Higher Ed’s Local and Regional Economic Impact: A NEBHE Conference and Recent Evidence

John O. Harney — Fri, 17 Feb 2012 15:24:48 +0000

Our longstanding interest in the ways colleges and universities enrich their communities and the region will be on full display at NEBHE's April 3 conference on "Locally and Regionally Engaged: New England Colleges and Universities as Drivers of Innovation, Workforce and Economic Development." It promises to be a fascinating gathering focused not only on economic impacts such as building a competitive workforce, but also on the fuzzier interconnections between higher ed and New England communities—what we used to call broadly "town-gown" relations.

Among recent developments, the Association of Vermont Independent Colleges issued a new report showing that private colleges in the Green Mountain State pump nearly $1.4 billion a year into the state economy and attract 14,000 out-of-state students who spend their college savings in Vermont. Awarding more than half of all degrees conferred in Vermont, the private colleges from Bennington to Vermont Law School also provide 6,300 jobs, accounting for $314 million in wages and benefits paid annually.

Other groups in the region have produced similar reports. As I reminded a reporter friend looking for the latest on higher education's economic impact, the reports that colleges, consortia and states publish on the subject are ubiquitous, but hardly monolithic. Some are very bare-bones focusing on employee wages and campus purchasing. Some are very generous, including money spent by "tourists" visiting students, R&D license income and affiliated museums, not to mention the impact of preparing future higher-paid people. (One even reasoned that because college-educated people have healthier habits, they save health care dollars.) The reports often strike me as propaganda.

Another key issue is how tax-exempt colleges support local revenues, often through payments in lieu of taxes (PILOT). Johnson & Wales University recently agreed to triple its annual PILOT to the city of Providence from $309,000 to at least $958,000, after a debate over the appropriate level of the payments to the city, particularly from Brown University.

Ultimately, the best I could offer the reporter was a smattering of pieces we'd published over the years on the subject of how colleges impact communities ...

Drop the PILOT? Not Yet, Say Cash-Strapped Municipalities

Show Me the Money! Why Higher Ed Should Help K-12 Do Economic Impact Studies

Editor's Memo Deep Impact

Pomp and Whine

Comic Relief for White River Junction

Taxing Times for Boston Colleges

Local Heroes: How Colleges and Universities Enrich Their Host Communities (pdf)

Editor's Memo College and Community (pdf)

College Town Dilemmas: Good Neighbors? and Dorm City (pdf)

It this all piques your interest, do consider joining NEBHE on April 3 for our Locally and Regionally Engaged conference.

Drop the PILOT? Not Yet, Say Cash-Strapped Municipalities

John O. Harney — Thu, 02 Dec 2010 17:30:09 +0000

Private colleges, nonprofit hospitals, museums, soup kitchens and churches are exempt from property taxes. As cash-strapped host municipalities look for more revenue, their interest in collecting payments in lieu of taxes (PILOTs) from charitable nonprofit organizations will grow, according to a report by the Cambridge, Mass.-based Lincoln Institute of Land Policy.

In recent years, many cities have expanded PILOTs and "user fees" to help pay for basic public services such as police and fire protection. PILOT payments are voluntary and usually amount to just a fraction of what the institution would contribute if it paid property taxes.

The report's authors, Daphne A. Kenyon and Adam H. Langley of the Lincoln Institute, note that PILOTs offer one way to make nonprofits pay for public services they consume, but they "are often haphazard, secretive, and calculated in an ad hoc manner that results in widely varying payments among similar nonprofits."

The report offers an account of PILOT programs in 117 municipalities across 18 states and notes:

• PILOTs are most appropriate for municipalities that are highly reliant on the property tax and have a significant share of total property owned by nonprofits. PILOTs are most suitable for nonprofits that own large amounts of tax-exempt property and provide modest benefits to local residents relative to their tax savings.

• The best PILOT initiatives grow out of a partnership between the municipality and local nonprofit organizations, because both have an interest in an economically healthy community. In cities with a large number of nonprofits, such as Boston, creating a systematic PILOT program can promote equity among tax-exempt nonprofits and raise more revenue than negotiating individual agreements.

• State and local governments should consider alternatives to PILOTs. State governments should consider providing grants to local governments that host tax-exempt nonprofits to compensate them for their loss of property tax base, as is done in Connecticut.

The report suggests that a tax-exempt nonprofit may decide that reaching a PILOT agreement will help avoid any formal challenge to the organization’s tax exemption.

New England Board of Higher Education » PILOT

Higher Ed’s Local and Regional Economic Impact: A NEBHE Conference and Recent Evidence

Drop the PILOT? Not Yet, Say Cash-Strapped Municipalities