Private-college group: Financial disclosure bill 'needless'

The report, issued by the Center for Social Philanthropy at Boston-based Tellus Institute and partially funded by the Service Employees International Union, says some non-profit, tax-exempt higher education institutions were involved in high-finance-style practices that contributed to the global financial crisis.

“They made foolish financial decisions,” said state Senator Patricia D. Jehlen, a Somerville Democrat and the lead sponsor of the bill. “And the question is now, have they changed or are they, like many people on Wall Street, doing the same thing they were before the financial crisis and making other people pay for their mistakes?”

However, Richard Doherty, president of the Association of Independent Colleges and Universities in Massachusetts, said his association opposes the legislation and plans to denounce it when it reaches the public hearing process.

“It’s unclear to us what public policy problem the bill solves,” Doherty said. “We think there are any number of provisions in it that would cause harm,” to private higher education.

The bill, as it is drafted now, would require each private college and university in the state and their related organizations to report federal, state and local taxes they would have paid had they not been exempted as non-profits. Institutions owning more than $10 million in investments and/or real property would report a list of, and value, for each.

Doherty said the provision for calculating potential for-profit taxes “has a suggestion embedded in that that tax exemption is a loophole” and that “it’s unclear what’s done with that information and why it’s helpful.”

By disclosing investments, schools would “end up losing their competitive advantage,” he said. “There isn’t any company that I’m aware of that discloses to this detail their financials and their investment strategy.”

But, advocates for the bill say such a measure would create more public accountability over private higher education — a key economic industry with major tax benefits in Massachusetts.

“No one knows what is the cost of tax exemption,” said Joshua Humphreys, a Harvard University history lecturer who authored the Tellus Institute report. “But with that number in the public eye, we could have a much more informed discussion about the cost of tax exemption.”