Coalition presses tax-exempt organizations to support Philadelphia public schools
The activists who were central to the dissolution of the School Reform Commission want to raise at least $191 million a year for Philly’s public schools by closing tax loopholes for corporations and real estate developers and raising tax revenue from the city’s wealthiest. And they’ve got a plan to do it.
The coalition began its campaign March 28 with a protest at the University of Pennsylvania. Students, teachers, activists, and alumni flooded the University Council meeting, demanding that the university make payments in lieu of taxes (PILOT) to help fund the city’s schools. After all, they said, Penn does not pay city property taxes and it has an endowment of over $10 billion.
Penn and Columbia are the only Ivy League universities that don’t make these types of payments.
“For so many years, giant corporations and developers have avoided paying their taxes, and we know with the new Trump tax bill, it’s only going to get worse,” said Antione Little, a central organizer with the Our City Our Schools coalition. “Our funding proposal would raise a billion dollars for our schools over the next five years without raising taxes on working people.
“For too long, corporations like Comcast, universities like Penn, and developers like Brandywine Realty have made windfall profits without paying their fair share of taxes.”
The coalition has applauded Mayor Kenney for closing the District’s looming budget deficit, but is demanding further investment in the city’s schools. Its new report proposes four main sources of revenue, which would total $191 million annually — and if property values were updated to match fair market value, that could drive the revenue as high as $301 million annually.
Jessica Way, a member of the Working Educators Caucus who teaches at the Franklin Learning Center in Fairmount, demanded that her alma mater help finance the public schools where she has spent her career teaching.
“When I first started at Franklin Learning Center, they called the neighborhood around my school North Philadelphia,” Way said. “This was 10 years ago. The average house in the neighborhood cost less than $200,000. Ten years ago, my school had a principal, an assistant principal, two deans, a librarian, a nurse, three counselors, four secretaries, a lab assistant, and plenty of aides to watch the hallways and the lunchroom.
“The neighborhood around my school started to change. … Entire blocks of rowhomes were redone from top to bottom. Housing prices shot up to [between] $500,000 and $700,000, and everyone started saying: ‘No, dear, this isn’t North Philadelphia — this is the Fairmount section of Philadelphia.
“And at the same time that enormous influx of cash was pouring into the neighborhood, my high school went broke. We lost the lab assistant. We lost the librarian. We only had one counselor for a high school of almost 1,000 students. We lost our nurse. We lost the assistant principal. We had one dean of students, now teaching a full load [of classes]. We had no aides and one secretary. At one point, my custodian came into my classroom, knocked the hand sanitizer dispenser off my wall and said: ‘Budget cuts. I gotta return this to 440,” which is the Broad Street address of District headquarters.
“Slowly we got a few things back, but we are far from where we started,” Way said. “The current budget proposal being offered by our mayor will keep the School District open, but will only maintain what we have. And what we have is not good enough!”
$892,523 per school
The crowd cheered her for saying what had brought the activists together: Budget deficit or no, the schools will need more money to give students the education they deserve.
Way had done the math to prove her point. She divided the lower estimate of $191 million in annual recurring revenue among the 214 District-run schools. That would come to $892,523 per school.
“That’s enough to purchase one counselor, one librarian, five teachers, and two secretaries at every single school,” Way said. “We don’t need another computer program that makes things more efficient for our teachers. We need people!”
The report, Proposal for Equitable School Funding in 2018, was written by the Our City Our Schools coalition, formed when more than 20 organizations came together to demand an end to the School Reform Commission. It includes activists, community nonprofits, and labor unions.
If enacted, the proposal would raise at least $95 million a year from PILOT. That would require payments from large, tax-exempt universities such as the University of Pennsylvania, and hospitals like Jefferson. These institutions are among the biggest owners of the city’s $13.6 billion in tax-exempt property, according to the report (based on a 2017 analysis in the Inquirer).
“I need the folks around my neighborhood school to pay their fair share,” Way said. “I am an alumnus of this university and I want my alma mater to pay for the children in this city. Don’t tell me they don’t have the money. I went here. I know this school is rich as hell!”
The plan would also raise $54 million a year by postponing reductions in the business income and receipts tax, also known as the big business tax. Kenney did something similar in his 2018 budget, postponing cuts in the city’s wage tax to raise more money for schools. That move was important, the coalition’s report said, but it’s “immoral to keep a tax that hits individuals while allowing tax rollbacks for giant corporations in the city.”
That portion of the report was based in part on research by the Pennsylvania Budget and Policy Center.
“This tax is only paid by the top one-third of businesses in the city, so our city government shouldn’t even consider rolling this back,” Little said, “especially since Trump has given these same companies huge handouts.”
Other financial angles
The proposal would also raise $35 million a year by marginally raising the use and occupancy tax, which applies only to property owners and landlords whose real estate is used for business, rather than housing. The report says taxes dropped $16 million on the city’s 10 largest landlords as a result of a 2014 reassessment of property values.
“While some argue that raising taxes on business will negatively affect development and cause people and businesses to leave the city, we do not find research to support this,” the report reads. “To the contrary, as the annual Pew Polls on the State of Philadelphia illustrate, residents leave because of the state of our schools, not because of taxes.”
The coalition’s report also calls for an independent forensic audit of the District’s spending “so the public can assess spending and make recommendations.” The report specifically pointed to money spent on “lawyers and for-profit consultants.”
The proposal also calls for a feasibility study on creating a public bank in Philadelphia. It notes that the District has spent years getting its annual debt payments down to 9 percent of annual operating costs — but that’s still $272 million a year in debt payments.
Public banks, such as the Bank of North Dakota, can bypass the middleman — Wall Street — and borrow directly from the Federal Reserve, lowering interest rates below anything available on Wall Street’s municipal bonds market.
The coalition also wants to end the city’s 10-year tax abatement, which exempts property taxes for that period on higher values that result from renovation, new construction, or expansion.
Earlier this month, newly elected City Controller Rebecca Rhynhart said her office is studying the abatement to determine whether it’s necessary and is considering options such as scaling it back to cover only certain neighborhoods or certain improvements valued at less than $500,000.
Ending it entirely would bring in $7 million the first year, but that number would escalate past $70 million annually by year 10. Adding those increases together means $386 million for the schools over that first decade and more than $700 million over the course of each proceeding decade.
Much of the talk at the rally centered on the disparate treatment of the city’s neighborhoods.
Catherine Blunt spoke about the recently announced phase-out of Strawberry Mansion as a neighborhood high school. She is a member of the mayor’s nominating panel for the new school board and the former principal of Parkway Center City.
“[The District] will then repurpose that building. They will even put another school in there. Why can’t those babies stay? It’s their neighborhood. … They can share that building,” Blunt said. “When we talk about saving our schools, we’re talking about funding our schools, but we’re also talking about the School District not creating what I call ‘school deserts’ in our neighborhoods.”
Little, of Our City Our Schools, lives at 24th Street and Lehigh Avenue and has experienced that phenomenon firsthand.
“There’s Rhodes at 29th and Clearfield — that’s open. Then you have Whittier at 27th and Clearfield — closed. You have Walton at 26th and Cumberland — closed. You have Fitzsimons Junior High at 26th and Huntingdon — closed. Now you have Strawberry Mansion,” Little said. “Black and brown communities are under siege by a system that is designed to fail our children. What we cannot do, and will not do, is stand back and allow it to happen.”
Michael Xavier Samuel, a senior at Martin Luther King High School, spoke about his experience on the yearbook committee. When students went back to look at yearbooks from past decades, they saw a school they hardly recognized.
“We had a drama program, music classes, a 50-person marching band, a swim team — things of that nature just aren’t there anymore,” Samuel said. “Without that, you’re only showing kids what they see in their neighborhood, which in most cases isn’t much. You see drugs and violence. That’s not all this world is, and that’s not all it has to offer. But if that’s all you show a child, what do you expect them to do when they come of age?”
Penn students join in
Some Penn students joined the students and teachers from Philadelphia public schools at the rally.
Aiden Castellanos-Pedroza moved to Philadelphia from his home in California because Penn offered him a full scholarship. It meant everything to him. As a young man with a single working mother, he never thought that higher education was attainable.
“And then when I came here, I was honestly ashamed,” Castellanos-Pedroza said. “Being here is absolutely disgusting. One of the first things I learned is how much Penn has gentrified West Philadelphia, and this was the same way that Stanford had evicted me and my family. This is the same thing I saw that led my family to be so poor and have so little.
“Penn has hurt so many people here in Philadelphia, and Penn now has the opportunity to give something back. All we’re asking is for them to pay their fair share. It’s infuriating that I’m here and being complacent by being a student. And having them make the excuse that they don’t need to pay the rest of the city because they still care about poor people since they’re offering some a full ride if they get accepted.
“Don’t use me as a reason for why you get to take advantage of the rest of the city.”
Castellanos-Pedroza delivered the proposal to the offices of Penn’s president, Amy Gutmann, who was not in her office at the time. So, organizers decided to go to Gutmann and flooded the lobby of the building where the University Council was in session. They chanted and sang, asking for fair funding.
A staffer for the university came out to the lobby to hear their demands.
“We’re all here for the same cause, and this is to make sure that Philadelphia public schools can receive the money that they deserve,” Castellanos-Pedroza said. “There is no reason why Penn doesn’t already pay a PILOT. … Amy Gutmann and the board of trustees have the power and agency to support our schools!”
After realizing that Gutmann would not come to the lobby herself, protesters filed into the University Council.
Gutmann left the meeting without a word.
And Jessica Way wasn’t having it.
“Excuse me, president Gutmann, I’m an alumnus, can you help out Philly schools?” Way called out as Gutmann was leaving. She did not respond.
Slower to get out of the building was Provost Wendell Pritchett, who is also chair of the mayor’s nominating panel for the new school board and a former member of the School Reform Commission.
“You know, I spent a lot of time working with the schools myself,” Pritchett told Arielle Klagsbrun, an organizer with the coalition who tried to get him to agree to discuss a PILOT program for Penn.
“I think we already have a confirmed position on that,” he said before leaving the building. She asked what that position was, but Pritchett did not respond.
The University of Pennsylvania has not responded to a request for a comment clarifying its position.
Past efforts by Penn students to get the university into a PILOT program have fallen on deaf ears. This time, however, the university is facing a broad coalition made up of more than just college activists who will one day graduate and move on with their lives.
Coalition members were clear: They will be back.