H 8192Property

Taxation - Property Subject to Taxation

Taxes wealthy private colleges to fund mental health staff in the local public schools where the college is located.

Held for study

Population
Affected

Introduced Feb 27, 2026Committee House Finance

Plain-English Summary

This legislation introduces a new tax on private colleges and universities in Rhode Island that possess large financial endowments. specifically, institutions with endowments exceeding $1 billion will be taxed at a rate of 2% on the amount over that $1 billion threshold. The revenue generated from this tax will be placed in a restricted account and given to the municipality where the college is located. The local school district is required to use these funds exclusively to hire and support behavioral health staff, such as social workers and school psychologists, for public schools.

For younger readers

Some private colleges have a very large savings account called an endowment. This bill says that if a college has more than one billion dollars in that account, they must pay a tax on the extra money to the town where they are located. The town must use that money to help the local public schools. Specifically, the schools will use the money to hire people who help students with their feelings and behavior, like school counselors, social workers, and psychologists.

Who & Where It Applies

Impacted groups

Private universities with endowments over $1 billionPublic school students in host municipalitiesBehavioral health professionals (Social Workers, Psychologists)Municipal governments hosting universitiesUniversity donors and financial aid recipients

Impacted communities

Providence

Constitutional & Fiscal Check

Moderate risk

Moderate Risk. While states have broad taxation authority, targeting a specific asset class that effectively applies to only one or two entities could invite challenges based on the Equal Protection Clause or arguments regarding Bills of Attainder. However, courts generally uphold tax classifications if there is a rational basis, such as ability to pay. The requirement to spend funds on specific staff is generally within legislative power over municipalities.

Estimated cost

None

Estimated revenue

Private Institutions: 2% of endowment value in excess of $1 billion

Bill Analysis

Both viewpoints

For Progressives

Redistributes extreme wealth from elite private institutions to fund essential public services, directly addressing economic inequality within the community.
Provides a dedicated, substantial funding stream for mental and behavioral health services in public schools, addressing a critical need for student well-being.
Empowers local municipalities to improve their public education systems using resources generated by tax-exempt institutions located within their borders.
May inadvertently lead to tuition increases or reduced financial aid at the affected institutions, potentially harming low-income students attending those colleges.
Creates geographic inequity by only benefiting public schools in towns that happen to host wealthy universities, leaving other struggling districts without similar support.
The tax only applies to amounts over one billion dollars, which limits the scope of revenue generation to a very small number of institutions rather than a broader systemic reform.

For Conservatives

Imposes a financial check on elite, wealthy private universities that are often perceived as centers of ideology contrary to conservative values.
Ensures that wealthy tax-exempt institutions contribute financially to the local municipalities that host them, potentially relieving some burden on local property taxpayers.
Mandates that the revenue remains local to the municipality rather than being absorbed into the general state budget, supporting local control of funds.
Establishes a precedent for taxing private assets and savings (endowments), which could be viewed as an infringement on property rights and capital accumulation.
Targets a specific class of institutions based on their financial success, which may be seen as punitive and discriminatory against successful private entities.
Expands government interference in the education sector by dictating exactly how private funds must be redistributed and used by public entities.

Votes

Loading votes...

Full Bill Text

Changes to existing Rhode Island law · 18 additions

SECTION 1. Chapter 44-3 of the General Laws entitled "Property Subject to Taxation" is hereby amended by adding thereto the following section: 44-3-70. Imposition of tax on higher education private institution endowments.

(a) There is hereby imposed a tax upon the endowment of a private institution of higher education with an endowment in excess of one billion dollars ($1,000,000,000). This tax shall be in an amount equal to two percent (2%) upon each dollar or dollar value within the endowment in excess of one billion dollars ($1,000,000,000).

(b) All tax revenues collected pursuant to the provisions of this section shall be deposited into a restricted receipt account.

(c) The funds in the restricted receipt account shall be disbursed to the municipality where the private institution of higher education is situated. These funds shall be used expressly to hire, retain, and support behavioral health staff within the public schools of the municipality, which staff shall include, but not be limited to, social workers, school psychologists, and behavioral health specialists.

(d) As used in this section, the following terms shall have the following meanings:

(1) “Endowment” means a fund or source of funds, much of which consists of donations of money or property to the private institution of higher education, which uses the resulting investment income for a purpose, or to be used for operations or programs of the private institution.

(2) “Situated” means the municipality where the private institution is predominantly located or maintains a majority of its physical buildings, including, but not limited to, a campus.

SECTION 2. This act shall take effect upon passage.