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Hillsdale College still may avoid the Repub­lican revenue package’s endowment tax, despite removal of a pro­vision that would have exempted any college that refuses federal funds, such as Hillsdale, from the pro­posed tax.

Senate Repub­licans had amended the bill last week to increase the endowment size qual­i­fi­cation for the 1.4 percent excise tax on private, non­profit col­leges and uni­ver­sities from the $250,000 per student threshold set by the House of Rep­re­sen­ta­tives to $500,000 per student. Hillsdale’s endowment is about $364,000 per student, making it too small to be taxed under the Senate’s revi­sions.

College Pres­ident Larry Arnn said he had hoped to see the com­plete removal of the endowment tax from the bill.

“It does not make sense to me for the Con­gress to add a tax on to some­thing that it is sub­si­dizing so heavily,” Arnn said in an email. “If it does not like the way the col­leges are using their endow­ments, it should reduce the subsidy to them.”

The Senate passed its tax bill early Sat­urday morning and, on Wednesday, sent it to a con­ference com­mittee where members of both chambers will meet to rec­oncile the dif­fer­ences in their two bills.

If the com­mittee includes the endowment tax with a threshold lower than $364,000 per student, Hillsdale could have to pay up to $700,000 in taxes on its $548-million endowment’s income, according to Patrick Flannery, vice pres­ident of finance and college trea­surer.

When asked how soon Hillsdale could grow its endowment to $500,000 per student, Flannery said he is waiting for the bill’s final lan­guage to comment further.

An amendment written by Sens. Pat Toomey, R-Penn­syl­vania, and Ted Cruz, R-Texas, however, would have exempted any college that refuses federal money from the tax.

“The idea here,” Toomey said early Sat­urday morning on the Senate floor, “is that any college that chooses to forego federal funding for its stu­dents chooses not to be a burden on tax­payers that way, it is rea­sonable for us to respond by sparing that college of the tax on the endowment fund.”

Upon noticing the pro­vision, Democrats latched onto it, making it a “metaphor” for the special-interest favors throughout the tax package, Senate Minority Leader Chuck Schumer of New York said Friday night.

As a result, “Hillsdale College” was trending early Sat­urday morning in the United States on Twitter, while inac­curate state­ments about the school were made on the Senate floor and on social media.

Sen. Ron Wyden, D-Oregon, was the first to bring up on the chamber floor that Hillsdale College would be the only school ben­e­fitting from the amendment. The alle­gation earned the pro­vision nick­names on social media, including the “Hillsdale handout,” “hustle,” “earmark,” and “carve-out.”

Toomey agreed that he believed Hillsdale would be exempt but added that other schools in America do not accept federal money and any insti­tution could choose to do so and still receive the exemption. There are at least nine schools other than Hillsdale that do not receive federal funds right now, including Grove City College in Toomey’s home state, which the senator men­tioned on the floor prior to the vote on the amendment’s repeal.

By the time of the debate, however, the Repub­licans had already amended the bill to increase the endowment tax threshold from $250,000 to $500,000 per student. The exemption, then, would not have covered Hillsdale nor any other school that refuses federal money right now, because their endow­ments cur­rently are too small to qualify to be taxed.

Sen. Claire McCaskill, D-Mis­souri, then pro­ceeded to ask Toomey if he knew whether or not Edu­cation Department Sec­retary Betsy DeVos has donated to Hillsdale College.

“Do you know who the biggest donor was to the Hillsdale College endowment?” McCaskill asked Toomey. “Would that be the DeVos family, by any chance? …It feels like this is a very limited pro­vision written for a very special person.”

Sen. Jeff Merkley, D-Oregon, made similar remarks later, stating Hillsdale may be receiving the exemption because it “happens to be funded by one of the wealthiest fam­ilies in America because they happen to be a Repub­lican donor.”

Toomey said he did not know if the DeVoses donated to Hillsdale College. Although the DeVos family does have con­nec­tions to Hillsdale, there appears to be no public proof that the Grand Rapids-based bil­lion­aires Dick and Betsy DeVos have donated to the school in recent years.

John Cervini, vice pres­ident for insti­tu­tional advancement, told The Col­legian that the college does not name donors without their express per­mission.

According to forms sub­mitted to the Internal Revenue Ser­vices, the Dick and Betsy DeVos Family Foun­dation have given to numerous col­leges, including Calvin College, Cornell Uni­versity, Dav­enport Uni­versity, Ferris State Uni­versity, Rollins College, the Uni­versity of Michigan, and Wake Forest Uni­versity. The foun­dation, however, did not list Hillsdale as a recipient in recent sub­mis­sions and did not respond to requests for comment in time for print.

Betsy DeVos’ brother Erik Prince — the founder of the con­tro­versial private security firm Black­water Worldwide, now named Academi — grad­uated from Hillsdale in 1992 and spoke on campus in October.

Addi­tionally, Richard DeVos, Betsy DeVos’ father-in-law, co-founded Amway Corp. with Jay Van Andel. Van Andel’s son, Steve, was a 1978 graduate of Hillsdale and serves as Amway’s chairman with plans to retire at the end of 2018.

In 2013, Hillsdale named its graduate school of states­manship in his honor, after Steve Van Andel donated toward its oper­a­tions and schol­ar­ships.

College Pres­ident Larry Arnn said he knew DeVos before she became edu­cation sec­retary and had at least one meeting with her in June since she filled the role.

Although there is no recent evi­dence to show the DeVoses have donated to Hillsdale, according to the Federal Election Com­mission, Betsy DeVos gave to Toomey’s cam­paign in 2010 and 2015, totaling $7,800 in dona­tions. The records showed her husband had donated several times, as well.

Toomey spokesman Steve Kelly told The Col­legian that the senator received outside con­sul­tation from official rep­re­sen­ta­tives from rel­evant schools, including Grove City.

“Sen. Toomey has not heard from Sec­retary DeVos, her family, or her office on the broad issue of tax reform, let alone this tiny pro­vision in the tax bill,” Kelly said in an email. “Asser­tions to the con­trary are com­plete fab­ri­ca­tions.”

Later on the floor, Sen. Merkley also asked Toomey if he knew why Hillsdale does not accept gov­ernment money.

“Is this Hillsdale College the same one that was sued for dis­crim­i­nation in the 1980s?” he asked Toomey, who said he was unfa­miliar with Hillsdale’s lit­i­gation history. “Is it the reason this college has not taken federal funds is because they were sued for dis­crim­i­nation?”

Later, Merkley posted a video on Twitter, saying Hillsdale refuses federal funds “because it wanted to have per­mission to dis­crim­inate in selecting stu­dents,” that it “spe­cializes in dis­crim­i­nation,” and that it has a “license to dis­crim­inate.”

Hillsdale, however, was never sued for dis­crim­i­nation. In 1975, the Department of Health, Edu­cation, and Welfare changed its rule to make inde­pendent insti­tu­tions that refused federal grants and sub­sidies, such as Hillsdale, subject to its reg­u­la­tions, including the anti-sexual dis­crim­i­nation law Title IX, because its stu­dents took federal loans to attend.

Hillsdale’s board of trustees resolved to fight the change, believing it to be an uncon­sti­tu­tional gov­ernment over­reach because the stu­dents were the recip­ients of the loans and not the college. After nearly a decade of lit­i­gation, the Supreme Court decided against Grove City College, which fought the change for similar reasons, and Hillsdale stopped taking student federal loans in 1984 to pre­serve its inde­pen­dence.

Although Hillsdale is not required to adhere to Title IX, its founding doc­ument from 1844 was the first in the country to include a nondis­crim­i­natory clause. The school’s mission promised “to furnish all persons who wish, irre­spective of nation, color, or sex, a lit­erary, sci­en­tific, [and] the­o­logical edu­cation.”

Toomey noted this several hours later on the floor of the Senate before a vote to repeal the amendment, saying Hillsdale had been “unfairly maligned.”

Merkley’s office did not respond to numerous requests for comment.

Early Sat­urday morning, the Senate voted 52 – 48 to remove Cruz and Toomey’s pro­vision with the Democrats being joined by four Repub­licans: Susan Collins of Maine, Deb Fischer of Nebraska, John Kennedy of Louisiana, and Lisa Murkowski of Alaska.

Imme­di­ately fol­lowing, the Senate voted to pass the tax bill 51 – 49. The House of Rep­re­sen­ta­tives voted on Monday to send its version of the bill to a con­ference com­mittee, and the Senate did so on Wednesday.

Matthew Spalding, asso­ciate vice pres­ident and dean of edu­ca­tional pro­grams for the Allan P. Kirby Jr. Center for Con­sti­tu­tional Studies and Cit­i­zenship in Wash­ington, D.C, pre­vi­ously told The Col­legian that he had hoped to see the endowment tax removed, or con­sid­er­ation of an exemption given to schools that refuse federal funds during the con­ference com­mittee.

Arnn said he was “appalled” by the mis­in­for­mation spread about Hillsdale College on Friday night and grateful to Toomey and Cruz for their service.

“Hillsdale has an old, trea­sured, and still prac­ticed tra­dition of service to human equality,” he said. “Any other claim is a slander.”

  • Alexan­derYp­si­lantis

    Whatever the result of these Bill mod­i­fi­ca­tions, the main point is Michigan’s two Democrat Sen­ators are useless as screen doors on a sub­marine. Because the Democrat Party no longer actively debates bills in the US Senate, they just sit on their hands with glum expres­sions on their faces and refuse to par­tic­ipate. The still collect pay­checks for NOT working though, as far as I know. Hillsdale College had to rely on Repub­lican Senator Pat Toomey of Penn­syl­vania to advance it’s interests-Stabenow and Peters aren’t inter­ested in doing their job.

  • Ellsworth_Toohey

    It’s too bad nobody reflects on the reason for the tax… as well as the exemption for $250,000 or below. Liberal schools such as Harvard and Yale using their endow­ments as investment vehicles for their donors.

    Opps.…

    • Alexan­derYp­si­lantis

      How can it be an ‘investment vehicle’ for the donors? They receive a tax write-off for the donation, sure. But we all know that. Once donated the donor receives no addi­tional benefit. And if the schools are frugal with their endowment funding, more power to them. The one valid crit­icism is schools like Harvard and Yale, who have massive endow­ments, still receive a great deal of Federal and State funding. That needs to be reviewed and allowance taken that a school like Hillsdale receives no com­pa­rable gov­ernment funding. Tax­payer money should not be used to tide-over Leftist/Liberal schools whose ide­ology many tax­payers don’t share. The schools either need to get out of political advocacy, or gov­ernment funding needs to be sig­nif­i­cantly reduced.

      • Ellsworth_Toohey

        It’s only a valid argument if it’s offered back as a tax credit, not a tax exemption. .

    • Living­In­Hells­dale­County

      Where did you read that? I’m VERY inter­ested in that subject. I noticed this article http://money.cnn.com/2016/09/22/pf/college/harvard-university-endowment/index.html last year, won­dered why “cor­porate” non profits are self auditing, the IRS needs to crack down. But at least Harvard and Yale not only accept FAFSA for dis­ad­van­taged stu­dents, (which only exempts Hillsdale College from affir­mative action, not every law and rule the rest of schools must follow) it’s inter­esting that college’s with the equal of Hillsdale College’s endowment have 10 times the student enrollment. Hillsdale College runs a political lobby in Wash­ington DC, and endow­ments for reli­gious schools are not legal the church they’re under holds the endowment not the schools, at least according to the IRS’ admin­is­trative rules. With 3.6 million “free’ newsletters going out from a reli­gious school per month begging for cash and property and estates, etc? http://hillsdalelegacy.org/?pageID=134&Cat=4&docID= I’d think that political money laun­dering would be caught if they’d require names of donors and the amounts con­tributed. No one ever talks about the Sherman Act vio­la­tions done in higher edu­cation endow­ments, source please!!!! 🙂