Wednesday, March 20, 2013


On another post Mark Rauterkus wrote:

Article in the school newspaper, the Obama Eagle...

Broken Promise? The Pittsburgh Promise and UPMC
Posted: 19 Mar 2013 02:04 PM PDT
According to Michael Lamb, Pittsburgh Democratic mayoral candidate, there is no promise. Sure, there’s the promise that Pittsburgh Public School students will get money for going to college in Pennsylvania. But what about UPMC’s promise to fund it?
The University of Pittsburgh Medical Center, known as UPMC, is what is referred to as a nonprofit organization. It does do a lot of good in the Pittsburgh area, primarily by the life-saving medicine they provide.
However, according to the most recent data available, makes $801 million in profits a year, not including millions of dollar a year and a private jet for the owner Chris Gessner. It also owns $1.6 billion worth of tax-exempt property, 86% of which is designated as exempt from taxes by the local government, according to a recent Pittsburgh Post-Gazette investigation. UPMC is also known to have paid maintenance employees so low that they have to rely on food banks.
The main difference from a nonprofit such as UPMC and a for-profit corporation, in reality, is taxes. While the corporate tax rate in America is 12% (Wall Street Journal) plus 10% (Pennsylvania Department of Revenue) for Pennsylvania state tax, nonprofit organizations are exempt from tax entirely. So a company that makes $801 million a year should pay about $176 million in taxes per year.
UPMC announced in 2007 a “$100 million commitment to help students graduating from Pittsburgh Public Schools further their education after high school,” according to their website. However, “UPMC will give $1.00 for every $1.50 that is contributed to The Pittsburgh Promise Fund” (, with a limit of $100 million in the next ten years. Last year, $7.5 million was raised by the city, so UPMC donated only $5 million. In comparison $176 million, $5 million a year is a very small amount to donate.
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Questioner said...

So how much of that would have gone to PPS?

Anonymous said...

Somebody better look more carefully at the Promise agreement. If UPMC is found taxable, it says something to the effect that they get a refund/offset from the Promise.

Lots of rhetoric on this downtown, but the devil is in the details.

Anonymous said...

To parents who may be attending Promise nights at their kid's school the question to ask is---based on current funding levels and anticipated overhead and payments to graduates, how long will the Promise endure? It is already true that the goal to reach in order for UPMC to match is sometimes unattainable. From here on out it would not be a surprise if we could not raise the amount needed to get full yearly funding from UPMC. (That alone should make it ineligible to be a source of funding for early childhood education, sorry Mr. Peduto).

UPMC's property tax exemption is a matter for discussion and modification to law if needed. Frankly, from where many of us sit, it is hard to be critical of the largest employer we have here. I would like to see his become less of an issue during our mayoral campaign.

Anonymous said...

Wow, the Eagle digs much deeper than the Post Gazette

The student who wrote this did a wonderful job and could teach the writers Post Gazette.

Anonymous said...

I know they are our region's biggest employer, but it's time that people call UPMC on their monopoly. I mean, my God, how do you make $600 million in one quarter and then not call it "profit????"
These people are putting the wood to the public. And their efforts with The Promise are miniscule. They can do much more.

Questioner said...

UPMC requested that type of offset provision but the request got a very bad reception and was dropped.

Anonymous said...

Somebody probably needs to remind the Pittsburgh Federation of Teachers that clause 5 of the agreement between UPMC and the School District is "Covenant Not to Assess, Litigate, or Collect Taxes" and clause 8 is "Change in the Law Increasing Tax Liability."

City Council may not have approved the agreement, but the School District did.