Despite its massive footprint in West Philadelphia, Drexel University does not pay any property taxes on the land it occupies. Despite the fact that the university is technically a non-profit, its revenue grows every year. Other universities in Philadelphia, including the University of Pennsylvania and Jefferson University, are situated similarly. These massive institutions have hundreds of millions, or even billion-dollar yearly budgets and command considerable institutional and systemic power.
At the same time, conditions in Philadelphia’s public schools continue to deteriorate, with dangers like lead piping and asbestos threatening the well-being and education outcomes of students, faculty and school staff. Public schools are dependent on tax revenue for their operations, and, as it stands, those in Philadelphia lack the resources to provide a safe learning environment. The Drexel community, including current students, alumni, and community members, have come together to demand that Drexel University contribute its fair share to the community upon which it sits.
Comparing the cost per student to the neighboring school district of Lower Merion highlights the grotesquely disparate education resources school-aged children in Philly receive. Though the children attending Philly public schools are at most a mere seven miles from Lower Merion, the funding Philadelphia receives annually per child is $14,406, compared to that which is invested in a school-aged pupil in Lower Merion: $28,495. 86 percent of the students in Philadelphia are students of color, whereas only 21.2 percent of Lower Merion students are students of color.
These disparities arise in a number of unfortunate ways. Most critically, schools sacrifice important faculty and staffing needs. As noted by Philly Inquirer in 2017, Philadelphia schools saw shortages in school nurses, aides and support staff who typically fill important staffing needs. This comes on the heels of funding deficits that contributed to 37 school closures.
Public schools are dependent on property taxes for funding. And even though Drexel continues to expand its campus, it is not paying taxes commensurate to its growth, resulting in poorly funded public schools.
That’s why we’re urging Drexel to participate in paying Payments in Lieu of Taxes, or PILOTs, which is a common practice in addressing local funding issues across the country. PILOTs are voluntary payments that tax-exempt non-profit organizations can make to their cities or local governments. Over 10 percent of the city’s property is owned by non–profits, including universities like Drexel, Penn, and Jefferson, making Philadelphia the city with the largest percentage of tax-exempt land in the country.
Though these universities own large sums of land in the city, they do not pay taxes, forcing the city to make up for the lost revenue, often at the expense of public goods like education. In 2017 alone, Philadelphia lost $285 million in foregone property taxes from mega non-profits.
While civil unrest has launched institutions like Drexel into public scrutiny for not paying PILOTs, the debate is not new. In 1994, then-Philadelphia Mayor Ed Rendell officially established a PILOTs program, passing an executive order compelling Philly mega non-profits to begin paying 40 percent of what they would pay in property taxes as PILOTs if they owed more than $15 million in real estate value.
PILOTs have been done before, and they can be done again! As a higher education institution, Drexel should be interested in the education outcomes of the university’s neighbors. Despite its prominent profile in the city it calls home, Drexel’s tax status as a “non-profit” has enabled the university to profit, expand and disrupt neighboring communities in the West Philadelphia area. Worst of all, this practice has inadvertently harmed Philadelphia’s youth community by diverting significant property tax revenue that would otherwise go towards crucial services like cleaning our schools and kept those dollars in the hands of mega non-profits like Drexel, Jefferson and Penn.
One could argue that this is a taxation problem, an earnings problem or a mismanagement of government spending across Philadelphia. But at its core, PILOTs is an education equity intervention. It enables institutions like Drexel University to pay their share of property taxes that rightfully make their way to the city’s property tax revenue, and therefore fund vital services across the city.
Drexel’s history in West Philadelphia makes it clear that the university benefits greatly while the most vulnerable communities contend with inadequate and outright unsafe public schools. PILOTs is a way for Drexel University to contribute its fair share to the community. By making payments to the Education Equity Fund, Drexel can take the lead in ensuring equality in education for the next generation of Philadelphia students. Drexel has made prudent investments to build and expand its growing portfolio in West Philadelphia. The time has come to make the best investment of all — an investment in the future.