The ongoing nationwide uprisings against police brutality and systemic racism have sent shockwaves through numerous institutions. Penn is no exception. In particular, Penn’s exemption from property taxes and refusal to offer Philadelphia “payments in lieu of taxes” (PILOTs) has once again been raised by community organizations both on and off campus. One such group, Penn for PILOTs, has gathered over 1,100 faculty and staff signatures on a petition urging the University to commit to making annual financial contributions to an Educational Equity Fund administered jointly by the city and the school district of Philadelphia [1]. According to the group’s website, this Education Equity Fund could be used to address a variety of growing problems for the city’s public schools, such as shortages of teachers and librarians, cuts to physical and creative education, a lack of support services like bilingual staff and school nurses, and unmitigated health hazards in school buildings.
But how exactly did we get here in the first place? Why is Penn – the largest property owner and private employer in Philadelphia – exempt from paying property taxes [1, 2]?
Pennsylvania state law permits nonprofit institutions – such as universities and hospitals – to refrain from paying property taxes as a thank you for their role as “purely public charities”. Nonprofits throughout the country enjoy similar exemptions. Despite this special designation however, many large nonprofits, including all universities in the Ivy League except for Penn, currently pay PILOTs to the cities in which they operate [3]. Our University’s isolation from its peer institutions, as well as pressure from faculty, alumni, and Philadelphians in general, are bringing these issues to a head.
It hasn’t always been this way; Penn spent several years in the late 90s contributing just under $2 million annually to the city at the behest of an executive order signed by then Mayor Ed Rendell [1]. Since 2000, however, the Board of Trustees has declined to continue these payments. When pressed for comments on the subject, University administrators tend to refer to Penn’s many outreach programs in schools and other settings throughout the city, particularly those run by the Graduate School of Education and the Netter Center for Community Partnerships. One University spokesperson, Stephen MacCarthy, recently told the Daily Pennsylvanian that “we believe that the depth of Penn’s financial commitment and the breadth of programs we support has proven to be far more impactful than PILOTs have been in any city where such a program has been implemented.”[4]
Penn for PILOTs, as well as undergraduate organizations such as the Student Labor Action Project and Police Free
Penn, believe otherwise. Students and faculty cite widespread poverty throughout the city (Philadelphia is the poorest large city in the US) and assert that Penn’s refusal of PILOTs despite ample wealth undermines its
public mission of “fostering a vibrant inclusive environment and fully embracing diversity” [1]. In September, several professors held a virtual public press conference demanding that the University reverse its position on PILOTs. Based on research performed by Penn for PILOTs, these faculty are urging Penn to pay 40% of what it would owe in property taxes – a cool $36.4 million, or 0.3% of the $12.2 billion endowment – to the proposed Educational Equity Fund [1].
For context, other Ivy League Universities currently contribute several million dollars annually to their host cities. These figures range from $6 million by Cornell to $17 million by Yale. That said, activists in each of these cities have raised criticisms of these institutions for not doing enough to benefit their surrounding communities. The typical argument is that these payments are still too small of a fraction of these Universities’ extremely generous endowments.
The debate surrounding PILOTs raises a fundamental question about the role of prestigious universities in general. Are they truly committed to fostering quality education in their communities? Are they operating as “purely public charities” as their tax privileges suggest, or are they operating as large corporations, con- tributing to the gentrification and impoverishment of their neighborhoods?
Philadelphia’s public schools have been suffering for years. Dozens are still full of health hazards like lead paint or asbestos, and years of budget cuts have led to frequent school closures, high student to teacher ratios,
and gaps in critical student services: issues that have become even more pronounced as schools struggle to switch to virtual learning. This controversy extends well beyond our academic community. Thousands of Philadelphians are speaking up to urge our University to take a leading role in mitigating these inequities.
University administration now has an opportunity to make a bold contribution toward economic justice. If Penn decides to contribute PILOTs to the city, Temple and Drexel will almost certainly follow suit. In the context of the impending economic recession as well as novel educational challenges imposed by the pandemic, these funds could provide a lifeline for our embattled public-school system. Further, if Penn were to begin making a contribution even half the size of the figure requested by Penn for PILOTs, it would be the largest payment by any Ivy League school. Thus, Penn has a chance to act as a leading force for educational equity both locally and regionally, and to exert pressure on its peer institutions to follow suit. The actions of the Board of Trustees in the coming months will reveal whether or not our University takes its mission statement seriously.
References
Chase Sutton and Celia Kreth. July 2020. Penn’s history of refusing to pay PILOTs, explained. The Daily Pennsylvanian.
Stephanie Lai. October 2019. Stacking up: Where do Columbia’s contributions to the community rank among its Ivy peers? Columbia Daily Spectator.
Shirali Shah. September 2020. Penn faculty challenge Penn to pay PILOTs ahead of Thursday Board of Trustees meeting. The Daily Pennsylvanian.
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