November 4, 2023

BATEMAN |  Cornell Still Does Not Pay its Fair Share to the City of Ithaca

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Wealthy universities across the country benefit from tax exempt status while they sit on endowments in the billions that grow every year and collect millions in tuition dollars annually. Their tax exempt status can have a significant impact on the budgets of the cities and towns that host them. PiLOTS (payments in lieu of taxes) or other voluntary contributions have become one way for universities to contribute, but these agreements are shaped by the power imbalance between wealthy institutions and often underfunded towns. This is glaringly clear in Cornell University’s recent negotiations with the City of Ithaca to provide a voluntary contribution to the city. While the estimated value of taxes on Cornell property would be approximately $33 million without the exemption, the University refused to pay the $8 million the City asked for. With a negotiating team led by an experienced Washington, D.C. lobbyist, Cornell initially offered just over $3 million. Exploiting Ithaca’s budget deficit, the University made clear they would walk away if the City did not accept the bad deal they were offering. Despite calls for opposition from Ithaca residents, City officials ultimately accepted $4 million each year for 15 years.

To maintain its legitimacy as an educational institution for the common good and to fulfill its moral and social obligations to contribute to the well-being of these communities, Cornell should pay its fair share. Ithaca and the surrounding region may benefit from Cornell’s presence, but that presence also imposes heavy financial and social costs. The University makes extensive use of public services to serve its large population and footprint yet its privileged legal status directly contributes to a cost of living and housing crisis in Ithaca and surrounding communities. Many people who work in Ithaca, including Cornell staff, cannot afford to live in Ithaca. Public school teachers and public transportation workers, for example, often commute up to an hour to their jobs. The $33 million tax burden that would otherwise fall to Cornell is instead dispersed among homeowners, and landlords pass it off to their tenants without fail. Even students must often take on debt to afford rental housing, the cost of which is far higher than cities of comparable size and location. Ithaca has accumulated a large public debt despite high property taxes and faces a sustainability crisis in the long term. Meanwhile Cornell sits on a ten billion dollar endowment and tremendous property holdings in both Ithaca and New York City — the majority of which it pays no property tax on. Needless to say, this unfinanced burden impedes Ithaca in meeting not only its current obligations but also any aspirations to address emergent and urgent municipal issues of our time — like critical preparation and mitigation for emergencies linked to ecological and climate crises.

For the last 20 years, Cornell has made a miserly contribution to the City of Ithaca, and even less to the wider communities in Tompkins County and beyond. The University pays far less, per student, than other Ivy League universities do in their voluntary payments. For instance, Yale paid $13.2 million to New Haven in 2022 (approximately $893/student, almost five times Cornell’s payment) which will grow to $24 million by the fifth year of its agreement with New Haven. Harvard, with a number of students equivalent to Cornell, and Princeton with far fewer, each paid over $10 million in 2022 to their respective cities. The terms of Cornell’s contribution, moreover, have been heavily restricted so that much of the funding it does provide must be spent on priorities set or agreed to by Cornell. Cornell’s large footprint imposes costs and it is only fair that these costs be managed democratically, through the institutions, decision making processes and participation of the people of the city and county.

As long as Cornell continues to exempt itself from its social responsibilities, to believe that unlike other major employers and property owners it can set for itself the terms upon which this responsibility is met, Cornell directly contributes to inequality in Ithaca and beyond. Indeed, sustaining public investments is an issue of social and racial justice. A city in which Ithaca’s historically Black neighborhoods remain cut off from Cornell’s wealth, and which is so unaffordable that staff must endure lengthy commutes into the county’s smaller towns, is not a welcoming environment for anyone concerned with justice and inequality. Nor is it environmentally sustainable. Public transportation is underfunded and inadequate, exacerbating the problems of affordability and accessibility and imposing a large carbon footprint. A robust commitment to the intertwined goals of economic, racial, social and environmental justice requires contributing to improved public infrastructure and public life. 

The University’s extractive relationship with the city that supports its existence can be viewed in light of a much longer history, too. As revealed by the Cornell University and Indigenous Dispossession Project, Cornell was founded on, and has profited from, Indigenous dispossession and land theft both on Gayogo̱hó:nǫɁ homelands around Cayuga Lake and across the country. In addition to the forms of reparation called for by the Project, learning from the past calls for the University to abandon its extractive relationship with the communities of which it is a part. 

Cornell had the chance to put its aspirations around community engagement, justice and sustainability into practice — and to serve as an example for wealthy universities around the country. And while it has missed one opportunity, the University can still decide to give more to Ithaca. The Make Cornell Pay Coalition is calling for an increased contribution to the Ithaca City School District, as well as contributions to Tompkins County, where Cornell contributes nothing to the budget. Also, greater transparency is needed in future negotiations to invite more public participation and accountability. As faculty and Ithaca residents, we call on Cornell to pay its fair share.

David A. Bateman is an Associate Professor of Government in the College of Arts & Sciences. His research focuses on democratic institutions, legislatures and political rights, democracy, race and racism. He is the Vice President of the Cornell University Chapter of the American Association of University Professors. He can be reached at [email protected].

Risa L. Lieberwitz is a Professor of Labor and Employment Law in the School of Industrial and Labor Relations. She researches academic freedom in the university, freedom of speech, due process and the “corporatization” of the university. She is the President of the Cornell University Chapter of the American Association of University Professors. She can be reached at [email protected].

Ian Greer ’05 is the Director of the ILR-Ithaca Co-Lab. He is a Research Professor and is the Secretary-Treasurer of the Cornell University Chapter of the American Association of University Professors. He can be reached at [email protected].