Frequently Asked Questions
What do property taxes have to do with the quality of Philadelphia’s public schools?
Property taxes are critical for funding our public schools. The city of Philadelphia collects taxes in many forms (eg. income tax, wage tax, etc.), but property taxes represent the majority of local contributions to the school district's budget (Fig. 1 in Appendix). According to the Pew Charitable Trust, Philadelphia collects relatively little in property taxes when compared with the thirty largest cities in the United States, and that is not because rates are low. A significant problem is the city’s large quantity of tax-exempt property. Philadelphia’s property tax revenues per capita are below the median for the thirty largest cities in the country. This concerning lack of revenue is compounded with the fact that Philadelphia is one of the poorest large cities in the United states. Philadelphia’s local tax-supported expenditures for public education are below the median, as well.
Is this happening with other schools or hospitals as well?
Yes. Penn has had a campaign for their university to pay PILOTs for over 5 years. Just recently, their campaign has seen progress, as Penn recently committed to give $100 million over the next 10 years to the Philadelphia School District for lead and asbestos remediation. While there is much more that Penn should do to further address the quality of our schools, this is an important first step in making sure our schools get the money they need to properly provide a healthy educational environment. There are students at other Philadelphia universities also organizing to push their universities to pay PILOTs. PILOTs are implemented by many mega nonprofits across the country. If it were to join the PILOTs program, Jefferson would follow the same procedures already in place at Harvard, Yale, Brown, Princeton, Cornell, Dartmouth, and many other schools.
Where would the money go?
Schools currently lack extremely basic personnel and resources such as nurses, guidance counselors, adequate textbooks, updated technology, safe facilities, and much more. We are calling for the money to go to Philadelphia public schools and essential services, such as capital repairs for the toxic conditions that exist in our schools’ buildings. PILOTs would contribute to funding for these necessities.
Why did Jefferson pay PILOTs in the past? Why did they stop?
In 1994, the city of Philadelphia had been bankrupt. The mayor at the time, Ed Rendell, had issued an executive order for nonprofits to contribute Payments in Lieu of Taxes by paying 40% of their foregone property taxes to the city of Philadelphia. PA State Charter had provided “5 prongs” that nonprofits should meet in order to be considered a nonprofit by the state of Pennsylvania, and so the executive order issued that nonprofits had to begin contributing PILOTs, or it would undergo investigation of its nonprofit status. About 50 nonprofits, Jefferson included, began paying PILOTs.
However, Act 55 was passed in 1997, changing Pennsylvania’s classification of a nonprofit to be much more lenient. Once Rendell left office in 2000, nonprofits were no longer worried about whether their classification as a nonprofit would be challenged and stopped providing payments. However, this changed again in 2012 when the Pennsylvania Supreme Court passed 4-3 that in order for an organization to qualify as a nonprofit, they must pass both the HUP test and specific Act 55 standards. The classification of a nonprofit is now the same as it was in the 1990s.
However, Act 55 was passed in 1997, changing Pennsylvania’s classification of a nonprofit to be much more lenient. Once Rendell left office in 2000, nonprofits were no longer worried about whether their classification as a nonprofit would be challenged and stopped providing payments. However, this changed again in 2012 when the Pennsylvania Supreme Court passed 4-3 that in order for an organization to qualify as a nonprofit, they must pass both the HUP test and specific Act 55 standards. The classification of a nonprofit is now the same as it was in the 1990s.
Hasn’t Jefferson been financially impacted by the Coronavirus pandemic?
This is the time to act. The fiscal crisis of the Philadelphia public schools, long exacerbated by Jefferson’s property tax exemption, is more acute than ever. In the wake of the COVID-19 pandemic, the public school system faces a $1 billion shortfall over five years. The city government has called for additional cuts to a system already cut to the bone.
Jefferson, of course, is facing the pandemic and recession itself, but its circumstances are nothing like those of the public school system. Jefferson can easily generate tens and even hundreds of millions of dollars through reasonable increases in endowment spending, borrowing, and voluntary reductions in the salaries of highly paid administrators. Those modest measures, all of which have precedent at mega-nonprofits, would generate more than enough revenue to close the university’s budget shortfall and make a substantial contribution to the school district.
This is a moment when Jefferson must demonstrate its priorities and live up to the values it proclaims. The pandemic has made clear the intolerable consequences of economic and racial inequalities in our society. The killings of unarmed Black citizens have inspired uprisings against racial injustice on a scale not seen in half a century. In response, Jefferson administrators have publicly committed our university to the pursuit of equity and justice, not just on campus but in the wider society of which we are a part.
These commitments must be made real. Philadelphia is not short on research or philanthropy, but it does lack a just system of public finance that can channel concentrated private wealth into public services for all people. Now is the time to tackle that problem. So long as we refuse to do so, the idea of a partnership with the city will continue to ring hollow.
Jefferson, of course, is facing the pandemic and recession itself, but its circumstances are nothing like those of the public school system. Jefferson can easily generate tens and even hundreds of millions of dollars through reasonable increases in endowment spending, borrowing, and voluntary reductions in the salaries of highly paid administrators. Those modest measures, all of which have precedent at mega-nonprofits, would generate more than enough revenue to close the university’s budget shortfall and make a substantial contribution to the school district.
This is a moment when Jefferson must demonstrate its priorities and live up to the values it proclaims. The pandemic has made clear the intolerable consequences of economic and racial inequalities in our society. The killings of unarmed Black citizens have inspired uprisings against racial injustice on a scale not seen in half a century. In response, Jefferson administrators have publicly committed our university to the pursuit of equity and justice, not just on campus but in the wider society of which we are a part.
These commitments must be made real. Philadelphia is not short on research or philanthropy, but it does lack a just system of public finance that can channel concentrated private wealth into public services for all people. Now is the time to tackle that problem. So long as we refuse to do so, the idea of a partnership with the city will continue to ring hollow.
What about all the services Jefferson already provides for Philadelphians?
.These services, also known as Services in Lieu of Taxes (SILOTs), include various class-based or extracurricular outreaches to the local community, ultimately do not address the needs community members explicitly express.
Philadelphians repeatedly call for funding of their school districts over SILOTs. Parents who have sent their children to local schools for years, and teachers who have worked decades in unsustainable school conditions intimately understand the difference adequate funding would make for their communities. Jefferson prides itself on serving its community, but half-hearted efforts can not be effective service unless centered around the explicit community demand for funding.
Institutions like Jefferson have provided these services for years, yet terrible school conditions persist. If these programs were not meant to fix the system of unsustainable school conditions, what are they useful for if not for the benefit of the Jefferson institution rather than the community.
Usually these services involve Jefferson students volunteering their fledgling expertise at local schools for a class or as an extracurricular activity. Campuses and students endorse these programs to practice communication skills, and health care students are specifically urged to practice taking patient histories and performing physical exams. Partially trained students still in school, however, can not substitute for the expert care of fully trained professionals. Many of these schools lack properly trained school nurses and consistent medical care during school hours, none of which SILOTs fulfill.
Philadelphians repeatedly call for funding of their school districts over SILOTs. Parents who have sent their children to local schools for years, and teachers who have worked decades in unsustainable school conditions intimately understand the difference adequate funding would make for their communities. Jefferson prides itself on serving its community, but half-hearted efforts can not be effective service unless centered around the explicit community demand for funding.
Institutions like Jefferson have provided these services for years, yet terrible school conditions persist. If these programs were not meant to fix the system of unsustainable school conditions, what are they useful for if not for the benefit of the Jefferson institution rather than the community.
Usually these services involve Jefferson students volunteering their fledgling expertise at local schools for a class or as an extracurricular activity. Campuses and students endorse these programs to practice communication skills, and health care students are specifically urged to practice taking patient histories and performing physical exams. Partially trained students still in school, however, can not substitute for the expert care of fully trained professionals. Many of these schools lack properly trained school nurses and consistent medical care during school hours, none of which SILOTs fulfill.