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A Philadelphia City Council committee held a hearing on Wednesday, Mar. 3 to examine the role that Payments in Lieu of Taxes could play in Philadelphia’s future.

Credit: Gary Lin

Calls for Penn to pay Payments in Lieu of Taxes to Philadelphia were raised yet again in a recent City Council committee hearing that examined how nonprofit tax exemptions affect the funding of local schools, as well as the role PILOTs can play in the city's future.

The hearing, which took place virtually on March 3, attracted Penn students, professors, and members of the Philadelphia community who have been impacted by Philadelphia school facilities’ conditions and wanted to share their experiences.

City Councilmember Kendra Brooks began the meeting by introducing a resolution from Jan. 28, which was co-sponsored by Councilmembers 1993 College graduate Helen Gym and 2004 Stuart Weitzman School of Design graduate Jamie Gauthier, which explained the environmental hazards within the School District of Philadelphia's facilities and how PILOTs from wealthy nonprofits, such as Penn, Drexel University, and Thomas Jefferson University, would help the struggling schools.

In an interview with The Daily Pennsylvanian, Gym said that the goal of the resolution and subsequent hearing was to “center community voices around the urgent call to address the crisis around school infrastructure, the toxic conditions of schools, and education underfunding.”

In recent years, local schools have been met with have experienced dangerous conditions and deteriorating facilities due to cuts to staff cuts and underfunding. According to the resolution, the school district estimates that its facilities need about $5 billion in capital repairs to ensure a "safe and healthy environment" for students, including $125 million to remediate lead and asbestos. Due to the pandemic, the district is also projecting a budget shortfall of nearly $900 million by the end of fiscal year 2026. 

As schools plan to reopen in person, these health and safety issues have only become more evident

Executive Director of Philadelphia Jobs with Justice and 2017 College graduate Devan Spear said that the timeline for reopening has been difficult to plan for because many of the buildings are not equipped with the proper ventilation to protect students and staff.

Penn, along with other institutions across the city, own a large amount of land, but due to its tax-exempt status, does not have to pay property taxes to Philadelphia — forcing the city to make up the difference. Spear said that a large portion of this money would go towards funding the city’s schools. 

Penn administrators often cite other non-monetary and service-based contributions to the city, including the Netter Center and other campus offices, as reasons for why they do not pay PILOTs — explaining that these measures are more practical and helpful than PILOTs would be in practice.

University spokesperson Stephen MacCarthy wrote in an emailed statement to the DP that, in addition to being the largest private employer in Philadelphia, service-based work is a key component of all Penn schools, Penn Medicine, and the Penn Museum. MacCarthy said that, in light of hardships caused by the pandemic this year, Penn Med “stepped in to assure continued operation of the Mercy Health System" by providing critical medical services to the residents of West Philadelphia while still providing essential COVID-19 testing, treatment, and vaccinations to Philadelphian residents.

“The University of Pennsylvania and Penn Medicine are part of the economic foundation of this region, providing jobs, business opportunities, and needed services throughout the region. We believe that the depth of Penn’s financial commitment and the breadth of programs we support have proven to be far more impactful than PILOTS have been in any city where they have been attempted,” MacCarthy wrote to the DP.

During the hearing, the witnesses presented their prewritten testimonies to the council members and public. They overwhelmingly supported Penn and other giant nonprofits in the city committing to pay PILOTs.

Spear said that Philadelphia Jobs with Justice helped organize the hearing with Councilmember Brooks by reaching out to partnering organizations in order to find people to testify at the hearing. For Spear, listening to the testimonies at the hearing emphasized “how much Philadelphians care about this issue and how important it is to see this through.”

Penn Community for Justice organizer and 2020 School of Social Policy & Practice graduate Chris Cannito testified at the hearing because of his personal and professional experiences in Philadelphia, since he co-produced a podcast for his final capstone project that highlighted the issues that Philadelphia educators faced during the COVID-19 pandemic. In his testimony, he emphasized that a reliable source of funding for local schools would substantially improve the school district's safety problems.

Many community organizers support the idea that the University and other nonprofits should contribute 40% of what they would owe in property taxes as a way to offset some of the inequality throughout the city and support public education in Philadelphia, History and Latin American and Latino Studies professor Ann Farnsworth-Alvear, a member of Penn for PILOTs, said during the hearing. 

Penn for PILOTs is a group of Penn staff and faculty from Penn Med and the University who advocate for payments to "an Educational Equity Fund governed by the school district and City of Philadelphia," according to their website

“The underfunding of public schools hurts the city's future because we are underinvesting in the next generation, and it hurts the democratic institutions that all of us need to support,” Farnsworth-Alvear said. “PILOTs represent an opportunity for Penn to do its part to begin fixing this crisis of underfunding.”

Over 1,100 Penn staff and faculty members have signed a petition calling on the University to support the Philadelphia school system through paying PILOTs. Previously, Farnsworth-Alvear and other Penn faculty held a press conference to talk about the University's obligation to pay PILOTs in order to aid Philadelphia public schools.

“It's hard for stakeholders in institutions to [respond to demands] because it legitimizes the faults that they're being criticized for,” Cannito said. "I'm always optimistic. Penn has signed up for $100 billion, but they could change that and say, ‘We're going to talk with the school district, City Council, and organizers to find the healthiest, most sustainable way to support the school.’”

After facing widespread criticism from both students and faculty for its refusal to pay PILOTs, Penn pledged in November 2020 to contribute $100 million to the School District of Philadelphia over the next 10 years, the largest private contribution in the school district's history.

Gym said that, while she welcomes the $100 million contribution from Penn, she hopes that the University and other Philadelphia institutions put the time and money into modernizing the local school systems. Gym added that the hearing “highlighted the wide extent [to which] this issue is felt viscerally in communities."

"It’s painful for people to see islands of privilege when our children are attending toxic schools," Gym said. "The resounding message [from the hearing] was that our schools need to be our top investment."

Penn Community for Justice member and graduate student Rosa Nanasi Haas, who also testified at the hearing, said she agreed that the University is not doing enough for local schools with the $100 million donation, adding that members of the Penn and local community need to collectively discuss solutions to the city's systemic issues. 

Like Nanasi Haas, Cannito added that it is important for the University not only to be aware of the impact that it has on the surrounding Philadelphia community, but that it needs to act in ways that minimize the damage it has done.

“It doesn't happen over night that we are living in America's poorest big city that has had consistent poverty rates for almost 20 years, while Penn has the fourth highest endowment for an Ivy League institution,” Cannito said. “That does not happen in a vacuum.” 

Political Science lecturer and member of Penn for PILOTs Mary Summers, who has been teaching Academically Based Community Service Courses at Penn for almost 20 years, testified at the hearing saying that service experiences and volunteering are not proper substitutes for payments to the city's schools.

While ABCS courses can be beneficial for both students and the Philadelphia schools, Summers said that sending Penn students without proper training to these schools often “just adds to the chaos" when the facilities are already dealing with understaffing or poor conditions.

“University-community partnerships have tremendous potential, but only in a context where you have really strong public institutions that are able to partner with the University and use the students effectively,” Summers said. “The bottom line is that Penn should be making PILOTs to support strong public institutions, and then it is great to have students involved in partnerships.”