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Higher‑education lobby warns against endowment excise and mandatory PILOT changes
Summary
Representatives of private non‑profit colleges asked the Joint Committee on Revenue to reject bills that would impose an excise on college endowments and allow mandatory PILOT payments by municipalities, arguing those measures would harm students, research and town‑college relationships.
A trade group representing private, nonprofit colleges told the Joint Committee on Revenue the committee should oppose bills that would impose an endowment excise and permit municipal mandatory payments in lieu of taxes (PILOT) on tax‑exempt institutions.
Brad Freeman, vice president of government relations for ACM (which represents 58 private non‑profit colleges and universities), testified in opposition to H.3122 / S.2013 (described in testimony as imposing an endowment excise) and H.3264 / S.2016 (described as allowing mandatory PILOT payments by municipalities). Freeman warned the committee that an endowment tax structured like the proposal would be “a tax on the operating budget” for affected institutions, many of which have donor‑restricted funds and depend on endowment returns for scholarships, research and operations.
Freeman said the federal endowment excise tax that existed in prior federal law taxed annual endowment gains (1.4% under 2017 law) and that the 2025 federal reconciliation changes narrowed coverage to institutions with 3,000 or more students but created tiered rates up to 8% for some institutions. He argued a Massachusetts excise or mandatory PILOT regime would be “punitive” and could divert funds from financial aid and research at a time when federal funding pressures and demographic trends already burden institutions.
On mandatory PILOTs, Freeman said voluntary pilot programs serve as a negotiated relationship between institutions and host communities and that the proposed mechanism to allow municipalities to impose mandatory payments would undermine those partnerships and harm community services tied to colleges’ missions.
Committee members asked Freeman to explain the federal endowment tax’s evolution and potential impacts; Freeman provided historical context and argued that an aggressive state excise or mandatory PILOTs would exacerbate fiscal pressures on institutions, students and host communities. No committee votes on these bills were recorded during the hearing.
