This is the article from Chronicle of Higher Education
http://chronicle.com/article/Debate-...&utm_medium=en
Towns, Gowns, and Taxes
Higher education helped save Pittsburgh, so why are the two sides still fighting?
In Pittsburgh, about a third of all property value is nontaxable. The campuses of Carnegie Mellon U. and the U. of Pittsburgh dominate the Oakland neighborhood.
When Pittsburgh played host to a summit of the world's 20 largest economies last fall, local politicians proclaimed it "Transformation City," trumpeting its evolution from sooty steel town to booming high-tech hub.
Unemployment in the region, they noted, was tracking lower than the U.S. jobless rate, while property values continued to climb, bucking national trends. More than 100 multinational corporations—in robotics, life sciences, and financial services, among other sectors—have headquarters or a major business unit in Pittsburgh, they boasted.
And the reason for the region's economic vitality? The strength of its powerful education and medical sectors, local leaders said.
"When you ask why President Obama chose Pittsburgh" for the international meeting, says Jared L. Cohon, president of Carnegie Mellon University, "we're why Pittsburgh."
Just two months later, though, the city's colleges were no longer being heralded. Instead, they were getting hammered, in the press and by public officials, after balking at a bombshell proposal by the mayor, Luke Ravenstahl, to impose a 1-percent "Fair Share Tax" on the tuition paid by Pittsburgh's 100,000 college students. It would have been the first such tax in the country.
"We were the fair-haired children in September," says Mary E. Hines, president of Carlow University and chairwoman of the Pittsburgh Council on Higher Education, an association of the region's 10 nonprofit colleges. "Then all of a sudden, we're not doing our fair share?"
Mr. Ravenstahl, however, said the levy, which was projected to net $16-million a year, was needed to offset gaping deficits in pension plans for retired municipal workers. And it is higher education's very financial vigor that appears to have put its students in the cross hairs. College payrolls have swelled, their physical footprint has expanded, and, until the recent downturn, they enjoyed healthy investment returns, the mayor argued. They could afford to contribute to the city's bottom line.
The tuition-tax showdown drew national attention, in part because of the novelty of Mr. Ravenstahl's proposal, which was tabled in late December amid protests by students and parents. But it also highlighted the sometimes uneasy relationship between town and gown, particularly in places that have morphed from industrial centers to college towns.
Although there is broad acknowledgment of higher education's role in Pittsburgh's rebirth, Mr. Ravenstahl and other civic leaders complain that the city has not gotten substantial additional revenue from its new identity as an intellectual center, because most of the institutions are tax-exempt. Nor has that identity been fully embraced by residents.
"The general public is still in the mind-set of the eight-hour-shift job," says G. Reynolds Clark, vice chancellor for community initiatives at the University of Pittsburgh.
And colleges themselves do not seem wholly comfortable in their new role. Viewing a university as just another large employer loses sight of its educational and research mission, says Mr. Cohon, of Carnegie Mellon. "There's a tendency to think of us as like a steel mill or a bank," he says, "and we're not."
Won't You Be My Neighbor?
Current college students, like generations before them, probably got their first civics lesson courtesy of Fred Rogers, the cardigan-wearing children's television host who broadcast his iconic show, Mister Rogers' Neighborhood, from WQED, a public-television station in Pittsburgh's Oakland neighborhood. "Won't you please, won't you please," he sang in the opening of every episode, "please won't you be my neighbor?"
Today, Mr. Rogers's neighborhood is bustling. filled with cafes, beer bars, and even a hot-dogeria, Essie's Original Hot Dog Shop. Backpack-toting students and scrubs-clad physicians from the nearby University of Pittsburgh Medical Center throng bus stops along Fifth and Forbes Avenues, Oakland's main arteries, while culture hounds flock to the stately Carnegie Museums of Art and Natural History. The neighborhood—which is home to Carlow and Carnegie Mellon Universities and the University of Pittsburgh, as well as its affiliated medical center—ranks behind only downtown Pittsburgh and Center City Philadelphia as among Pennsylvania's largest commercial cores.
Soaring above the Oakland skyline is the Cathedral of Learning, a 42-story Gothic Revival tower that is the centerpiece of Pitt's campus. Built, in part, with donations from local residents during the height of the Depression, the building, said to be the second-tallest educational structure in the world, contains some two dozen "nationality rooms," classrooms meant to celebrate the region's ethnic and immigrant groups.
But for some Pittsburghers, the Cathedral of Learning is symbolic of the disconnect between the city's colleges and the municipality's financial needs. Like other academic buildings, the 535-foot structure is tax-exempt.
"The Cathedral of Learning, could you imagine it being assessed?" says Joseph King, president of the city firefighters' union, who likes to crack that he, too, has a "Ph.D.—a Pittsburgh high-school diploma."
"The universities and hospitals," Mr. King continues, "they've taken over everything in Oakland."
In fact, one-third of Pittsburgh's property is off the tax rolls, according to estimates by local economic-development experts; about 20 percent of tax-exempt property is owned by colleges and private schools. That's a problem for Pittsburgh, which is largely dependent on property-tax collections to support city services.
But it's hardly alone. Former manufacturing centers throughout the Northeast and Midwest have shed much of their industrial tax base, and residential collections have fallen off because of suburban flight, leaving nonprofit institutions, such as colleges and hospitals, as major municipal landowners.
Boston and Providence, as well as some New Jersey townships, are also trying to find ways to get colleges, or college students, to foot a greater share of the bill for policing, trash collection, and snow removal.
College students and employees "still use those services," says the Rev. Ricky V. Burgess, a Pittsburgh City Council member. "I think they need to pay for them."
A Stake in the City
But college leaders—many of whom note that their institutions do pay taxes on leased space or on property, such as bookstores, used for commercial purposes—say the focus on direct payments to city coffers disregards the many other ways in which they benefit Pittsburgh and its residents.
Forty percent of the calls to the University of Pittsburgh's 74-member police force, and 80 percent of its arrests, are for crimes or disputes unrelated to the university, Pitt officials say. In Oakland, nearly a third of the local business-improvement district's operating budget, which supports infrastructure projects, street cleaning, and other services, comes from nonprofit colleges and hospitals, according to Georgia Petropoulos Muir, the group's executive director.
At Carnegie Mellon, some 200 start-up businesses have been spun off from the university over the last 15 years. At the same time, the private institution has helped lure Fortune 500 employers, like Apple, Intel, and Google, to open Pittsburgh offices, many in its on-campus Collaborative Innovation Center, a gleaming, state-of-the-art facility meant to foster partnerships between corporate researchers and Carnegie Mellon students and professors.
College towns are ideal places for cutting-edge businesses, says Jeff Walz, director of Google's university relations. "It's about being as close to the flow of brilliant ideas as possible," he says, adding that Carnegie Mellon is one of the company's top sources for new hires.
Mr. Cohon, the university's president, says companies like Google—which has outgrown its current space and is moving to a rehabbed Nabisco factory nearby—offer the kind of jobs that will keep his graduates in Pittsburgh. About 20 percent of Carnegie Mellon students now stay after graduation, up from 8 percent at the start of Mr. Cohon's tenure, 13 years ago, a brain gain for the city because the university draws most of its students from outside the region.
Mr. Cohon and other college leaders say their efforts underscore that they have a substantial stake in Pittsburgh's doing well. Attracting promising students and faculty members can be difficult if a city is perceived to be on the decline.
"It's in Pitt's best interest," says Mr. Clark, the vice chancellor. "After all, when you apply to the University of Pittsburgh, you know where you're coming."
In Need of Cash
Still, even some of higher education's biggest civic supporters say that academic leaders are overlooking a simple truth: For all the cultural, economic, and social good colleges do, cash-strapped cities need cash, in Pittsburgh's case to shore up seriously underfinanced public pension plans. (Pittsburgh colleges and other nonprofit organizations voluntarily paid about $5-million a year into a public-service fund between 2005 and 2007, but that agreement was not renewed.)
"No one asks to be taxed," says William Peduto, a city councilman whose district includes Oakland and who opposed the tuition tax. "But the universities are too much a part of the city and they use too many resources to say they're not going to contribute."
In fact, some experts in university economic development suggest that, in the process of articulating their value, colleges actually may inadvertently be setting themselves up for disputes over their financial contributions to the city treasury.
"A lot of schools love to create economic-impact statements," says Todd Hoffman, president of a Massachusetts-based consulting firm, Collegia, that has worked with cities like Philadelphia and Columbus, Ohio, to better leverage their higher-education assets. "But maybe the statements backfire."
If an institution calculates its economic impact to be millions, or even billions, of dollars, then elected officials may reason that a 1-percent tax will not be a burden, Mr. Hoffman says. To cities, "it's like having a rich uncle who won't share with the rest of the family."
Likewise, when taxpayers see the size of university endowments—$1.8-billion at Pitt, $754-million at Carnegie Mellon, even $53-million at Chatham University, a small private institution in the city's Shadyside neighborhood—they think colleges have money to spare, he says. Few outsiders understand the complexities of college financing: that many gifts come with restrictions on how the money can be spent, that colleges make up the difference between the advertised tuition and what students pay with institutional grants, that many universities, Pittsburgh's included, were hit with double-digit-percentage endowment losses in the last year.
It can be difficult for employees, students, and even trustees to understand university budgeting, let alone citizens with no connection to the campus, says Alex Johnson, president of the Community College of Allegheny County. "We don't believe in bragging," he says. "but we need to explain ourselves better because we're not well understood."
Some government officials agree. "Frankly, I don't know why they don't do a better job at telling their story," says Michael E. Lamb, Pittsburgh's controller, noting that both Carnegie Mellon and Pitt have schools of public policy. "They certainly have the resources."
However, many people in Pittsburgh's academic community say they thought they had made their case. In addition to universities' prominence at the global summit, a national survey this fall of "best neighbor" colleges, conducted by Evan S. Dobelle, president of Westfield State College, in Massachusetts, named both Pitt and Carnegie Mellon among the nation's top institutions for community engagement.
"We assumed we were like motherhood and apple pie," says Esther L. Barazzone, president of Chatham.
A month after the proposal was shelved, Ms. Barazzone, a spirited woman with a sign reading "Super Esther" affixed to her office door, clearly is still smarting from the tax battle. She and other administrators say they were upset to learn of Mr. Ravenstahl's plan only the day before it was made public.
The mayor's approach is in stark contrast to the tax incentives that cities and states so often throw at businesses to lure them to a region or get them to stay. "Cities should treat universities like they're a very desirable industry," says Carol Coletta, president of CEOs for Cities, a national coalition of civic, business, and academic leaders focused on improving urban areas. "No way would you spring a tax on a very desirable industry."
At the same time, college leaders in Pittsburgh and elsewhere emphasize that higher education is not just another business sector. "Sometimes we need to step back," says Roy J. Nirschel, president of Roger Williams University, in Bristol, R.I., which has seen its share of town-gown tensions. "Our mission is to educate students, not to produce tax revenue."
Win-Win—or Lose-Lose?
Reminders of Pittsburgh's manufacturing heritage are everywhere, like the aluminum-sheathed downtown skyscraper that once was home to Alcoa, a major aluminum producer. The Allegheny Conference on Community Development, a local economic-development group, now occupies an 11th-floor suite in the office tower.
The transition from "such heavy dependence on a single industry" has been difficult for Pittsburgh, says Dennis Yablonsky, the organization's chief executive and a former secretary of the Pennsylvania Department of Community and Economic Development under Gov. Edward G. Rendell. The shift, Mr. Yablonsky says, has been both economic and cultural.
Indeed, political observers in Pittsburgh view the proposal by Mr. Ravenstahl, who was not available to speak with The Chronicle, as a nod to old Pittsburgh, to citizens nostalgic for the city's industrial heyday and to the municipal unions that helped re-elect him last fall. Turnout in precincts home to large numbers of college students, by contrast, has historically been low during local elections. (The Chronicle made multiple requests over the course of a month to speak with Mr. Ravenstahl, but a spokeswoman never scheduled an interview with the mayor.)
"It was a political calculation," says Mr. Peduto, the City Council member. "He was saying to the public, 'We're not going to ask you to pay for it. We're going to ask them to pay for it.' He was saying that students are not Pittsburghers."
In fact, some 46,800 of the 65,200 students enrolled in Pittsburgh's 10 nonprofit colleges are Pittsburgh residents, according to the Pittsburgh Council on Higher Education.
Whether or not Mr. Ravenstahl's strategy worked remains open to debate. Bruce A. Kraus, another City Council member, says he has never received such a large volume of e-mail on a single proposal, most of it against the tax, in his two years in office. And an online reader survey by the Pittsburgh Post-Gazette, conducted in the heat of the debate, showed overwhelming opposition.
Renee Milburn, a cab driver and a longtime resident, readily says she thinks that the mayor's plan was a "political game."
"Sure, they've done a lot for the economy," says Ms. Milburn, dark hair spilling out from beneath a Pittsburgh Steelers ball cap, gesturing as she drives through Pitt's urban campus. But in the next breath, she echoes the mayor. "But, you know, maybe they need to pay up. Maybe they need to pay their fair share."
Mr. King, the firefighter-union president, says college and hospital executives need to "sharpen their pencils and come to the table and put a value on" the property they own. His primary concern, he says, is for the 650 active workers, 900 retirees, and 400 widows and dependents in the firefighters' pension plan.
"Look, I'm a street kid," he says. "I fight for what our firefighters need."
At the same time, the debate also suggests that new Pittsburgh could become a political force. College students were the most vocal opponents of the tuition tax. A group from Chatham even made a video, which aired on local television stations. In it, students silently held signs criticizing the tax, such as "Don't tax me for bettering myself" and "I don't want to live in Steal City."
Mr. Kraus says the city's financial problems exacerbated run-of-the-mill town-gown tensions. It can be difficult for the average resident to step back and appreciate the economic advantages of colleges "when your 20-year-old neighbor is puking on your lawn at 2 a.m.," he says. "All you want at that point is for the idiot to stop puking on your lawn."
The question that remains is to what extent the relationship between college and community has been frayed by the tuition-tax dust-up, and whether it can be repaired.
College chiefs say they are committed to working with public officials. In a news conference announcing the withdrawal of the tax bill, the leaders of Pitt and Carnegie Mellon pledged to work with the city to lobby state legislators to deal with broader structural problems in pensions and municipal finance and to again make voluntary payments to the city, although the amounts have not been specified.
In the end, says Ms. Coletta, of CEOs for Cities, colleges and their communities need to recognize that collaboration is key. "There's no win-lose," she says. "It's win-win or lose-lose."