THE COLLEGE HILL INDEPENDENT


What Brown Could Pay

Brown’s property tax exemption and the crisis of public school funding

by Hal Triedman & Sara Van Horn

Illustration by Pia Mileaf-Patel, Hal Triedman, Sara Van Horn & Ben Bienstock

published November 22, 2019


 

“How is it that a city—a small city—can continue to have public schools that fail repeatedly?” In an interview with the College Hill Independent, Marco McWilliams was insistent. A former organizer for Direct Action for Rights and Equality, graduate student at Brown University, and program coordinator at Brown’s Swearer Center, he noted that, “someone benefits from that. This is not an accident.”

Scattered across the Jewelry District, College Hill, and Downtown, the plethora of property owned by Brown University is valued at $1.1 billion. Despite an endowment of $3.8 billion, the University does not pay federal, state, or local taxes on the vast majority of its real-estate holdings. Meanwhile, the Providence Public School District is in the midst of a financial crisis, as revealed by a devastating report released by researchers at Johns Hopkins University this past June. Following the report, university president Christina Paxson avowed the University’s ongoing commitment to Providence public schools, asserting that the University would “develop plans to support local schools in Providence.”

If Brown University paid taxes on all of its 193 properties, the city of Providence would receive over $38 million annually, Inside Higher Ed reported in 2012. Instead, Brown makes $6.7 million worth of voluntary payments to the city each year. The amount of these Payments In Lieu of Taxes (PILOT) has fluctuated historically, depending on the severity of the city’s financial situation and the willingness of various mayors to put political pressure on the University.

The question of property taxes is often framed by university administrators as a foregone legal conclusion. Because private universities are classified as nonprofit organizations, they have historically found themselves exempt from paying taxes on their property. Although this tax-exemption is longstanding, there is growing concern over the legal underpinnings of private university wealth, reflected in the New Haven community campaign to “Tax Yale”; the 2016 lawsuit filed against Princeton by Princeton residents contesting its tax-exemption (settled out of court for $18 million; and the city legislation, proposed in Providence in 2017, to tax Brown’s non-mission essential properties. One model for this legislation like this is a 1977 New Hampshire Supreme Court ruling that required Dartmouth College to pay taxes on its dormitories, dining halls, and kitchens.

The most important questions in the debate over taxation, however, are not legal ones. Instead, they are more fundamental questions about not only the ways in which university goals are prioritized over the needs of students, but also the history of elite institutions in relation to the cities in which they are located. “What are our responsibilities to those local communities as an institution?” asked Mathew Johnson, executive director of Brown’s Swearer Center, in an interview with the Independent. And what should working-class cities with mostly residents of color like Providence demand of rich, mostly white institutions like Brown? Implicit in McWilliams’ original question is the fact that current educational inequities are tied to Brown’s historic relationship to the city of Providence.

In letter to parents and faculty this past August, President Paxson cited Brown’s historical ties to the transatlantic slave trade, including the Brown family’s direct involvement, as grounding for Brown’s responsibility to the city’s public schools, writing that “Brown has a longstanding commitment to K-12 education, as noted in the 2007 Report of the Steering Committee on Slavery and Justice.” This report, commissioned to investigate the University’s historical relationship to the transatlantic slave trade and provide recommendations on how best to address this legacy, is unequivocal about the centrality of education to the project of reparations. “If a single theme runs through this report,” the document reads, “it is education. This focus reflects not only Brown’s nature as an educational institution but also the nature of slavery.” The report describes both how, in many states, it was once a criminal offense to teach free and enslaved Black people to read and how many Americans during the age of abolition “recognized education as essential to repairing the legacy of slavery and equipping the formerly enslaved for the full enjoyment of their rights as free people.”

Because of the central importance of education within the history of American slavery—a history to which Brown is intimately tied—the Report explicitly recommends that Brown “use the resources of the University to help ensure a quality education for the children of Rhode Island.” Yet as both the University’s extraordinary wealth, which is due in large part to its tax-exempt status, and the harsh reality of the Providence Public School District make damningly clear, Brown has fundamentally failed to honor this recommendation. “You got the slave monument on campus,” McWilliams emphasized to the Independent. “I believe I can make the moral argument—the ethical argument—that Brown has a responsibility to be doing something given its history.”

 

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As students, parents, and activists have known for decades, Providence is a city in the midst of an ongoing educational crisis. This past summer, however, its public school district garnered long-deserved and widespread media attention after the release of the devastating report on school quality in Providence. According to “We’re Not Gonna Take It,” published earlier this year by the Independent, the report documents the alarming state of school facilities, widespread teacher absenteeism, physical violence, and a culture of low expectations. Within a district that is 87 percent economically disadvantaged, 64.6 percent Hispanic, 16.6 percent Black, and nine percent white, these alarming descriptions provide context  an extremely segregated educational environment where, across grade levels and especially among students of color, only 14 percent of students are proficient in English Language Arts and only 10 percent are proficient in math.

Although underemphasized by the report—which was funded the Partnership for Rhode Island, a nonprofit made up of the CEOs of major Rhode Island employers like Brown University—the centrality of the city’s finances to the challenges of its public schools cannot be overstated. Buried in the report, in a section entitled “Academic Outcomes,” financial constraints are listed as one of many factors hindering student success: “Almost everyone [on the school board] said that money is a problem, or even that it is the number one problem.”

According to Tom Sgouros, tax policy expert and former advisor to the Rhode Island general treasurer, Providence is being financially squeezed by both the state legislature and the city’s small property tax base. In the context of this fiscal strain, Brown’s presence is often justified as an important economic driver. In an interview with the Independent, however, Sgouros noted that while Brown generates income and sales that are both subject to state taxes, this money does not go to Providence. “Brown is generating a tremendous amount of economic activity,” Sgouros emphasized, “but the city doesn’t actually benefit from it. The city could benefit from it if the state would share, but the state mostly treats Providence as a wayward child, not as a partner.”

In an interview with the Independent, former Mayor of Providence Angel Taveras highlighted the ostensibly non-financial aspects of the educational crisis. “I think we need to change the culture of education,” he argued. “I think we need to change the expectations we have for our kids. There may be some money associated with that, but I don’t think it’s simply a money problem.” As even a quick perusal of the Johns Hopkins report reveals, there are fundamental structural problems—failing welfare programs, a lack of language and racial representation of students among their teachers, and profound segregation—that impact the ability of local schools to educate their students. For Brown University, however, the question at hand is the underemphasized financial impact of accumulated wealth on the functioning of public schools. “Money is a factor,” Boston Globe reporter Dan McGowan emphasized to the Independent. “There’s no question about that.” Sgouros similarly cautioned against overlooking the importance of financial relationships. “The fundamental issues, in my opinion, almost always come down to the dollars and cents,” Sgouros told the Independent. “You know the rule: when people say, ‘It’s not about the money,’ it’s about the money.”

 

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Despite their tax-exempt status, nonprofits constitute an important source of city funding through their voluntary PILOT payments. These transactions, according to McGowan, are all “negotiated, optional payments” and the result of hard-fought political battles between university presidents and the various mayors of Providence. “There’s always this game of tug-of-war,” McGowan told the Independent, “between the city and all the nonprofits, but Brown in particular.”

This financial tug-of-war is currently dictated by two legal documents: a 2003 Memorandum of Understanding (MOU) and a 2012 Memorandum of Agreement (MOA), signed during moments of fiscal crisis, which establish a minimum floor of University contributions of about $3.5 million per year.

Following the Great Recession, Providence was on the brink of financial catastrophe. Yet Mayor Angel Taveras successfully struck a deal with Brown, increasing yearly voluntary payments until 2023 in return for giving the University ownership over several city streets and 250 parking spots, which the University charges its faculty and staff to use. In spite of their difficulties negotiating, the relationship between Brown and Providence, according to Taveras, is “codependent. We need Brown and Brown needs us.” Yet this analysis is not necessarily reflective of the ongoing conflict between city government and the Brown administration. As McGowan succinctly summarizes, “Every person that has ever run for mayor has fought with Brown.”

In part, the University is reluctant to pay more because of the lingering perception of corruption in city government. “There’s a hesitation to write a blank check to the city of Providence,” McGowan explained to the Independent. “What nonprofit leaders, Brown included, think of Providence government is that it’s some combination of corrupt and inept.” Yet the frequent citation of corruption seems to impede both the state government and nonprofits from contributing to meaningful conversations about their financial responsibilities to the city. Additionally, according to Sgouros, the gesture by majority-white institutions toward corruption as a primary rationalization for denying funding to a city with predominantly residents of color is grounded in racist funding priorities: “There’s this idea in the legislature that city councils are drunken sailors, and that we can’t trust them with anything. The issues of race are rarely far behind.”

 

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In lieu of property taxes, Providence receives both voluntary payments and a variety of services from Brown University. According to a 2015 independent review of nonprofit payments to the city of Providence by the Rhode Island Internal Auditor, Brown owns 193 properties in the city of Providence. Of these properties, 158 are classified as tax-exempt.

Included in the tax-exempt properties—usually specified, in the case of universities, as buildings used for educational purposes—is the $2.24 million residence of the University president, currently occupied by Christina Paxson. If taxed like a normal residence, this property alone would generate over $40,000 per year for the city. According to the National Education Association, the median starting salary of a teacher in Rhode Island for the 2017-18 school year was $41,689.

Albert Dahlberg, assistant vice president for government and community relations at Brown, told the Independent that the University paid $6.7 million in voluntary payments to the city in the fiscal year (FY) 2017. This $6.7 million payment in FY 2017 can be broken down into four separate revenue columns: commercial property taxes, properties bought by Brown transitioning off of normal property taxes, payments specified by the 2003 MOU and the 2012 MOA, and other payments. “There are a variety of reasons we make those payments,” Dahlberg said, “But it’s mostly to be a good neighbor.”

As Kinverly Dicupe, a former community organizer for Fuerza Laboral, explained to the Independent, however well-intentioned those payments may be, “none of that money is actually felt by the people who live in Providence” because these contributions are relatively small compared to the city budget.

The University also contributes to the public school district more directly. According to Paxson, “In recent years, Brown has spent more than $800,000 annually on direct support to Providence school children in the form of after-school programs, summer education experiences on campus, college scholarships, and more.” For example, the Swearer Center connects Brown students with local schools to provide various kinds of programming, including Rhode Island Urban Debate League and Brown Elementary Afterschool Mentoring (BEAM) at the William D’Abate Elementary School, which has vastly overperformed similar schools in the district.

While Brown dedicates significant financial and human resources to the city of Providence, its priorities are reflected in its fundraising successes—and failures. In 2017, Brown embarked on a three billion dollar capital fundraising campaign BrownTogether. Brown has since raised over two billion dollars in under two years, generating funds for new facilities, renovations, and dozens of endowed professorships. In 2007, Brown promised to raise 10 million dollars for Providence public schools following recommendations in the Slavery and Justice Report. Yet, as the Boston Globe reports, the “Fund for the Education of the Children of Providence” raised just one-fifth of its professed 10 million dollar goal. In McGowan’s eyes, “the value of the PR far outweighed the money that was actually raised. That’s a shame.”

Brown frequently gestures to these services as evidence of its committed, reciprocal relationship to the city. “Brown, and all the other nonprofits, have talented lobbyists and a legitimate case to make about what would Providence be without Brown University,” McGowan told the Independent. “It would be a lot less without Brown. That’s always the Brown argument. We do a lot. We are helping in the schools.” As evidenced by the multiplicity of tutoring programs and grants, there is no doubt that Brown does provide services to the city. The question, according to McGowan, becomes: “Is it enough?”

 

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“If you look at the history of our relationship with the city, it goes all the way back to our founding,” Dahlberg told the Independent. “There have always been issues between Providence and Brown University.” As the Report of the Brown University Steering Committee on Slavery and Justice makes evidently clear, Brown owes its wealth to American slavery: “There is no question that many of the assets that underwrote the University’s creation and growth derived, directly and indirectly, from slavery and the slave trade.” This history continues to shape its relationships, especially since in the nineteenth century Providence served a northern hub of the Atlantic slave trade. As McWilliams notes, “We live with these legacies today. Brown can’t escape its own history.”

For McWilliams, this history, as well as the racial-economic structures it created, is reflected in the way in which the failures of the Providence Public School District leave Black students behind. “Black labor has always been positioned to fit in a particular place in the capitalist marketplace: as a low-wage, perpetually exploitable group,” McWilliams emphasized, attributing the failing public education system to the assumption that “students that come out of the schools aren’t expected to compete in the marketplace. They’re not expected to come to Brown.”

The culture of low expectations for students rings true for Dicupe as well. “Most of the people who go to Brown come out of state, so it’s not an experience that people from Rhode Island really have,” Dicupe told the Independent. “We’re asked to be proud about Brown when most of us are never going to get to Brown. We can’t afford it, and it’s not really a possibility for many of us.”

Brown’s inaccessibility illustrates how relationships between the University and Providence perpetuating racial inequity cannot be reduced to Brown lining its pockets. “If Brown invests a ton of money in the [Providence Public School District] and if, when those students graduate, they still can’t apply to go to school here, I’m gonna be curious about that,” McWilliams said. “Because when we say elite institution, we don’t just mean money.” To illustrate his point, McWilliams gestured in a sweeping arc around the conference room in the Swearer Center. “This room is intended to do something,” he asserted, glancing at the ornately gilded mirror on the wall behind him; at the glittering chandelier above his head; at the large mahogany table at which he sat. “It’s intended to convey power.”

For some, this elitism prevents the University from meaningfully addressing the city’s challenges. “You would think that a center for education would be actively pushing and working super hard to end poverty,” Dicupe told the Independent. “But that’s not what we see from universities like Brown. These institutions have forgotten what they’re there for. You’re not there to make money, you’re there to educate. And you’re supposed to be the best of the best.”

Because Brown is first and foremost an educational institution, many see education—and the Providence Public School District specifically—as the most appropriate sphere within which Brown can make reparative change. The Slavery and Justice Report, for example, believes the University’s response “should reflect Brown’s specific nature as an educational institution.” Because Brown is best at learning and teaching, the report reads, education is the area “in which Brown can most appropriately and effectively make amends.” McWilliams agrees: “Brown is a university. They issue college degrees. That’s what they do. They don’t build bridges and skyscrapers. They aren’t in landscaping. They do education.”

The demand that Brown pay property taxes presents a similar financial challenge to the demands from student organizers that Brown divest from companies perpetrating human rights abuses in Palestine and that Brown refuse monetary gifts acquired through profit from the sale of so-called “non-lethal” crowd control weapons. Honoring each demand would require the University to reevaluate its current priorities; it would require decentering endowment growth as the University’s governing ideology and prioritizing the wellbeing of students—down the hill and across the world—as well as the importance of fulfilling the University’s promises in light of its foundational connection to American slavery.

Because of how private donors sustain elite universities, however, interrupting the movement of capital into these institutions—as well as questioning its accumulation—might very well mean changing what private universities look like and seek to do. For Johnson, one of the fundamental questions is whether the issue of property taxes can “be solved in the context of a system that places cities and universities in their financial reality.” Instead, he argued, “the question is really about a system that essentially ends up pitting the city and the University against each other in an artificially scarce resource environment.” Within the context of growing national demand for government funded, tuition-free, public higher education, it may also be time to question the necessity for private higher education. As McWilliams argues, “We gotta make a space where everybody can come at the table to eat.” Perhaps, he argues, we have to build a bigger table. Or perhaps we have to get rid of the table and have everyone sit on the floor. Either way, the moral imperative is clear. “Everybody gotta eat. If we believe in the Constitution, in these rights, in this democracy, everybody gotta eat. And if we can’t, I gotta call this thing a sham.”

SARA VAN HORN B’21, HAL TRIEDMAN B’20.5, and $1.4 BILLION OF BROWN UNIVERSITY’S ENDOWMENT FY’19 are currently enjoying the sunand sand of the Cayman Islands.