The Oregonian
March 29, 2016
By the Oregonian Editorial Board
A campaign to tax businesses for student scholarships and faculty salaries at Portland State University got a boost with a recent $100,000 donation, as The Oregonian/OregonLive's Andrew Theen reported. The weird thing? That contribution came from PSU's charitable foundation, a donor-backed nonprofit that typically reserves its money for things like ... student scholarships and faculty salaries.
It's not unheard of for foundations to use donor money for political campaigns that support their mission. The Oregon Zoo's foundation, for instance, donated to the zoo's campaign in 2008 to pass a bond measure for rebuilding exhibits and modernizing the zoo. But those efforts generally ask voters to approve bonds or tax measures that will be borne by voters as a whole.
In contrast, the proposal for PSU asks voters to approve targeting one segment of the community — businesses in a tri-county area — to bear the financial burden of a public benefit. The proposal, which still faces a few hurdles before qualifying for the November ballot, would impose a 0.1 percent payroll tax on businesses in the Metro service area, similar to TriMet's payroll tax, and would generate between $35 million to $40 million a year, the campaign estimates.
To no one's surprise, businesses aren't too happy. While the payroll tax is the focus of their ire, it didn't help that the foundation ¬— to which businesses have donated tens of millions ¬of dollars — doubled down on the university's anti-business strategy by making a $100,000 contribution to the campaign.
"I was very disappointed to hear that dollars that businesses had contributed to support students and academic programs at the university will be used for political purposes," said Scott Bolton, vice president of external affairs for PacifiCorp, which has donated tens of thousands of dollars to the foundation, according to the foundation's honor roll. While he declined to comment on whether it would affect PacifiCorp/Pacific Power Foundation's future giving, he noted that it's discouraging "to see dollars we've given for one purpose be given to another."
Constance French, the interim foundation president, defended her board's decision to make the contribution. The foundation's sole purpose is to support the university, she said, and using donors' money by giving to the payroll tax campaign meets their wishes "to advance PSU."
However, French could not recall the foundation making a political contribution previously. It's unlikely donors believed that contributing to anti-business political campaigns was on the menu with scholarships, building construction, faculty retention and other programs that more directly support students.
The action also ignores the fact that donors who want to give to the payroll tax campaign can do so directly, easily and more efficiently. There's no need for the foundation to do it for them.
The bigger issue, of course, is the payroll tax that PSU is pushing. The Yes for PSU campaign makes a weak argument that businesses benefit from a well-trained workforce and therefore should bear more of the cost. That ignores, first of all, that PSU's job is to educate students; it's not taking students' money out of a philanthropic desire to help businesses. Second, PSU graduates go on to many places beyond the tri-county area that would get hit with the tax. Third, businesses hire people with a range of educational backgrounds, including degrees from area community colleges that won't get a seat on the PSU-only gravy train. Fourth, PSU and its foundation have a lot more sway than they seem to acknowledge in how much students pay for an education.
Another problem with the proposal? As currently drafted, "payroll" would include even the wages parents pay for babysitting if the amount totals $1,000 or more a year. That's an exceedingly low threshold that families can cross with just two hours of babysitting a week at a modest $10 an hour. This goes far beyond what's collected under TriMet's payroll tax, which categorically excludes "domestic services in a private home" from the payroll tax, according to the state revenue department.
The idea that parents would have to track and remit a payroll tax for a babysitter highlights the absurdity of this proposal.
You also have to wonder why the foundation would intentionally create ill will considering it's still rebuilding from an embarrassing incident last year. About seven months ago, the foundation hastily canceled its planned announcement of a donor's $100 million gift after officials realized that the donation was fiction and the donor was not credible. The foundation president at the time, Francoise Aylmer, and the chief development officer resigned shortly after.
French said the foundation had some preliminary polling done that "looks very positive" for the proposal, although she declined to share the results. But provided it makes it to the ballot, it's foolish to assume it will pass.
While using that $100,000 for scholarships would have only modestly bumped up the $3.2 million that the foundation awarded last year, the assistance certainly would have been welcomed.
The foundation should be concerned that its behemoth gift is only one of two contributions reported by the Yes for PSU campaign, with the other amounting to $140 in cash donations. That lack of support might be something the campaign organizers should have weighed. Sadly, once again, it seems the foundation's not paying attention.