Clark and WPI Pay 5 Times More to Worcester than Holy Cross and UMass Medical

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Wednesday, December 17, 2014

Patrick Sargent, GoLocal Worcester Contributor

In the city of Worcester, nonprofit organizations such as colleges own 48% of Worcester's non-taxable land and these institutions are exempt from paying property taxes. According to the Worcester Research Bureau, "the nonprofit institutions argue that they provide social, cultural, and economic value to the City that compensate for taxes the City would have received from them." The PILOT program is a negotiation between city administration and these institutions to provide financial backing to improve local parks and the Worcester Public Library.

City Councilor Morris Bergman said, "All the players have to be together and we need to have better control over some sort of consistency of what we are asking for. We can’t ask for one different from the other because obviously whoever is going to give you the least is setting the example for the next non-profit.”

The five schools participating in the program contribute a combined amount of at least $644,000 annually. However, two of these schools, Clark University and WPI, pay out more than $500,000 a year annually combined. Massachusetts College of Pharmacy and Health Sciences (MCPHS) contribute a percentage of their of property value.

Major Disparity Between Four Colleges

Holy Cross and UMass Medical School contribute a combined $112,000 annually (Holy Cross contributes $80,000. UMass contributes $32,000). The average annual tuition and fees for Holy Cross is $51,867 and the average for UMass Medical is $53,639 (See Editor's Note Below). The enrollment at Holy Cross and UMass is 2,900 and 518, respectively. For UMass, their annual contribution amounts to $20,000 less than one student's combined tuition and fees. Holy Cross' contribution equals the tuition and fees of 1.25 students. 

Holy Cross' contributions to the PILOT program began in May of 2012. Since then, the school has donated at least $240,000 to the city. Holy Cross is in a five year commitment with the city and after 2016 it will have contributed $400,000. UMass began contributing in March of 2013 and has donated $64,000 to date. After 2017, UMass will have contributed $160,000 to the PILOT program.

Although WPI has a substantially higher enrollment number than UMass and Holy Cross, the school is paying out the tuition of nearly 4.5 students annually. WPI's average tuition and fees can amoutn to $57,964 and it contributes $270,000 annually with a 2.5 percent increases each year to the PILOT program. WPI's PILOT program began in July 2009. Since then, the school has contributed at least $1.35 million. By the end of its 25 year commitment, WPI will pay nearly $7 million to the city.

Clark University, with an enrollment of roughly 2,200 and an average tuition with fees of $53,109, contributes $262,000 and also has a 2.5 percent annual increase. On average, Clark donates an annual amount equivalent to five students yearly tuition. Clark's PILOT program began in September 2010 and the school is responsible for at least $1.08 million in contributions. Like WPI, Clark is also in a 25 year commitment with the program. By the end of its term, Clark will pay at least $6.5 million to the city.

“The key to all of this is that there’s no law that requires this to happen. They have to be negotiated on a piecemeal basis and they have to be done in a way that you get the best deal you can. That’s not to say that we shouldn’t have a game plan as a city and try to come up with a formula to try to get each of the largest non-profits, particularly the colleges and universities, to abide by and then we can eliminate the piecemeal and helter-skelter way we go about asking for money from our colleges and universities," said Bergman. 

Boston Sets the Bar for PILOT Program Contributions

"We could do better as a city if we had a game plan on some formula. Some cities go by 20 percent of what the actual tax is on their property. Boston does some version of that. If we were to do that, we would see some uniformity between the largest non-profits as to how much they give. We don’t have a plan in place yet to do that so the disparity between what they give will be there," said Bergman.

In the 2014 fiscal year, the city of Boston received nearly $25 million from 49 different non-profit organizations. Nearly $10.5 million of that amount came from Boston's colleges and universities. Boston University alone donated more than $6 million.

In Boston, PILOT payments are based on non-profit institutions' tax-exempt property value. Participants are those institutions with property valued greater than $15 million. According to city of Boston's website, "Each institution is eligible for a community benefits deduction generally limited to 50% of the PILOT contribution. The new guidelines also allow a deduction for any real estate taxes paid on property owned by the institution that is used for a tax-exempt purpose."

The closest resemblance to a Boston nonprofit contributor in Worcester's PILOT program is MCPHS which contributes 20 percent of the assessed value of the property that the school owns. Like WPI and Clark, MCPHS also pays an additional 2.5 percent each year to the city.

Bergman said, "At the end of the day, they’re not required to give us a dime so the overriding philosophy is going to be that whatever we get is something better than what we’ve gotten had we not asked. So we accept whatever we get and that’s why you see the disparity between the different colleges. They are free to give us what they want to give us and we are not free by law to challenge that.”

EDITOR’S NOTE:

According to the University of Massachusetts Medical School’s Website, the cost of tuition, fees and other costs to the first year medical students exceeds $54,000. Please see complete costs below - year-by-year as prepared by UMMS.

In addition, UMMS’s James Healy, the Vice Chancellor for Management writes GoLocalWorcester, “UMMS accounts for 36% of the total state-owned land pilot monies received annually by the City (of) Worcester. In FY14, the City received $426,103 of such monies, $151,601 of which is attributed to UMMS.”

In addition, Healy writes, “In sum, the total payment made to the City of Worcester in FY14 through our two voluntary agreements plus state-owned land PILOT program amount to over $863,000.”

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