Penn’s Shameful Divestment From Philly Schools

by Penn Community for Justice and Philly Jobs with Justice

Philly JWJ’s first speak-out on the condition of Philly public schools and the need for PILOTs now

“Black and brown communities are being taken under siege by a system that is designed to fail our children, and what we cannot and will not do is stand back and allow it to happen.”

– Antoine Little, former chair of Our City Our Schools Coalition

As the most impoverished large city in the US, Philadelphia faces multiple public health crises: homelessness due to affordable housing scarcity, the opioid epidemic — and the toxic and unsafe environments of Philadelphia’s public schools.  In Philadelphia — as with many of its sister cities — there exists a long and painful history of environmental racism. This toxicity enacts immeasurable violence on Philadelphia’s working class, people of color, and their children.

The poor condition of Philadelphia schools is unconscionable and indefensible. In 2012 and 2013, over 10% of schools in Philadelphia closed due to a severe budget deficit. By 2023, this budget deficit is projected to increase to $700 million. Not only are Philadelphia schools closing due to the city’s insufficient funds, but many schools that remain open harbor environmental safety hazards posing a serious risk to students’ health: In 2018, the Philadelphia Inquirer found that students at Cassidy Elementary School stored their lunches in a classroom closet contaminated with asbestos fibers at a level “50 times higher than the highest result for settled asbestos dust found indoors in apartments near ground zero after the 9/11 terror attacks.” In addition to asbestos concerns, students have been hospitalized for severe lead poisoning from paint chips. On-site medical care at Philadelphia schools is, similarly, lacking: Nurses are available at schools only up to two days per week, resulting in the tragic and wholly avoidable deaths of elementary school students who needed assistance when there was no school nurse on call.  Not only is the deplorable state of the School District of Philadelphia a direct consequence of inadequate funding from the Commonwealth of Pennsylvania, it is also the result of lack of funds from the tax-abated and non-taxed property holders in Philadelphia. 

This is how we come to Penn’s role: Due to its federal status as a nonprofit, Penn is not required to pay property taxes. Penn is not required to pay taxes despite its significant involvement in real estate investments, its $14.7 billion endowment, and its $11.3 billion consolidated operating budget.

A word on nonprofits: While nonprofits are tax-exempt, this exemption is intended to privilege institutions that provide essential services to address needs that the government would not otherwise be able to meet. Examples of such essential services might be: harm reduction, gun violence prevention, counseling, shelters for people who have experienced domestic violence and/or sexual abuse, suicide prevention hotlines, food banks, soup kitchens, reduced cost pre-K and kindergarten, and elder care, among many other programs and needs. While Penn does provide access to education, it does so only as a private Ivy League institution with a sticker price to match: $79,635 per year for undergraduates living on campus, totaling more than $318,000 per student for a four year degree. It seems reasonable to conclude that Penn does not meet any public needs, and yet it profits grossly from its tax-exempt status.

Penn is not alone: Other large landowning nonprofits (including contemporaries in the Ivy League, such as Harvard and Yale) likewise operate under this tax-exempt status. However, other large landowning nonprofits compensate for their wealth by opting into Payments In Lieu of Taxes (PILOTs) agreements. PILOTs are an opportunity for large nonprofit institutions who are not meeting essential needs of the public to pay a portion of what they would pay in property taxes to their resident city.

Shamefully, Penn is the only Ivy League university that does not have a PILOTs agreement*, despite owning at least $3.2 billion in property. This has disastrous consequences on Philadelphia – particularly on the School District, which relies on property tax revenue to fund city schools. Ask teachers, parents, or the students themselves (all of whom have given testimonies on Penn’s campus): Philadelphia schools are severely neglected and their students are suffering. (*Columbia University does not pay PILOTs, but does invest into a community benefits agreement.)

Student protests and testimony calling for Penn to pay its fair share

The University of Pennsylvania is not oblivious to the calls to pay PILOTs, but has avoided addressing the issue directly. Instead, Penn has issued statements that exaggerate its contributions to Philadelphia, and that distract from the real issue at hand: their ability to pay PILOTs and their obvious neglect to do so. Penn gives two justifications: their employment numbers, and student volunteer hours.

Penn boasts that it is the largest employer in the city of Philadelphia, with 33,000 people working under its name. (In fact, this only shows that Penn is Philly’s largest manager, working at all costs to prevent and bust unions — including recent efforts to establish a graduate student union.) Penn claims that payroll taxes adequately compensate the city — a weak justification that equates employees’ contributing dollars to Penn’s lacking contributions.

Penn’s second justification for shirking PILOTs is a feeble argument around SILOTs: Services in Lieu of Taxes. The SILOTs argument states that Penn’s community engagement programs, namely those performed by Civic House and the Netter Center, are a substitute for tax payments. By this logic, the university assigns a $20 / hour value to all volunteer work provided by a student, despite this volunteer work occurring unpaid and without professional training or official oversight. These service hours are performed through Academically Based Community Service (ABCS) courses and university organized volunteering opportunities. Under the pretense of SILOTs, the university claims that the monetary value of these volunteer hours more than compensates what they would have paid in PILOTs. To extend this argument is to then claim that student volunteer hours provide essential services to the city, since actual payments by Penn would go towards meeting such essential needs. But service hours, while commendable, are not comparable to professional work, are not compensated as such, and do not meet essential needs in this city. Furthermore, untrained service does not replace the value of providing up-to-date textbooks in Philly’s public schools and staffing nurses for every school day.

As an addendum to this argument: Penn claims to have contributed to Philadelphia’s public school system via its investment in the Penn Alexander School. The Penn Alexander School — while originally intended to be an investment in the West Philadelphia community — has contributed significantly to the neighborhood’s gentrification. Penn annually contributes $1,330 per student (up to $700,000) in this university-assisted school model, and while this contribution may have been intended to divert university resources into a public school for kids from a once predominately Black and working class neighborhood, it has instead created a gravitational pull for university professors and their families. Penn Alexander is now one of the most high performing K-8 schools in the country, with a privileged student base to match.   Penn’s attempt to invest in the neighborhood most proximate to them backfired, with many of the residents whose children could have attended Penn Alexander pushed out.

While the University of Pennsylvania masquerades as a nonprofit, it operates unapologetically as a corporation. Penn will do everything in its power, for as long as it is possible, to avoid paying PILOTs.   As students, please remember: If Penn were not here, the 1,085 acres it occupies would have been taxed. This extractive relationship cannot continue, and it is up to students to join the movement to change this. 

To Join the Movement: Read more about the current campaign for PILOTs with Philadelphia Jobs With Justice, and email aiden@philly.jwj.org for more information.

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