After Ohio State privatized campus parking operations in 2012, against the wishes of some 83 percent of Ohio State faculty members, I decided to provide periodic reports to the community on the true financial impact of this privatization deal. Here’s my updated reminder of how poorly privatized parking has been going for Ohio State on the financial front.
Two things have not changed. First, the Ohio State administration continues to treat the up-front $483 million payment it received from CampusParc as if it were a gift to Ohio State, rather than treating it as payment for giving CampusParc 50 years’ worth of net profits that Ohio State formerly made from parking operations. The administration continues to hide — in an ongoing PR campaign to support its moves to privatize whatever public assets it can — the opportunity cost to Ohio State because those tens of millions in annual parking earnings are going to CampusParc until 2062.
Second, the Ohio State administration continues to hide key financial information that would make possible a full accounting of the actual financial impact of the parking deal. Public records requests for this information continue to be met with “the information that you requested is considered a trade secret … and thus exempt from disclosure under the Ohio Public Records Act.”
The administration contends there is no public right to know whether this was a good deal. Yet we can still detect that it was not because an estimate of the financial impact remains possible based on information Ohio State revealed earlier in the process and information about investment performance of Ohio State endowment funds that cannot be so easily hidden from public scrutiny.
Each year so far Ohio State has reported taking millions in distributions from the endowment fund’s parking deal proceeds, emphasizing in its PR how these funds have been distributed to various good causes around campus. Specifically, in fiscal year 2017 it was $22,485,560; in fiscal year 2018 it was $23,011,205; and in fiscal year 2019 we already know it will be $23,515,323.
However, as noted above, Ohio State has utterly failed to acknowledge the net earnings from parking operations it has handed over to CampusParc. These far exceed the amounts above that have been received in return. When these opportunity costs plus actual expenses related to monitoring CampusParc are taken into account, Ohio State has suffered rapidly, increasing net losses on parking privatization.
Last year, I estimated the net loss for fiscal year 2017 to have been about $11.5 million. Based on updated information, I now estimate the net loss in fiscal year 2017 was about $11.6 million, and the net loss in fiscal year 2018 was about $14.5 million.
In other words, an updated analysis shows that when opportunity costs are included, the $23 million Ohio State will claim it has provided to good causes around campus in fiscal year 2018 because it privatized parking is about $14.5 million less than otherwise would have been available. That is, Ohio State would have had about 63 percent more money to distribute to those good causes if it had not privatized parking.
Sadly, the financial burden the Ohio State administration has set up for future Buckeyes and Ohio taxpayers in the energy infrastructure privatization deal will be much worse.
Ohio State is poised to borrow far more than the advertised $1.165 billion — that’s billion, with a B. In a repeat of what happened with parking privatization, this amount is being touted by Ohio State’s PR machine as if it were the winning bidder’s gift to Ohio State rather than the loan it actually is.
The energy deal actually involves multiple loans that official Ohio State documents, obtained through public records requests, show could total more than $1.75 billion. These loans carry ridiculously high effective interest rates compared to what Ohio State would have paid to borrow in the normal credit markets. And Ohio State will still be paying off these loans not just for the next 50 years, but for the next 70 years.
Bruce W. Weide