City parents might not want to blow the kids' college fund yet, but with a key impediment out of the way, Mayor Luke Ravenstahl turned his attention yesterday to the next step in making the Pittsburgh Promise for tuition a reality.

A day after the University of Pittsburgh Medical Center dropped a controversial precondition to its $100 million pledge, the mayor challenged foundations, corporations and individuals to come up with $135 million in matching funds needed to create an endowment.

"It's Pittsburgh's responsibility to now follow UPMC's lead," he said. "Once Pittsburgh has an opportunity to realize the potential from this program, we'll rise up to the occasion."

The goal is to provide as much as $20,000 in college aid to graduates of Pittsburgh Public Schools from 2008 on. UPMC has committed $10 million a year for 10 years. In all but the first year, that contribution must be matched by $15 million from other sources.

"The larger discussions with foundations, corporate [leaders], etc., have begun and are well under way," said Mr. Ravenstahl. "Those will continue, and we're optimistic that Pittsburgh will step up to the plate."

The mayor, schools Superintendent Mark Roosevelt and the Pittsburgh Foundation are working together to raise the money.

John Ellis, vice president for communications at the Pittsburgh Foundation, which is administering the Promise, said he didn't believe the tax-credit controversy has slowed donations or diminished interest in the program. He said the foundation has received about 30 donations, totaling about $20,000, in the past seven to 10 days, He said total donations since Dec. 5 are slightly over $20,000.

"We are very confident about the way the community is responding to this, given we haven't even started actively fund raising yet," Mr. Ellis said. He said a board to oversee the Promise will be appointed in a week or two and that fund raising would begin in earnest once the board appoints an executive director.

The city plans to put a tear-off coupon on tax forms inviting individual contributions to the Promise starting in 2009. Council permitted such a measure in March, but it will not be implemented on this year's tax forms.

Last week's hang-up was UPMC's desire for "credit" for its Promise contributions if the state or courts change its tax-exempt status. Council President Doug Shields and Councilman William Peduto questioned whether such a credit would meet state tax fairness rules.

The credits "were not within the city's ability to provide," said Mr. Shields. "I think it worked out best for everybody."

After a week of phone calls and e-mails between the mayor's office, council and UPMC, the hospital system dropped that condition Wednesday.

"The decision was arrived at because it was too important of a program to let it become as controversial as it has," said Mr. Ravenstahl.

"People don't understand what this is going to mean to many students," said Councilwoman Tonya Payne. "Sixty percent of the students who attend Pittsburgh Public Schools are African-American. Many of them are poor. ... Many students that go to Pittsburgh Public Schools will now have the opportunity to go to college."

If UPMC is taxed, or suffers a budget deficit, it could reduce or withhold its contribution to the Promise. The hospital system finished its last fiscal year with a $618 million surplus.

The school board voted Dec. 19 to give UPMC tax protection equal to its Promise contribution, and Solicitor Ira Weiss said he doesn't expect that to change. "The school district is happy it is behind us so we can move on to what's really important here."

Council's concerns may have led to a $1.5 million gain for city coffers. UPMC had planned to stop its annual contribution in that amount to the city's budget, but now will continue that for next year.

"We have committed only to a contribution in calendar year 2008 and have not entered into a multiyear agreement," said UPMC spokesman Frank Raczkiewicz.

The city is "grateful for their commitment for next year, and we'll deal with 2009 when it arises," said Mr. Ravenstahl. "I'm still cautiously optimistic that we'll meet our goals in terms of our budgetary line item from the nonprofit community."

The city's five-year plan counts on around $4.2 million a year in voluntary contributions from tax-exempt organizations, and UPMC has been the biggest giver.

The discussion comes against the backdrop of state Senate hearings on the law that defines tax-exempt institutions, and keeps municipalities from challenging their nonprofit status.

A city controller's office audit found that tax-exempt organizations owned $3 billion in untaxed property within the city, on which they otherwise would have to pay $32 million in property taxes, including $8.3 million by UPMC. Nonprofit employers also do not pay the city's payroll preparation tax.

"There needs to be a local tax on nonprofits," said Mr. Peduto.

Mr. Ravenstahl said he doubts there will be legislation anytime soon that would make UPMC taxable. "I think with UPMC's contribution being the largest of its kind probably anywhere in the country, we have seen them step up when they didn't have to step up."