Saturday, June 9, 2012

The Ohio State University Latest Victim in Trend to End Public Support for Public Universities

How Long Before OSU Becomes Completely Private and Fields an NFL Football Team?  - Not Long

In the good old days people had the quaint idea that each state should sponsor a number of colleges and universities.  The idea was that the young people could get a good education, become more productive citizens and that the entire economy would be better off.  The Feds chpped in by providing financial aid, the big one being the GI Bill of Rights which provided an almost free education for veterans returning from World War II.

The result of all this silliness was that the post WWII United States became a world economic power, with growth and prosperity and the creation of a middle class unequaled in history.  The whole system was a resounding success and produced large vibrant and intellectually powerful schools like The Ohio State University.  But alas, supporting these institutions required tax dollars, and now that Conservatives control many states those tax dollars are needed for other things, like tax cuts for the wealthy.

The Ohio State University one of the greatest successes is now largely bereft of public funding.

Joseph A. Alutto, the provost, noted that state aid now accounted for only 7 percent of the university’s $5 billion annual budget, and that the federal government’s budget troubles could lead to even deeper cuts.

And one can easily envision state funding being eliminated altogether now that it is such a small portion of the overall costs of operating the University.  Consequently The Ohio State University is doing what you would expect them to do, borrowing money, selling concessions and selling assets.

The Ohio State deal is one of several that the university is pursuing in a drive to build its financial reserves. The university recently sold 100-year bonds, a first for a public university, raising $500 million; it made a $25 million exclusive deal with a local bank for campus A.T.M.’s and other services and is looking into privatizing its airport.

And now the University is considering selling its parking concession.

As state universities try to fill in gaps left by shrinking government support, Ohio State University is taking steps to open a new financial frontier with its parking lots. University officials say that a private bidder has offered $483 million in a lump sum for a lease to operate university parking facilities for 50 years.

Of course in the long run this is a losing proposition for the college.  It will forgo the revenues from the parking lots in exchange for a lump sum of money.  Since the firm that leases the parking lots must make a profit, presumably a big profit, that is a huge sum of money that is not going to Ohio State.  Assuming an 8% return for invstors (they are not doing this out of the goodness of their hearts you know) or about $38 million a year that is $2 billion that the University will be giving up over a 50 year period.

Of course, all that really means is raising the cost of attending, putting students further into debt and reducing the opportunity for low income and middle income families to better themselves through higher education.  But that's okay, that is what Conservatism is all about. 

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