As a large budget deficit faces New Haven this year, residents are continuing to call for the University to provide additional financial support to the city they call home.
Due to its status as a nonprofit, Yale is not taxed by the state of Connecticut. This status specific to nonprofit organizations, including universities and hospitals, is written into the state constitution. The University does, however, make annual voluntary payments — more than $11.5 million this year — to the Elm City. University officials defended Yale’s contributions to the city, noting that this voluntary payment is the “largest” payment made by a university to a single municipality.
“Since 1991, we have funded over $127M to the city in voluntary payments,” Karen King, the director of Yale University President’s Public Service Fellowship and a Community Affairs Associate, said in a statement to the News. “In light of the city’s recent financial troubles, we increased our voluntary payment by $2.5M this year, for an annual payment of $11.5 million.”
In a monthly financial report released by Mayor Toni Harp’s office in May, New Haven’s deficit for the 2017–2018 fiscal year was roughly $15 million at the end of May. In June’s report, that deficit decreased to $11.5 million —as a result of the $2.5 million increase in the voluntary payment made by the University and another $2 million payment by the New Haven Parking Authority. In May, the Board of Alders approved an 11 percent property tax hike, the first tax increase in two years.
Mayoral spokesman Laurence Grotheer told the News that Harp “fully appreciates” the help that Yale gives to the city.
“The mayor is grateful for the increase of voluntary payments that Yale just made this year,” Grotheer said in an interview with the News. “Yale’s contributions are appreciated and help the city balance its budget each year.”
Grotheer also noted that the University helps the city in non-monetary ways as well, specifically mentioning the New Haven Promise, New Haven Reads and New Haven Works programs.
New Haven Promise is a Yale-funded program for city residents who attend local public high schools. The initiative annually provides high-achieving students with a scholarship to attend a public university in Connecticut. According to the website of Yale’s Office of New Haven and State Affairs, the University provides up to $4 million per year in scholarships.
The University also tries to have a positive impact on the municipal education system through New Haven Reads, a book-bank and tutoring program for local students founded in 2001. Meanwhile, New Haven Works — a joint initiative by the University, the Board of Alders, labor unions and local residents — matches job seekers with employment opportunities in the city. Yale also created its own department of New Haven Community Hiring Initiatives to link New Haven Works applicants with the University’s human resources department.
Still, Ward 21 Alder Steven Winter ’11 said that Yale must do more for the city, considering its “dire” financial situation.
“All stakeholders need to contribute and sacrifice to keep the city afloat,” Winter told the News. “We need Yale both in its financial contributions and in the many in-kind services it provides to increase its support for the city.”
According to Winter, if Yale paid taxes to the city, the University would contribute nearly $200 million annually. The University’s tax-exempt status, however, is written into the state constitution and a constitutional amendment would be required to create any changes.
King emphasized that nationwide, every nonprofit university is exempt from paying taxes on its academic property. Still, King added that Yale is one of New Haven’s “top” taxpayers and pays real estate taxes to the city every year as a result of its community investment program, a program that “redevelops nearby property.” This year, those taxes — separate from the University’s annual voluntary payments — amounted to over $4.9 million.
As a result of the 2018 federal budget, the University will also have to pay 1.4 percent excise tax on its endowment returns, amounting to roughly $30.8 million in 2018 based on calculations made by the News. This will be the first year that Yale will have to pay such an amount, as the endowment tax applies to financial years beginning after Dec. 31 of last year.
Ward 1 Alder Hacibey Catalbasoglu ’19 said the question about increasing Yale’s voluntary payments is “more complicated.”
“Yale and New Haven rise and fall together,” Catalbasoglu told the News. “The future of both entities are inextricably tied to one another. Solving New Haven’s fiscal issues will make New Haven a better place to live, which will then make Yale a better place to attend.”
Yale employs more than 4,000 New Haven residents.
Aakshi Chaba | email@example.com