As Negotiations Progress, Conn Must Recognize Its Debt to New London

With Governor Dannel P. Malloy’s state budget signed into law, Connecticut municipalities’ uncertainty about state funding has at last come to a close. According to The Connecticut Mirror via The Day, Malloy ended Connecticut’s 123 days without a budget on Oct. 31, when he approved what Mirror reporters Keith M. Phaneuf and Mark Pazniokas describe as “a $41.3 billion biennial plan that closes major projected deficits while boosting taxes close to $500 million per year; cutting municipal aid, higher education and social services; and sweeping tens of millions of dollars annually from energy conservation programs.”

While the mention of reduced funding for higher education likely raises alarms for Voice readers, this is not the issue that most closely affects the College, which is a private institution. Changes to higher education funding will surely be felt at the University of Connecticut, Central Connecticut State University, and other public institutions, but cuts to municipal aid will hit closer to home at Conn, as these changes will impact our host city, New London.

According to New London Mayor and Conn alumnus Michael Passero ’79, the State of Connecticut had been providing the City with stipended funding to make up for the tax revenue the City sacrifices for its tax-exempt properties, the largest of which is the College. Every year, New London gives up $5.8 million in tax revenue that it could otherwise generate from the College’s $213.9 million property. The state has been reducing compensatory funding year-by-year, as Passero told me in an early October interview, commenting: “This year, the money has stopped coming. It’s possible we won’t get any at all.” According to Malloy’s recently-released budget, the state anticipates spending a total of $59,122,160 per year in 2018 and 2019 on municipal aid for private tax-exempt properties, though the budget does not break down how much of this sum will go to each municipality. Though $59 million seems like a big number, this total allocation is drastically reduced from previous years, as the State allocated this category nearly $115 million in 2017 and $123 million in 2016.

As I reported in the Oct. 6 edition of The College Voice, the College recently concluded a ten-year PILOT (payment in lieu of taxes) agreement with the City, during which Conn paid a total of $100,000, or $10,000 a year on average, to New London. The payments were officially considered “voluntary,” though I found that they were actually motivated by the threat of a lawsuit over misuse of property. Now that the settlement plan has concluded, the College and the City have reopened the compensation conversation. An administrative assistant to Passero said that the Mayor met with College President Katherine Bergeron and Vice President for Finance and Administration Rich Madonna last Tuesday, the same day Malloy approved the new state budget. Over email, Bergeron told me that she is not yet ready to report updates from the conversation, as it is still ongoing.

While Bergeron may not be ready to discuss status updates, it’s worth considering how institutions similar to Conn compensate their host cities before Conn’s decision is final. David Collins ’79, a Conn alumnus and columnist for The Day, routinely writes about the College’s relationship to the City; he noted in an April 2017 column that Yale University pays $8.2 million annually to New Haven, and Brown University pays $8 million annually to Providence. These institutions also pay a respective $4.5 million and $2.3 million more in taxes and fees.

Ten thousand a year obviously pales in comparison to multi-millions, but as Collins rightfully notes, Yale and Brown reside in a league of universities whose endowments could consume Conn’s a hundred times over. “An English major, I never took a math course while at Connecticut College,” Collins writes, “but I know that a proportionate share of its own endowment, compared to Brown’s, would mean Connecticut College should be contributing hundreds of thousands of dollars to New London.” I concur with his claim—and his course of study—and from the basis established by a fellow Conn English major’s statistical analysis, I’d like to refer to the models set by less extreme examples than Brown, Yale, and even other NESCACs.

At Conn, we like to compare ourselves to other NESCAC institutions for their prestige, but NESCAC is an athletic conference, and many of our sporting peers are significantly older institutions. As a result, they often benefit from  larger endowments. At an Oct. 25 forum labeled “Where is your money going?” Madonna said that after a 12.8% return on endowment last year, Conn’s endowment is just shy of $300 million. At $3 billion, Brown’s is obviously bigger, and Yale’s—$27.2 billion—is, frankly, obscene. But some of our NESCAC “peers” aren’t far from this Ivy League camp, as Williams College reported an endowment of 2.3 billion; Amherst follows with $2 billion; and Middlebury has $1 billion. We may play the same soccer teams, but we can’t pay the same bills.

For a less prestigious but more comparable point of reference, consider Clark University’s payments to the City of Worcester. Clark was founded in 1889, just 22 years before Conn, and now has an endowment of $372 million dollars, $150,000 of which they contribute to Worcester as part of PILOT agreement every year. Clark pays another $112,176 annually in taxes on its newer property, the Worcester Business Journal reports. And though much larger than New London, Worcester—the “second largest city in New England,” as it often boasts—faces familiar plights: a formerly-booming mill town, Worcester has since hit hard times and struggled for years with poverty, housing insecurity, and the opiate epidemic. Like New London, it’s a city that relies on the economic support of its major businesses, many of which are colleges.

Worcester’s relationships with the various colleges it hosts are, understandably, different. While Clark pays over $270,000 annually, Holy Cross College, founded in 1843 and now with an endowment of $681 million, does not have a PILOT agreement with the City. In a 2015 article for the Worcester Telegram & Gazette, Nick Kotsopolous scrutinizes tax-exempt property but recognizes the contribution that voluntary payments provide, writing: “Unlike Holy Cross, other colleges have a PILOT agreement with the city, such as MCPHS University ($1.5 million over 25 years), Worcester Polytechnic Institute ($9 million over 25 years) and Clark University ($6.7 million over 20 years).”

Of course, PILOT payments are not the only manner through which colleges and universities can support their host cities. As Collins notes in his April 2017 column, Wesleyan University recently established a bookstore in downtown Middletown, presumably stimulating the local economy. At “Where is your money going?” Madonna hinted at similar plans by noting that the College intends to fund the construction of a raised sidewalk stretching from Williams St. to Hodges Square. It’s a $150,000 project, and while the State of Connecticut agreed to contribute $75,000, New London could not match with the other half, so Conn is stepping in.

While this sounds like a nice and worthwhile gesture, it’s important to recognize that isolated project funding like a one-time $75,000 payment is not, in fact, the same as prolonged support guaranteed by a payment plan. And, though theoretically continual, business investments aren’t either: while Wesleyan’s bookstore might provide economic stimulation, the effect relies on the success of the business, so the promised economic support is less reliable than regularly scheduled, legally agreed-upon payments. Holy Cross takes a similarly alternative approach to economic support, as Kotsopolous notes: “It just so happens that Holy Cross does not have a PILOT agreement with the city, though it contributes $80,000 annually for five years to cover operating costs for the Worcester Public Library’s bookmobile.” This totals just $400,000 for Worcester from a college whose endowment more than doubles Conn’s and nearly doubles Clark’s.

Not only does Holy Cross contribute less to the City of Worcester than its local peers, but its geography also seems symbolic. While Clark, WPI (Worcester Polytechnic Institute), and MCPHS (Massachusetts College of Pharmacy) are integrated with the City’s urban landscape, Holy Cross sits on a hill above the rest, isolated both from Worcester’s gritty realities and its thriving diversity. Sound familiar?

While Conn’s negotiations with New London unfold, the Voice will continue to cover the College’s plans and responsibilities. We don’t necessarily have to make massive monetary contributions to make a difference, but as we consider our methods, we should keep in mind what kind of institution we want to be: a team player like Clark, or a distant hilltop presence like Holy Cross.

1 Comment

  1. Repeal of the tax exempt status will likely kill the college. As the slash and abandon ethos of the current presidential administration and congress maneuvers to the more local levels, the city will likely be starved for funds. The first place municipal taxing authorities go to raise funds is to real estate. If you don’t pay the taxes, they just take your land. Moreover, the college hosts the Williams school which is a well regarded local school serving the youth of new London. More importantly, however, the actual survival of the college is far from guaranteed. With the more than obvious business reasons why paying $65,000 a year to LEAVE a well positioned urban lifestyle (convenient for networking) is likely to generate a low ROI, the only colleges that are going to survive are the ones that have the best resources, and the best geographical location to form synergistic relationships with the population centers surrounding them. This is, in a word, the antithesis of what Conn is about. There is a place for the liberal arts and there always will be. However, the present size of the endowment, the underlying economics of demand for college degrees, the tuition size, and the factor-that-must-not-be-named (forecasted ROI at point of sale) I say quite simply, that revoking a tax exempt status on an estate as big as conn college’s, would kill the college in relatively short order. And if you’re in the middle of pursuing a degree when that happens I’m not even sure that there’s a historical precedent for what is to be done in that situation to make restitution for your tuition or to ensure your transfer to a comparable university. You all should make certain you know when this vote is happening and that it doesn’t go through.

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