Provision key for U. employees who take grad classes

Employees who take free graduate-level classes at the University will no longer have to declare the fringe benefit as taxable income, thanks to the efforts of two powerful U.S. senators. Senators John Heinz (R-Pa.) and Daniel Moynihan (D-N.Y.) sponsored a provision in the federal budget package passed on Saturday which allows employees to receive up to $5250 worth of graduate courses a year from their employers as a tax-free fringe benefit. All University employees are eligible to take free graduate courses after three years of employment at the University, according to Senior Vice President Marna Whittington. Since 1986, the fringe benefit had been added to the taxable incomes of those employees who took advantage of it. The policy meant that a University employee taking $5000 worth of free graduate classes had to pay the same amount of taxes as someone who made $5000 more in salary. Counting free courses as taxable income was "a real disincentive" for staff members who might have wanted to take advantage of the benefit, Assistant Vice President for Policy Planning David Morse said yesterday. "This year, at the last minute, we were able to work with Senators Moynihan and Heinz who were able to get a provision passed that restores the non-taxability of tuition benefits for our employees taking graduate-level courses," Morse said. As the federal budget compromise was hashed out in Washington over the last month, Morse's office kept in constant contact with Congressional leaders, informing them of the University's position on various budget issues including the tuition benefit. Morse said Heinz and Moynihan, who both sit on the Senate Finance Committee, agreed to co-sponsor the provision because the University and New York University are among the only private schools that offer free graduate courses to their employees. Brian Connolly, Moynihan's press secretary, said yesterday that the senator had opposed making tuition benefits taxable in 1986 and had tried unsuccessfully in the past to change the law. "It's a form of educational assistance and that's always a worthy objective," Connolly said. Senior Vice President Whittington described the tax law change -- which must be reapproved by Congress each year -- as "a real plus" for University employees. "It was somewhat ironic that an institution of higher education's own employees were disadvantaged in taking graduate-level classes," Whittington said, adding that she believes more University employees will take advantage of the benefit. Morse said one other change in the federal tax law passed on Wednesday might have a positive effect on the University. He said individuals and corporations who give their private art or book collections to libraries and museums will no longer face a tax liability.

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