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Web extra: Letter from President Gee explaining RFP process

Below is a letter written by President E. Gordon Gee explaining the Request for Proposal process for the possible lease of parking operations at Ohio State.

Dear Faculty, Students, and Staff:

Last week, the Senate Steering Committee voted unanimously in favor of the University issuing a Request for Proposals to potential partners interested in leasing the management of campus parking operations (memorandum by Steering Chair T.K. Daniel is appended below). The Senate’s advisory role is an important one. While this note will discuss the process in more detail, I want first to summarize the fundamental circumstances that undergird our larger considerations.

Public universities from California to Florida and North Carolina to Washington are enduring dramatic reductions in state support, resulting in layoffs, construction cancellations, and program closures. In Ohio, we have been blessed with the strong support of elected leaders who appreciate and honor the importance of higher education. And yet, even here, higher education’s financial support – from both the state and federal government – is not going to become any more generous.

The central question is this: How do we, as a world-class University, finance our visionary aspirations and continue to flourish in an era of limited funding? The answer is that in order for this University to thrive, we must examine everything we do, think hard about how we operate, and find new ways to financially sustain and grow our excellence in teaching, research, and service. Because of ongoing efforts to capture new funds through streamlining operations and developing innovative financial strategies, Ohio State is already more financially stable than so many other public and private institutions across the country. Exploring the leasing of our parking operations is another part of that comprehensive strategy to strengthen our position and enhance the quality of our core academic work. That strategy is reflected in the Provost’s report to the Board of Trustees at its April meeting [http://oaa.osu.edu/1297.html].

To determine how much money a new parking arrangement might bring in, today we are issuing a Request for Proposals (RFP) for leasing the parking operations. Bids will be due back at the end of May, and we will make a final decision before the end of the academic quarter. We will recommend our decision to the Board of Trustees, for affirmation at its June meeting. To reiterate, no decision has been or can properly be made until we receive the bids.

Simply put, the financial and service guarantees must be advantageous or we will not enter into a contract. Please know that we have taken the issues raised into consideration in refining the terms of the bid contract. For example, no current Transportation and Parking staff member will lose his or her job because of any new contract. And any future parking cost increases will be capped at a rate consistent with a historical average for the past several years. For example, we now require all bidders to identify the consequences of capping annual parking rate increases at 5.5%, 6.5%, and 7.5% for the first ten years of the agreement. We have expanded the number of on-campus events to be excluded from contract provision, among other changes.

The financial piece of this equation is critical. We would invest the entire upfront payment in the University’s long-term investment pool to provide funding in perpetuity. While the exact dollar-amount allocations are not known because we do not have bids in hand, we are committing to certain proportions of funding streams.

If we receive $400 million, for example, this would increase our long-term investment pool by nearly 20%. The result would be an immediate, substantial, and permanent acceleration of our academic work. This infusion of funds would be an essential piece of our larger strategy to fund our work, but it is not the only piece. It would act as a catalyst for future investments. The funds would be allocated as follows:

Increase student financial aid and scholarship support by $75 million: This would generate more than $3 million in annual funding in the first year, in addition to other funding we will be identifying.

Add $200 million to faculty-recruitment funds to hire 8-10% additional faculty: This would generate more than $8 million in annual funding in the first year and be part of our commitment to this goal.

Increase by $50 million support for critical areas, such as the Arts and Humanities, where external funding is limited: This would generate more than $2 million in annual funding in the first year and supplement other commitments being made.

Add $75 million in funds to improve campus transportation systems and create a more pedestrian-friendly campus: This would generate more than $3 million in annual funding in the first year and allow us to supplement further such activities.

It is important to note that those annual expenditures would increase each subsequent year as part of the investment income is added back to the principle and reinvested to meet future needs. And while we do not know how much a lease might bring until we receive the bids, we do know that building our permanent revenue source is critically important in providing us with more security in the event of of future funding reductions from state and federal sources.

I want to acknowledge those who have been involved in the discussions about this issue over the past several months. The process and debate that bring us to this point have been open and vigorous, as they should be at a university. Several town hall meetings have been held, and various analyses have been discussed in numerous Senate and faculty committee meetings, as well as online and in the media. Particular thanks go to the Parking Advisory Group – a committee comprised of faculty, staff, and students – which has been helpful in discussing and assembling ideas and reviewing responses from potential partners.

Moving forward, we will continue to engage the University community in briefing sessions through these same kinds of efforts. After the bids come to the University on May 30, for example, we will meet with the Faculty Council on May 31 at 3:30 p.m. On June 5, we will meet with the Senate Fiscal Committee at 1:30 p.m. and the Parking Advisory Group at 4:00 p.m. We will brief the Senate Steering Committee on June 6 at 3:30 p.m. We will be reaching out to University Staff Advisory Committee and to student leaders to hold similar sessions with them, as well as with various units and departments. Further, by the end of this week, we will have a website where this information is presented and through which questions can be answered. Please watch for that website address in OSU Today.

As we continue to explore new funding models, we must be mindful that the central purpose is deepening our work to improve lives and enrich communities. Without resources, a university cannot be an economic, cultural, social, and global force. Ohio State is precisely that today, and we will be even greater tomorrow.

Sincerely,

E. Gordon Gee

President

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