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Ohio State University looks to privatize parking lots

Ohio State Buckeyes fans tailgate in a parking lot outside Ohio Stadium in Columbus, Ohio. OSU President Gorden Gee discusses his school's decision to lease out its parking facilities and the impact it could have.

Kai Ryssdal: Between state cuts to education on the one hand and students demanding more classes, better services and affordable fees on the other, public colleges are having to get creative budget-wise. The Ohio State University, which is in talks to lease out its parking lots to a private company to the tune of $483 million over 50 years. Gordon Gee is the president of Ohio State. We tracked him down yesterday, somewhere near Cincinnati, I think, and I asked him whether he longed for the budgetary old days.

Gordon Gee: Not really. You know, I've been a university president for half my life -- about 32 years. This is just part of a larger effort, which is to make sure that we keep costs and quality and control and that we make certain that we understand that our future is not the grand bargain that used to be, where you could raise tuition and you could expect the state to support you at a certain level. Those grand bargains no longer exist, so we now have to be in charge of our own future and that's going to require us to do what we're doing.

Ryssdal: Obviously you've had conversations with the board of trustees and I imagine members of the legislature and the governor, since Ohio State is a public institution. Do they have concerns about this monetization, I guess, of university assets?

Gee: First of all, there is always a concern among a certain group of people. I mean, this is a totally different direction. Given the fact that we have a $16 trillion deficit at the federal level and that we have considerable challenges in the state that what we're trying to do is we're trying to make certain that every Ohioan has an opportunity to come to a world-class university without any concern about raising tuition astronomically.

Ryssdal: I hate to use the term "windfall" because obviously this is a considered decision, but it's a whole boat full of money that you guys are getting -- $500 million.

Gee: It's going to be used to support our students with scholarships and to grow our faculty. We're probably one of the few institutions in the country that's actually talking about growing its faculty.

Ryssdal: You can't have any conversation about the rising cost of education and what states are doing to try to meet it without noting that you are, if not the highest paid, then one of the highest paid university presidents in the country.

Gee: I am.

Ryssdal: I'll say for the record you donate a large part to charity and back to the institution, but any second thoughts in that regard from you?

Gee: Well, I've never been in the position of defending my salary. I look at the output and hopefully the people of Ohio are getting a good effort out of me. The quality of my institution is something that I take great pride in.

Ryssdal: Gordon Gee is in his second term as the president of The Ohio State University. Thanks very much for your time, sir.

Gee: Bye now.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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It is useful to note that if you include a modest 2% annual pay increase for the university president, then more that one quarter of that $480 million will be used to pay just his or her salary over the next fifty years. Is the money truly for students and faculty, or rather to support outlandish salaries of those sitting in top administrative positions?

Also, the parking revenue lost is $28M/year. It's hard to see how the $480M boatload of money now is going to compensate for the loss of the $1.4B boatload of money lost over the next 50 years...

Mr. Gee confuses the federal deficit and the federal debt. It is to be hoped that he is more careful about the numbers in that 50-year parking contract.

MarketPlace -- You refer to the "boat full of money" that OSU is receiving. However, they're giving up a lot. They're giving up 50 years of revenue from parking. Right now OSU brings in $28M/year in parking revenue. Without interest, the cumulative value of 50 years of that revenue is $1.4B. Sure, that doesn't include overhead, but most of the parking infrastructure is automated. Even if you shave off half of that to overhead, you still are losing out on a lot of net cash. OSU plans on investing that $480M and expanding the university on the interest, but it's really hard to see how much is going to be left over once you account for them losing the $28M/year.

( It is also interesting that the company that will take over parking does not take over all of the costs that parking currently pays for. The campus-area bus service, for example, is currently paid for out of that $28M revenue. After privatizing parking, those costs become new costs for the university. So that $483M is actually much smaller than it sounds. )

Most people around Columbus look at this as a bad deal. In particular, the $480M they're getting now will at best wash out the money they're losing in the long run. Plus, the state legislators that see the massive injection of cash now will be less likely to send state funds the university's way in the near future. So people are saying that Gee's legacy is going to be this terrible deal.

And I'm not even bringing up the massive increase in parking fees that are expected when the private company takes over. Students have tighter caps than employees, but employees are facing significant increases.

There's nothing especially innovative about privatizing things at a university. Lots of universities are privatizing parking, dorms, and anything else they can use for quick cash. But these deals rarely do well in the long term.

(by the way, it's pronounced "Gee", not "G"; when _This American Life_ had Gee on, they got his name right :) )

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