Tulane University’s Long Con

Ideas and Issues
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New Orleans     Tulane University, located in New Orleans uptown Garden District, is a source of pride for many.  The university is consistently ranked relatively highly by most reporting services.  It’s not top tier, Ivy League or Little Ivy, but it’s in the small cohort of excellent private universities in the South.  Increasingly, it has drawn a more diverse student body and large numbers from New York State and other pipelines.

The university’s standing and reputation in the city depends on your perspective.  It’s arrogant self-interest in the aftermath of Katrina was almost unforgiveable, for example, including putting one-million into a charter school where its own faculty and staff would have priority to attend, so don’t get me started.

On the other hand, I can’t say enough for the quality and contribution of student interns that ACORN and our organizations have received over the last decade or so.  They have performed as generals in our volunteer army, and we have loved them dearly.  Community public service has become a theme for the school and a requirement for the students, all of whom have usually gotten credit for their work with us.  The Mellon Foundation gave them a significant grant a couple of years ago to increase their intersections with the community as another example.

But, are they a good citizen of the city or the state?  Certainly not at the bottom line.  Of course, as a tax-exempt education institution, they don’t have to pay federal taxes nor are donations to Tulane taxable, but what do they pay in local and state taxes?  Answer:  nothing!  Here’s where we confront the long con.

When Paul Tulane of Princeton, New Jersey, donated land for the campus and one-million dollars to support the establishment of the school in 1882, he made a shrewd deal with the legislature that the voters approved as a constitutional amendment two years later than began Act 1884.  To support the growth of the university at that time, they were exempted from all real and personal property taxes.  Period.  They were also exempted from all sales taxes and any other taxes that might be imposed by local, parish, or state authorities.  As opposed to every other citizen of New Orleans and Louisiana, rich or poor, young or old, documented or not, they contribute nothing to supporting the local schools, infrastructure, transportation system, or any of the other amenities that they require, like the rest of us to live here.  That was 137 years ago, so surely, that still can’t be the case?  Wrong!

With an endowment that they reported as $1.057 billion at the end of June 2020, which is undoubtedly much larger now, given the stock market’s growth since then, how can they still get away with this?  It’s an open secret and off and on a public and political scandal, but, basically, they put sugar in each state legislator’s pocket.  Every year, each of the 144 legislators, 105 representatives and 39 senators, gets to give away one scholarship to Tulane to a student.  Tulane values the “gift,” “bribe,” or whatever one might call it, at $56,684 per year now, so that means that Tulane can claim they are “paying” $8,162,496 in lieu of something or other.  Of course, few students ever pay the full boat.  Some experts estimate that the business model for universities is to collect about 40% of the sticker price, so maybe their real expenditure is $3,264,998.40 or less, since they are just “moving” the money, so to speak, from one side of their own ledger to the other.  Regardless, no matter how you cut the pie, their ability to claim they are paying $3 million or so to the state, still means nothing for the city or schools of New Orleans or of course even to the bottom line of the state budget, since that never records a dime of income from Tulane.

Call Tulane shrewd or a scofflaw, the only thing that is clear is that there is no way to call them a good partner in the community.  Until this pattycake with the legislature ends, it is unlikely that they will ever voluntarily check their privileges when it comes to paying their fair share or, in fact, any share, like the rest of the city and state.