Massachusetts Rep. Ann Gobi's, D-Spencer, proposed House Bill H2759 would eliminate outright the tax exemption currently granted to private colleges that recognizes the tremendous public good and education these private colleges provide to our citizens.
Other nonprofits would remain exempt, including public colleges, churches, hospitals, cultural institutions and large social service agencies. In addition, this bill would impact only 35 communities where independent colleges reside, or 10 percent of Massachusetts' 351 cities and towns.
Where is the justice, or constitutionality for that matter, in a public policy that heaps the burden of many onto the independent few? Or is this an opening salvo -- other nonprofits beware?!
The rationale for this is that communities provide services to colleges without them contributing taxes to support the cost. Nothing could be further from the truth.
Independent colleges benefit local communities. The Association of Independent Colleges and Universities in Massachusetts (AICUM) has carefully tracked and quantified the community benefits of its 60 members. I offer these AICUM facts, so that taxpayers know the truth:
* Massachusetts is the only state in the nation that annually educates more students in private colleges than in public colleges, overseeing 250,000 students.
* Massachusetts' private colleges save taxpayers in the commonwealth
* In 2008, AICUM institutions awarded close to 64,000 degrees, resulting in higher-paid workers and higher-paying taxpayers.
Perceptions surrounding private colleges can be misleading. One fallacy is that only "rich" students attend private colleges. Not so. AICUM members are digging deep to find the financial resources necessary to remain an affordable option for students from all backgrounds. Last year, 84 percent of the minority students who graduated from Massachusetts' four-year colleges attended a private institution. In the 2007-2008 academic year, Nichols students were awarded from all sources financial aid which totaled $24.7 million.
Each private college has its own unique story to tell, but let me describe how Nichols College, a business college located in Dudley, Mass., contributes to its surrounding region.
Nichols had a 2007-2008 academic year enrollment of 1,873 students. In a 2007 analysis completed by our economics department, Nichols' annual direct economic impact was approximately $91.8 million, based on factors including budget, capital improvements and student spending and fees. And Nichols is a small institution!
The college is committed to helping the region achieve long-term, sustainable economic growth -- by creating jobs, using local vendors and buying goods and services from the surrounding towns. Nichols employs 140 full-time and 160 part-time people. Nearly 80 percent of our full-time employees live nearby, own homes and pay property and excise taxes to local towns.
Economists teach that circulating money has a multiplier effect on the economy in the area where it is spent. Nichols College employees spend 92 percent of their income in the local economy. In general, money introduced into a given area circulates 2.5 to 4.5 times before leaving the area.
A property tax, however, would reverse the multiplier effect. This additional expense would have to be made up somehow -- either by increasing tuition or cutting financial aid, decreasing our ability to attract students to our campus or, by reducing expenditures and impacting local businesses.
Therefore, Nichols College and its students are essential economic contributors to our region and not a net drain by any means. Focusing on property tax alone obscures fundamental economic issues. Most municipal budgets get approximately 40 percent of their operating revenues from property taxes, with the rest coming from state aid from income and sales taxes. The Massachusetts private colleges employ 93,000 taxpayers, with salary and benefits of more than $7 billion, generating nearly $250 million in state income taxes, which in turn, is used to fund local aid.
Although private institutions and their stakeholders generate employment, sales taxes and important services, our elected representatives don't see the forest for the trees. If independent colleges are taxed, Massachusetts would stunt new economic growth before it has a chance to bloom.
Debra Townsley is president of Nichols College and chairwoman of the Executive Committee of the Association of Independent Colleges and Universities of Massachusetts.
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