Florida Gov. Rick Scott has invited Yale University to relocate to sunny Florida.
Scott, a Republican, made the overture on Tuesday after lawmakers in cash-starved Connecticut introduced a bill which would raid Yale’s endowment in an attempt to plug a gaping hole in the state budget, reports Inside Higher Ed.
“With news that the Connecticut Legislature wants to unfairly tax one of the nation’s most renowned universities to deal with the state’s budget shortfall, it is clear that all businesses in Connecticut, including Yale, should look to move to Florida,” Scott said a statement released by his press office.
“We would welcome a world-renowned university like Yale to our state and I can commit that we will not raise taxes on their endowment. This would add yet another great university to our state,” Scott said.
The proposed bill the Connecticut Senate pointedly singles out Yale’s coffers by taxing the annual gains of any college endowment valued at over $10 billion. No other schools in Connecticut even come close to having an endowment that large. (RELATED: Connecticut May Raid Yale’s Endowment For Much-Needed Cash)
Yale’s endowment of about $26 billion is the second largest in the country, behind only Harvard University’s gargantuan $38 billion nest egg.
To put Yale’s endowment into some perspective, it is larger than the entire annual gross-domestic product of El Salvador — and not too much less than the total annual gross-domestic product of the state of Vermont.
If passed, the bill would be the first law of its kind at either the state or federal level.
Yale would be able to avoid the tax hit, but only if it dedicated all of its endowment gains to its educational mission rather than reinvesting its gains back into the endowment.
Connecticut needs money because of a rapidly-growing hole in the state’s budget that lawmakers are desperate to fill. The state has a current budget shortfall of $266 million, and its unfunded pension liabilities total about $26 billion. (Connecticut’s underfunded pension problem is among the worst in the country.)
Yale administrators responded by saying they are touched by Scott’s offer but have no plans to escape dreary New Haven, Conn.
“It’s wonderful to be recognized as an outstanding asset, but Yale, New Haven and Connecticut have been on common ground to great mutual benefit for 300 years,” a school spokesman said in a statement obtained by Inside Higher Ed. “We’re looking forward to reaching even greater heights in education, research and civic engagement over the next three centuries and more.”
Interest in raiding massive endowments isn’t limited to the state level. Recently, three Republican members of Congress sent a letter to the 56 schools with endowments of $1 billion or more, inquiring about how they manage and use their endowments to benefit students. Rep. Tom Reed of New York, meanwhile, has proposed legislation that would require large endowments to use at least a quarter of their endowment earnings to subsidize tuition costs, or else lose their tax-exempt status.
Photo by Governor Rick Scott