Editor's Note: Yale University responded to NBC Connecticut's request for a comment on our story after the story was published. In part, Yale said: "Yale spends over $700 million annually directly on New Haven. This includes compensation to New Haven residents who work at the university and many programs and initiatives that we support throughout the city. Yale University’s $13 million voluntary payment in FY21 to the City of New Haven was the highest from a university to a host city anywhere in the United States and Yale continues to be among the top three real estate taxpayers in New Haven due to its Community Investment Program." You can see the full statement at the bottom of this article.
The City of New Haven is facing a budget shortfall, and some leaders believe Yale University should step up to help fill the gap.
“That’s one of the main problems that we have here in New Haven is that there’s not many community centers, there’s not many afterschool programs,” said Anthony Bacote, a youth football coach in the city.
“Our neighborhoods aren’t invested in. Nobody cares.”
There may be several reasons for the city’s revenue shortage, but Mayor Justin Elicker has not shied away from one in particular.
“I’ve been quite clear all along that I strongly believe Yale University needs to play more of a role in the future of the city and helping us address our financial problems,” said Elicker.
For Elicker, the issue is New Haven is facing a possible $13 million budget shortfall, so he is calling on Yale University for help. The 320-year-old institution recently announced a $203 million surplus.
Elicker pointed to the fact that 60% of the city’s total real estate is tax-exempt, at a value of $8.5 billion. Almost half of that, he said, belongs to the university.
“We want Yale to grow. We want Yale to succeed. We don’t want Yale to do that on the backs of New Haven residents,” said Elicker.
Data Courtesy of City of New Haven
The university did not answer multiple requests for an interview. In a past statement from May 2020 the university said:
“(The) $12 million voluntary payment in the most recent fiscal year was the highest from a university to its hometown anywhere in the United States and represented a 44 percent increase from the payment we made just three years earlier. And that is only one part of what Yale gives directly to the city. In that same year, we paid $5 million in property taxes on our non-academic properties (making us the city’s third-highest taxpayer).”
State Senator Martin Looney (D- New Haven) said Connecticut historically foregoes taxes on non-profits because they often have small budgets to provide important community services.
“It’s been a tradition that we don’t tax nonprofit institutions. In fact, Yale’s tax exemption is built into the state constitution,” said Looney.
Acting City Assessor Alex Pullen confirmed the university is the third highest taxpayer behind United Illuminating and Winstanley.
Records also show the hospital and university together hold $4.7 billion of the city’s tax-exempt property, $3.5 billion of which belongs to the school. So, how much tax revenue is lost?
“It’s a complicated question and to give it such a simplified answer wouldn’t be doing it justice,” said Pullen.
He said there’s no accurate way to tell because it would involve moving property back to the taxable grand list, which would change the mill rate and lower taxes overall. He said it’s all hypothetical, but in one scenario it could be $121 million in tax revenue and a mill rate in the 20s.
The city’s financial concerns are growing as a critical revenue stream is running dry. The state’s PILOT program – or Payment In Lieu of Taxes -- is also coming up short.
“It can range between $75 to $90 million that the city is actually losing by the state not fully funding that PILOT program,” said Michael Gormany, city budget director.
Through PILOT, the state can pay cities up to 77% of lost property taxes for hospitals, non-profits, and state-owned property. Instead, the state pays about 25% to municipalities, leaving New Haven with a flat $50 million.
“That is applied uniformly to every piece of PILOT eligible property in the state, so what it means is that Greenwich Hospital gets the same PILOT reimbursement for property as New Haven gets for Yale New Haven Hospital property,” said Looney.
Gormany said the formula is unsustainable for the growing tax-exempt list. That’s why Looney said he’s introducing a new three-tiered formula to give more money to municipalities in financial need.
“New Haven, Hartford, New London, and Mansfield of course because of the presence of UConn, are the four communities with the most tax-exempt property and the most interest in the PILOT formula,” said Looney.
Meanwhile, residents are frustrated.
“I think it’s time for the people to say enough is enough,” said John Lugo of Unidad Latina en Accion. In December his group led a march calling on Yale University to help combat issues like homelessness and hunger among New Haven residents. Some, he said, are people who work for the university or in the businesses and restaurants whose success depends on the school
“Some of these people they are the ones who clean the snow in the winter time, some of these people are the ones who take care of their gardens,” said Lugo. “We have to remind them that they are part of the New Haven community and they need to contribute. They have so much money.”
The mayor said there’s now a team from the city negotiating the issue with the university.
“We’ve been having conversations and I’m always optimistic that we can address this challenge. I wouldn’t be working so hard if I didn’t believe we could get there,” Elicker said.
Read the full statement from Yale University:
Yale spends over $700 million annually directly on New Haven. This includes compensation to New Haven residents who work at the university and many programs and initiatives that we support throughout the city. Yale University’s $13 million voluntary payment in FY21 to the City of New Haven was the highest from a university to a host city anywhere in the United States and Yale continues to be among the top three real estate taxpayers in New Haven due to its Community Investment Program. You may find more information here.
Yale makes numerous other contributions to the city of New Haven. For example, the university commits significant resources to support New Haven public school students as co-founder and primary funder of New Haven Promise. Yale contributed $4 million this year to cover full tuition at any public university in Connecticut for eligible New Haven public-school students. Last year, Yale and its employees made over $3 million in charitable donations to New Haven nonprofits and the United Way Campaign, to the direct benefit of New Haven residents. Yale further contributed $1.5 million to the Yale Homebuyer Program, which offers Yale employees $30,000 to purchase homes in New Haven. Yale supports initiatives such as the New Haven Works jobs pipeline program and Market New Haven.
Yale is also New Haven’s largest employer, with nearly 14,000 faculty and staff. Through its New Haven Hiring Initiative (NHHI), Yale has hired more than 1,000 New Haven residents into full-time positions (bringing the total to 4,000). For FY20 staff, academic, and construction hires have resulted in 239 total hires, with 86 from Neighborhoods of Focus. The NHHI graduated two Gateway Learning Cohorts and launched the 3rd cohort in August 2020. Yale recently made a significant contribution to support the new Stetson Library in the Dixwell Avenue neighborhood; our medical school sponsors free clinics; our law school offers pro-bono legal advice; and our architecture school designs and builds homes for the economically disadvantaged. Yale students volunteer throughout the city, providing tutoring, mentoring, tax preparation, ESL classes, and food pantry services to the city’s residents.
Yale’s Pathways to Science programming provides extensive STEM outreach programming to New Haven youth. August was National Black Business Month, and the university-sponsored radio ads on WYBC to increase the visibility of the Black-owned businesses in Yale properties and throughout the city. We are continuing to sponsor this initiative through the holiday season. The university also hosts many events for students and families throughout New Haven, such as our monthly community breakfasts and our extensive educational outreach programs, and we regularly attend Community Management Team meetings to listen and engage with our neighbors.
Yale University values its relationship and partnership with the City of New Haven. We play an active role in supporting our community and are regularly engaging in discussions with the city to address ongoing challenges, including COVID-19. At the start of the pandemic, Yale moved swiftly on several fronts to support the New Haven community, and will continue to do so through a growing number of initiatives and programs. These efforts are some of the ways Yale is working with the city to get through this crisis together. Our Yale Community for New Haven Fund was established to address the local impacts of the COVID-19 pandemic and has, since March 2020, distributed over $2 million to local nonprofits to support New Haven residents negatively impacted by the pandemic. This includes $250,000 to New Haven Public Schools to purchase Chromebooks for New Haven students. During the spring and summer, the university provided 1,800 free room nights, including free food and laundry services to New Haven first responders.
Regarding the effects of the pandemic on the university, please note:
- COVID-19 continues to have a significant impact on the university’s finances and operations.
- COVID-19 has cost Yale more than $250 million in lost revenue and COVID-related expenses so far, and the ongoing pandemic and the disruption of the U.S. economy mean that the financial outlook for Yale remains uncertain.
- Despite all the additional COVID-related expenses and revenue shortfalls, the university reported a surplus from operations for the 2020-21 fiscal year. This positive result provides Yale with a buffer for the current year during which the university has experienced significant lost revenue from reduced enrollment, conferences, and events as well as increased costs for COVID-related issues, including the public health infrastructure for testing, contact tracing, and isolation.
- In addition, most of the 2020-21 surplus is earmarked for school- or department-specific uses and is not available to invest at the discretion of the president and provost. In fact, 89% of the operating surplus is in funds that are accumulated as reserve balances in individual schools, departments, programs, or faculty accounts. That is the nature of Yale’s decentralized financial structure, and the money will be used to invest in the university’s mission of teaching, research, and practice. The positive results have allowed many schools and units at Yale to build up reserves to cushion against negative outcomes in the uncertain future.