In early June, St. Paul high school teacher, Erik Brandt, dropped a bit of a bombshell in the midst of the narrative about cash-strapped schools.
In an open letter to the St. Paul Regional Labor Federation’s newspaper, the Union Advocate, Brandt painted an anguishing portrait of a colleague, “Amy,” who would soon lose her job to budget cuts after twenty-two years of working with marginalized students. But Brandt took on an unexpected target as partly to blame: one of St. Paul’s most prestigious private institutions, Macalester College.
Brandt’s letter (addressed to Macalester and “its peers”) points out that the school pays no property taxes to the city of St. Paul. “You benefit from all of the resources afforded by property taxes,” Brandt wrote, “but pay none of them while your school sits on one of the most valuable un-taxed pieces of land in the city.”
Macalester avoids these taxes because it enjoys non-profit status, exempting it from paying for the land it occupies. This is true for many institutions in St. Paul and other cities across the United States, according to economic journalist Knight Kiplinger. Many other prestigious, wealthy colleges and universities also do not pay property taxes. Yale University is thought to sit on tax-exempt property worth upwards of $2.5 billion, for example, while a 2016 Washington Post piece listed over fifty additional “gold-plated ivory towers,” including schools such as Duke, Harvard and New York University, that do not pay taxes on their pricey properties because of their non-profit status.
Macalester avoids paying taxes as a non-profit school. This is true for many institutions in St. Paul and other cities across the United States,
Macalester has been around since the 19th century, when it began equipping students with the “inspiration, insight and experience to become successful and ethical leaders.” That inspiration and insight comes with a significant price tag: the school’s annual fee, including room, board and other costs, is just north of $60,000 per year.
For Brandt, targeting Macalester was more than appropriate. His co-worker, Amy, whose job was threatened thanks to the $23 million budget shortfall facing the St. Paul Public Schools, has worked at Harding High School for over two decades guiding students through the college application process. Many of her charges live in poverty, or are refugees for whom English is a second language. Still, Harding sends one or two students to Macalester every year, according to Brandt.
And, Brandt himself graduated from Macalester. In his open letter to the school, he says he knows that the “good people of Macalester believe in making the world a better place.” Brandt in his letter reminded Macalester of its reputation for progressive activism, or at least, “this is the image (they) sell to the public.” (The school even advertises a class called “Global Generosity” on the front page of its website.)
The St. Paul Federation of Teachers, Brandt’s union, has estimated Macalester’s property to be worth nearly $200 million. If the school paid property tax, that would bring in over $1 million a year—enough to retain support staff like Amy, or to foot the bill for an additional cohort of teachers. And Macalester has an endowment worth over $700 million, surely enough to pitch in to support the district. After all, Macalester’s well-regarded teacher education program relies on the training that many of its students receive working as student teachers in the public schools. This makes the college’s lack of tax-based investment in district infrastructure sting even more.
Macalester’s well-regarded teacher education program relies on student teacher training in the public schools, making the college’s lack of tax-based investment in district infrastructure sting even more.
Brandt’s open letter to Macalester does offer one potential solution to the nonprofit tax issue. Instead of paying property taxes, the school could participate in a PILOT or payment in lieu of taxes program. PILOT funds are voluntary payments made by nonprofits, such as colleges and hospitals, into city coffers to make up for the loss of tax-based income. Cities like Boston and Philadelphia have experimented with using PILOT programs to make up for lost revenue—especially for under-resourced public schools.
Whether or not any PILOT funds will be collected in St. Paul remains to be seen, as one local group, the Citizens League, has pressured the city’s government to examine such programs as a possible revenue stream. Brandt says that Macalester has not directly responded to his open letter (he first tried to get it published in the college’s alumni magazine; the school declined), but that it garnered attention from people in the community who had no idea such a wealthy St. Paul institution pays zero property taxes.
On the positive side, Brandt says that after public pressure, his colleague Amy’s job at Harding High School has been restored. Now she can continue to advise students on their future college plans. “She’s a real treasure,” Brandt said, “But, I’m not thrilled that her job remains precarious.” Until the St. Paul Public Schools gets a more reliable, robust stream of funding—perhaps from future PILOT payments—budget cuts will most likely continue to threaten the security of district teachers, staff and students.