-profit think tank. “The issue is broader than just the merits of tuition assistance programs. The issue is how communities and states can develop and attract human capital.”

In fact, representatives from several cities in and out of Michigan have visited Kalamazoo to draw lesson for their own communities. Last February, Newton, Iowa, established the “Newton Promise,” a scholarship program modeled after Kalamazoo’s.

Michigan Governor Jennifer M. Granholm, a Democrat, has proposed a somewhat similar program, “Michigan Promise,” which would award $4,000 to every Michigan high school graduate enrolling in a state college or university.

“We are all witnessing the tremendous impact that the Kalamazoo Promise is having,” said Governor Granholm at a stop here in September, during her successful re-election campaign.

The impact, in fact, is the kind of stunning results in educational attainment and economic development that major philanthropic projects generally take years to realize. For example, student enrollment in Kalamazoo Public Schools, which reached a peak of 18,000 in the early 1970s and then began a steadily decline, suddenly soared this year, to 11,091—an increase of 937 students from the previous year and the largest enrollment gain of any school system in the state.

And last May, the Promise helped convince city residents to easily approve a property tax increase to finance an $85 million bond that will build a new middle school and elementary school, the first new school buildings the city has seen in 35 years.

The Promise is even boosting operating and curriculum budgets in Kalamazoo's school system: At $7,500 per student, the system’s enrollment increases are yielding roughly $7 million more in school revenue this year.

Changing the Look of the Future
Part of the power of the Promise is that, to qualify, students must live within the boundaries of the Kalamazoo school district, enroll by the ninth grade, and then graduate from high school. The benefits are pro-rated according to the number of years a student spends in the K-12 system. Graduates that entered in kindergarten receive a 100 percent tuition benefit; those that started in the ninth grade receive a 65 percent benefit; those who enrolled in 10^th grade or later are ineligible.

The clear rules and generous benefits, say administrators, are boosting graduation rates. In the 2004-2005 academic year, the last before the Promise program began, 265 students dropped out of Kalamazoo’s public high schools. Last year, however, just 21 students dropped out. This year 23 students who had dropped out have re-enrolled.

Bob Jorth, the 52-year-old industrial systems analyst and programmer who was hired earlier this year to manage the program, said that “the Promise is changing how kids see their future.” Mr. Jorth’s statistics contrast sharply with typical college enrollment statistics.

Of last year’s Kalamazoo graduating class, 93 percent of eligible African American girls, 84 percent of African American boys, 88 percent of Hispanic girls, 82 percent of Hispanic boys, and 90 percent of white girls and boys enrolled in colleges and received Promise scholarships. By contrast, in 2005 just 60 percent of African American girls enrolled in college, for example.

The Promise Class of 2006 is attending 14 public colleges and universities in Michigan; 54 students are at the University of Michigan or Michigan State University, the state’s top campuses.

“The Promise just made it so much easier for me and my parents,” said Sylvella Boggan, an 18-year-old freshman, one of 102 Promise graduates attending Western Michigan University, which is located here and offered Promise students four years of free room and board. “I have four younger siblings. Before the Promise I know my parents were concerned about how they were going to afford college.”

Jenna Fiore, a 13-year-old eighth grader at the Maple Street Magnet School for the Arts, said her parents moved from nearby Gull Lake to Kalamazoo so that she and her two younger sisters qualified for the Promise. “My friends talk about it,” Jenna said. “I think it motivates us to think about college.”

“It is such a present to the whole community,” added Janet Pisaneschi, the provost and vice president of academic affairs at Western Michigan University. “It’s good to know that there are still people who can be this generous and think like these donors do.”

Anonymity and Philanthropy
The best kept secret in Kalamazoo, which has 77,000 residents, is the donors’ identities. Many observers credit members of the Stryker family, whose company of the same name generated a fortune by manufacturing medical devices, as well as heirs to the Upjohn Company, the pharmaceutical company founded here in 1886.

A second secret is exactly how the Promise program is financed. Best guesses are that the donors established an endowment estimated to contain $200 million to $250 million.

A third mystery is why donors sought anonymity. Many here think that may reflect the donors’ allegiance to self-effacing Midwest values.

But Michelle Miller-Adams, a political scientist who is writing a book about the Promise for the W.E. Upjohn Institute for Employment Research, a local non-profit think tank, believes that anonymity accomplished a strategic goal.

“It means that the donors can’t really control or interfere or influence this in a political way,” Ms. Miller-Adams said. “The Promise was designed as a project that relies on the entire community for making it work.”

“The schools play a part in preparing students for college,” she added. “The community has to support students with tutoring and skills development so they can stay in school. Businesses have a role in hiring people that move to town to enroll their children in school. The university and the community college have a role in accepting students and encouraging them to graduate.”

All about Jobs
Ronald R. Kitchens, the chief executive officer of Southwest Michigan First, a non-profit regional economic development agency, said the Promise is already doing what it was designed to do: aid Kalamazoo's transition from its collapsed industrial past of paper and auto-related manufacturing to a new era of academic, scientific, medical, and engineering enterprises. The city is home to Kalamazoo College (one of the Midwest’s best private colleges), Western Michigan University (one of the country’s 50 largest), a Pfizer Pharmaceuticals laboratory, and Stryker.

“We want to become known as a place where people can really achieve,” said Mr. Kitchens. “We can educate our children in our good schools. We can send them to college with free tuition. They can go out and see the world. And when they turn 30, they can bring their families back. We want to be the city that says, and really means it, ‘You can come home to good jobs and a great way of life.’”

That message is spreading. In the past year, families with school-age children have moved here from 63 different Michigan communities and 30 different states, including Arizona, Washington, and Hawaii. For the 12 months ending September 30, median prices for residential home sales within the Kalamazoo school district increased by an average of 3.6 percent over the previous year—even as, outside the district, in the surrounding suburbs, prices dropped 1.4 percent, according to the Greater Kalamazoo Association of Realtors.

The district’s still-modest home prices, which just a year ago seemed to indicate that the region was slipping, have added another new, competitive edge for marketing Kalamazoo. Leonora and Omarr Carter, both 30, arrived from the Seattle region on September 1, in time to enroll their five children, who range in age from 4 to 9. The couple sold a four-bedroom, split-level home in Kent, Wash., for $323,000 and next month close on a nicer, bigger, $199,000 home on the west side of Kalamazoo.

“It’s an adventure that’s working out well,” said Mrs. Carter, who is a nurse and, along with her husband, a Marine veteran, quickly found work. “The kids like school. Everything is so close. There’s no traffic. A tank of gas lasts forever. The cost of living is much less. We didn’t know anything about Michigan. But everybody here has been really warm and helpful.”