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SOUTH HADLEY, Mass. (WWLP) – With the price of college going up, schools are receiving a lot of backlash for the size of their endowments and the tax breaks they receive. The 22News I-Team investigates what tax breaks our colleges receive and what they give back to their communities.
Universities and Colleges are generally tax-exempt. They don’t have to pay taxes on a majority of their property. With towns and cities clawing for every dime, there’s a push for colleges to kick in a little bit more.
“We do hear the complaint a lot that Bay Path doesn’t pay taxes and they buy properties and they are very sensitive to that as well,” said Longmeadow Town Manager Stephen Crane.
Bay Path has $21-million of property in Longmeadow that they don’t have to pay taxes on. If Bay Path paid taxes on its tax exempt property, Longmeadow would receive $524,000 a year.
(Does Bay Path pay its fair share?) “In my opinion we do,” said Michael Giampietro, Bay Path’s Vice President of Finance and Administration. “We receive excellent police and fire services from them. We think we’re being responsible in terms of the voluntary payments that we’re making.”
Bay Path is a non-profit, so their property that is for educational purposes, isn’t taxable. The reason is that’s how the federal tax code is setup.
Springfield has four colleges. American International College, Springfield College, Western New England University, and Springfield Technical Community College.
They have $191-million in combined tax exempt property. At full value, Springfield would get an additional $6.8 Million. Instead they get less than $400 in Payments in Lieu of Taxes, plus an additional $530,000 in taxes the schools have to pay that is not tax-exempt.
Bay Path does pay $56,000 in taxes on property that is not exempt. The town was also able to secure an annual payment in lieu of taxes, or PILOT with the university.
“It is a voluntary agreement they don’t have to pay us this money and they do because they understand that Longmeadow is part of their campus and their campus is part of Longmeadow,” said Crane.
Bay Path University understands that this tax exempt system for colleges is under both local and federal scrutiny and Congress is evaluating possible changes.
“It’s hard to say what will happen in the future; we know that cities and towns are under financial duress by in large, higher education is also under those same pressures, so everyone is looking for where the resources come in next.”
It’s a conversation that has reached Washington D.C. In some cases, Billion dollar colleges don’t give much back to the community in terms of dollars.
In Connecticut, lawmakers unsuccessfully tried to tax profits on Yale’s $25.6-billion endowment.
In New Jersey, Princeton University settled a lawsuit, after a neighborhood group sued the Ivy League School over its property tax exemption status. Called a “hedge fund that conducts classes”, Princeton settled and agreed to pay $18.2-million in the next six years.
Amherst College has a $2.2 Billion endowment. Smith College has a $1.78-billion endowment. Mt. Holyoke has more than a $700-million endowment. Endowment’s come from donations and the schools aren’t taxed on them.
“$700-million seems like a lot of money right, if you look at some other institutions $2-billion, but in Mt. Holyoke’s case and I think in other cases as well, that’s money is going directly into the $40-million that we put toward financial aid,” said Kevin McCaffery, Director of Government and Community Relations for Mt. Holyoke College.
In addition to their endowments, colleges aren’t taxed on their property either when it serves an educational use.
Mt. Holyoke owns nearly half of the tax-exempt property in South Hadley. $76-million worth of real estate. If they paid what for profit businesses pay, the town would get $1.4-million in taxes.
“We’re not looking for dollar for dollar contribution but we do need to sustain sidewalks, road systems and the police services and the schools,” said South Hadley Town Administrator Mike Sullivan.
Mt. Holyoke does own some non-exempt property and is one of the town’s higher tax payers, dishing out $151,000 this year. Plus the school has gifted $700,000 open space and a new fire truck. But there is no agreement for a required annual payment to the town.
The 22News I-Team obtained data from Northampton and Amherst as well.
Amherst College has $439-million in Tax Exempt Properties. That’s a $9.5-million Tax bill that doesn’t have to be paid. They do pay $548,000 in taxes. Amherst College also gave the town a $130,000 gift this year.
“Amherst College has long been the number 1 taxpayer in town we pay about a half million dollars in property taxes and a couple hundred thousand dollars on top of that in city fees,” said Amherst College’s Associate Director of Public Affairs, Caroline Hanna.
Smith College has $34-million in tax exempt property. They do pay $534,000 in taxable properties. Smith agreed to pay Northampton $190,000 for the next three years.
Since UMass land is owned by the state, the amount of tax exempt property is unclear. But the University and the town have an agreement where schools pays more than $1 Million to the town each year. The state also gives the town of Amherst $137,000.
These schools are tax exempt, because they are non-profit organizations.
(When you see the type of endowments that you guys have, that Amherst College has is it really still a non-profit?) “Oh very much so, most of our money, or a large part of our money goes to opening up opportunities for our students,” said McCaffery.
The Federal Tax Code allows this tax exempt status. The colleges have no obligation to pay. Sullivan says the federal government needs to change it.
“I think it has to. I think you can’t reasonably look at the size of the endowments and not say there has to be some change to the tax code,” said Sullivan.
In February, Congress sent letters to 50 schools, including Amherst College questioning their “numerous tax preferences.” Congress is evaluating the value of federal policies that permit tax-free investment earnings for schools and tax deductions for donors.
Here is the response to that letter from Amherst College.
Below are some of the tax-exempt figures for Colleges and Universities.
CHICOPEE – ELMS COLLEGE (Source: City of Chicopee)
- Elms College has $30,285,300 in tax-exempt property. If they did pay taxes, Chicopee would receive $943,992.
- Elms College does not have any property that is tax-exempt.
- Elms College does not have a PILOT with the city and does rely on the Chicopee’s police, fire and ambulance serices.
Statement from the city of Chicopee:
Elms College supports the City of Chicopee as a responsible citizen through a broad range of activities. The college provides major economic benefits to the City both as a major employer and through the steady flow of new students supporting local vendors. The long-term financial contributions and benefits continue as 70% of Elms alumni remain in the region following graduation.
Members of the Elms College community actively engage in social service to the city through a number of volunteer efforts. Elms nursing faculty and students provide weekly health and wellness services to the homeless and underserved through the Elms CareVan. Chicopee District Court alternative sentencing program- Changing Lives Through Literature-is made possible through the work of college faculty. Students perform free VITA tax services and first responder will generation-Wills for local heroes; actively engage in charitable fundraising; and, provide education mentoring through Junior Achievement advising and STEM workshops in the Chicopee schools.
The College contributes substantially to the arts and cultural life of the city-playing host to weekly enrichment programs held in the arts and sciences offered at no cost to the public. Events include film screenings; musical and dance performances; artist and gallery exhibits; poetry readings; and, guest lectures in ethics, law, healthcare and social justice. In addition, residents of the city have free access to the campus’ 26 acres of open space; the Alumnae Library and reference services as well as daily and Saturday Liturgical services.
SOUTH HADLEY – MOUNT HOLYOKE COLLEGE (Source: Town of South Hadley)
- South Hadley has $163,872,400 in tax-exempt property. Mt. Holyoke College accounts for $76,865,000 of that tax-exempt property. The town would receive $1,394,749 if Mt. Holyoke had to pay taxes on those properties.
- Mt. Holyoke does pay $151,662 in real estate taxes and $702 in personal property taxes.
- Mt. Holyoke College does not have a PILOT with the town, but the school has gifted $700,000 open space and a new fire truck for Fire District 2.
NORTHAMPTON – SMITH COLLEGE (Source: City of Northampton)
- Smith College has $34,670,470 of tax-exempt property in Northampton. If Smith College paid taxes on those properties, Northampton would receive $560,420.
- Smith College does pay $533,685 on its taxable properties.
- Smith College does have a PILOT with Northampton.
WESTFIELD – WESTFIELD STATE UNIVERSITY (Source: City of Westfield)
- Westfield State University has $259,893,545 in tax-exempt property. Westfield State does not have property that is not tax-exempt.
SPRINGFIELD (Source: City of Springfield)
Springfield College
Inquiry: Ryan Walsh, Investigative Reporter, WWLP-TV
Tax Exempt Questions: STCC, Springfield College, AIC, & WNEU
What is the value of tax-exempt properties? (Individually by School)
- STCC Tax Exempt Value $30,320,800
- Springfield College Tax Exempt Value $65,648,300
- AIC Tax Exempt Value $35,542,700
- WNEU Tax Exempt Value $60,412,200If each school (individually) paid taxes on their tax-exempt property what would that equate to?
- STCC $1,170,383
- Springfield College $2,450,728
- AIC $1,250,583
- WNEU $1,952,090Do any of these schools have any property that is not tax-exempt? If so what do they pay on taxes for that property? (individually)
- STCC $209,940
- Springfield College $293,282
- AIC $13,545
- WNEU $18,965Do any of these schools give financial gifts to the city or a PILOT? If so what did they pay in fiscal ’16? (individually)
Payments in Lieu of Taxes FY16
- AIC $237.89
- Springfield College $144.50
AMHERST (Source: Town of Amherst)
What percent of property in Amherst is tax exempt?
- 28.9% however few of the UMass buildings are included in this and the land values for UMass are calculated using the State Owned Land formula that generates a significantly lower value.
What is the value of tax exempt properties in Amherst?
- The value we have assessed is $893,507,853.
What is the value of UMass’ tax-exempt properties?
- Not known
What is the value of Hampshire College’s tax-exempt properties?
- $9,760,400
What is the value of Amherst College’s tax-exempt properties?
- $439,612,200
If UMass/Hampshire/Amherst paid taxes on their tax-exempt property what would that equate to individually?
- UMass is not available; Hampshire $200,500 and Amherst $9,532,600
Does UMass/Hampshire/Amherst have any property that is not tax-exempt? If so what do they pay on taxes for that property?
- We receive approximately $137,000 quarterly from Amherst College on taxable real estate in FY 16, equals $548,000 annually. We do not receive payments from UMass on taxable property. Hampshire paid approximately $64,000 annually on taxable real estate.
Does UMass/Hampshire/Amherst give financial gifts to the city or a PILOT? If so what did they pay in fiscal ’16?
- UMass payments to the Town are defined in the Strategic Partnership agreement, which was covered in detail in publication (the Gazette and others) in December of 2015. We also received $137,000 in State Owned Land money from the State for property owned by UMass.
Amherst College gift was $130,000 in FY 16. There is no payment history of this type with Hampshire.
