Worcester colleges slam ballot question that would sap their endowments
The presidents of five private higher education institutions in Worcester sent a letter to the city council expressing concern about a ballot question about forcing them to invest some of their endowments.
On April 15, the city council unanimously approved a ballot question asking residents if they support forcing private higher education institutions in the city to invest 0.5% of their endowments into a city fund designated to help "finance needed housing, economic, and community development projects."
The proposal was brought forward by Worcester Mayor Joseph Petty and District 2 Councilor Candy-Mero Carlson. Residents will vote on the question during the November municipal election.
Following the approval of the question, the presidents of Clark University, The Massachusetts College of Pharmacy and Health Sciences, College of the Holy Cross, Assumption University and Worcester Polytechnic Institute (WPI) wrote a letter to the council saying the resolution question could cause substantial harm to the institutions.
"Especially given our institutions' long-standing engagement in and support for Worcester, we are surprised and disheartened by the seemingly short-sighted nature of the council's actions that selectively target certain institutions — even those that are already contributing through existing payment in lieu of taxes (PILOT) agreements," the letter reads. "Furthermore, the introduction of a non-binding resolution is not only unnecessary but potentially a roadblock to ongoing discussions with city leaders about further strengthening our partnerships."
City leaders have scrutinized recent property purchases by higher education institutions, such as Worcester Polytechnic Institute , College of the Holy Cross and the Massachusetts College of Public Health Sciences .
In an April 4 memo, Petty and Mero-Carlson wrote that the purchases of the three institutions in the past 18 months were valued at $64 million in total.
During the April 15 meeting, Mero-Carlson said that these purchases, which she said were done without any advanced notice, resulted in Worcester losing $1.8 million in tax revenue.
The letter from the five institutions, however, contests this claim — reading that some of the properties mentioned by the councilors are still on the city's tax rolls.
The letter also reads that from 2023 to 2024, the five institutions paid more than $1.5 million in direct real estate taxes to the city.
"Our universities provide benefits to Worcester residents and organizations in countless ways," the letter reads. "Specific to real estate property, since that is of keen interest to the council, we would like to remind members that, in total, our five institutions provide approximately $2 million in annual payments through payments-in-lieu-of-taxes (PILOT) agreements and other arrangements with the city each year."
The presidents also wrote that the ballot question runs counter to collaborative dialogues they have had with City Manager Eric D. Batista regarding new or expanded PILOT programs and other measures such as housing.
"We far prefer to continue in a collaborative, mutually respectful process," the letter reads.
Even if voters approve the ballot question, the city will still need to negotiate with the institutions on the endowments.
Worcester would not be able to force the schools to comply if the question was approved, according to City Solicitor Alexandra H. Kalkounis.
Still, the presidents of the institutions questioned the legality of forcing them to invest some of their endowments, calling it a tax. They wrote that if the city did have the authority to do this, it would apply to all non-profit organizations in the community.
"In terms of its impact, our endowments are not discretionary rainy-day funds," the letter reads. "They are carefully stewarded and often restricted resources that provide need-based financial aid, support faculty research and ensure operational stability. Taxing them would directly harm students and undercut our ability to serve our campus communities and support the local neighborhood economy — and the broader city of Worcester."
During the meeting, Mayor Petty said that the endowment investment is not a tax but rather an investment from the colleges for Worcester's future.
Petty said that there is a return on the investment for the fund.
"You can invest in this fund but you can get your money back, if not more, depending on the project," Petty said. "Our colleges and universities are a real asset for the city."
The letter also questioned the timing of the council's approval of the question — citing actions from the Trump administration, such as delayed grant disbursements and reductions in federal research support.
These concerns are identical to concerns shared by City Council Vice Chair and Councilor-at-Large Khrystian King, who expressed worry about the relationship between the city administration and the institutions during the April 15 meeting.
"We remain committed to the principles of partnership, collaboration, and accountability," the letter reads. "However, a proposal to mandate representation on private institutional boards is an unprecedented and potentially unlawful overreach that alters the traditional relationship between public authority and private governance."
