Letter to the Editor: Privatization isn’t always the answer

Bruce Weide
Thu, 29 Oct 2015 02:09:42 +0000
Letters to Editor, Opinion, campusparc, osu, parking, privatization

Tuttle Park Place Garage is located at 2050 Tuttle Park Place, Columbus, Ohio. Credit: Muyao Shen / Assistant Photo Editor

Many Lantern readers might not know — and older ones might only vaguely recall — that in 2012, Ohio State privatized Columbus campus parking operations via a 50-year lease to QIC/CampusParc. At the time, I was a faculty representative in the University Senate and one of many faculty members who vehemently opposed privatization. There were several reasons for opposition, not the least of which was that our analysis showed it would be a bad financial deal for OSU. Fortunately, the University Senate unanimously approved a resolution in early 2013 asking the OSU administration to present an annual parking privatization accountability and transparency report to the campus community so everyone can see how the deal actually plays out.

There is a big problem with the A&T reports so far, however. The financial analysis has been notable not for its transparency, but rather for inappropriately treating the up-front lease payment OSU received in 2012 as if it were a $483 million gift to the OSU endowment fund. No mention has been made of the opportunity cost to OSU of having privatized parking operations: OSU used to accrue millions in net annual earnings from parking that are now going to QIC/CampusParc. The A&T reports have completely ignored this fact even though the terms of the lease require QIC/CampusParc to provide its financial statements to OSU.

So, last year I worked with someone in the OSU Business and Finance Office who graciously provided me with one critical earnings number from the QIC/CampusParc financials. The A&T report said that in fiscal year 2014 OSU distributed $22.7 million from parking privatization funds to various good causes around campus (such as student scholarships). My analysis showed that when opportunity costs are included, this was about $3.1 million less than would have been available to these causes if OSU had not privatized parking.

When I recently asked OSU B&F for the critical QIC/CampusParc earnings figure for fiscal year 2015 so I could prepare a similar comparison with this year’s A&T report, I was stymied. I therefore made a public-records request. Six weeks later, I finally got a reply: “The information that you requested is considered (a) trade secret of QIC/CampusParc, and thus exempt from disclosure under the Ohio Public Records Act.”

In other words, we the public will never know — indeed, according to the administration we have no right to know — whether parking privatization was a good financial deal for OSU. We face 47 more years of not knowing.

The good news is that one can estimate the figure OSU refuses to provide. I’ve done that and will continue to do so and let you know what I find via annual letters to the editor of The Lantern.

I predict the official A&T report this year will say that just over $22 million was distributed to good causes around campus. My analysis shows that when opportunity costs are included, this is about $6.3 million less than would have been available to these causes if OSU had not privatized parking.

As OSU prepares to privatize operation of more OSU physical facilities, please keep this experience in mind. Not only will you not see from the administration a substantive analysis of the actual financial implications of privatization before it happens, you will never see an honest accounting of the actual financial outcome that was realized (unless, of course, it is truly positive).

But you are sure to be deluged with vague, incomplete and glowing reports about how clever the administration was to have made the deal. History shows that faculty members are basically powerless to make a difference in this regard. Unless there is some sort of student uproar over continual obfuscation of the truth, I cannot imagine why the administration would change its ways.