News summaries
How America's universities became hedge funds
In August 2009, just one month after the state of California cut over a
billion dollars from its higher education budget, the University of
California (UC) turned around and lent the state $200 million. When
journalists asked the UC president, Mark Yudof, how the university
could lend millions of dollars to the state, while the school was
raising student fees (tuition), furloughing employees, canceling
classes, and laying off teachers, Yudof responded that when the
university lends money to the state, it turns a profit, but when it
spends money on salaries for teachers, the money is lost. Welcome to
the university as hedge fund world....To understand how both public and
private research universities have gotten themselves into this mess,
one needs to understand five inter-related factors: the state
de-funding of public education, the emphasis on research over
instruction, the move to high-risk investments, the development of a
free market academic labor system, and the marketing of college
admissions. These different forces have combined to turn universities
into corporations centered on pleasing bond raters in order to get
lower interest rates so that they can borrow more money to fund their
unending expansion and escalating expenses.
Huffington Post
Aussie firm's pullbacks continue
Macquarie Group Ltd. said it is in talks to sell the management rights
of some of its real-estate assets, as it continues to cut ties with
many of its remaining listed satellite funds...The talks continue
Macquarie's moves to distance itself from the listed-funds model it
pioneered over the last 15 years, as it chases further expansion in the
U.S. and Europe and reshapes itself into primarily a global trading and
advisory business. In the last seven months, it has severed its
management ties over separately listed funds that house airport,
theme-park, media and toll-road assets and has bought a number of niche
advisory and investment firms offshore.
The Wall Street Journal
IL: Some Chicagoans not feeling the need to feed meters
On Jan. 4, Chicago Parking Meters LLC rolled out an increase in the
rates on the 36,000 meters in the city, according to the company, which
leases them from the City of Chicago as part of a controversial 75-year
deal. Chicago Parking Meters LLC paid $1.15 billion to operate the
meters and collect parking fees. The city collects parking fines. But
there are ways to beat the meter altogether, according to locals
including Shea Prater of Roseland, who wouldn't dream of driving
downtown alone. "I'll make sure my wife or a buddy of mine can come
with me and drive around in circles while I run my errands," Prater,
40, said of Loop trips. "It doesn't make sense to pay that kind of
money for some simple stuff like picking something up from a store."...
Current economic woes have made parking a tough business, period,
according to Steve Warshauer, whose family started Standard Parking in
1929. "It's cost people jobs, and people are not coming downtown as
often as they used to," said Warshauer. Standard Parking, a national,
publicly-traded company, is among the city's largest parking lot and
garage operators with 125,000 spots citywide. "Hotels are not doing as
well, retail's not doing as well and therefore less people are parking.
It's plausible to think that if the economy were doing better, we would
see some overflow due to the parking meter increase. But parking is
affected like any business had been. If there's a difference, right now
we just aren't seeing it."
Chicago Now
IL: Chicago granted FAA extension on Midway privatization deadline
Chicago has been granted an extra three months before it must update
the Federal Aviation Administration on its plans to privatize Midway
airport. The city, which faced a Feb. 1 deadline to submit a new
privatization timeline to the FAA, has asked for and received an
extension until April 30....A closely watched, $2.5 billion deal to
privatize Midway--the city's second airport--was pulled in early 2009
after the bidders failed to secure the required funding amid the global
credit crisis. Since then, city officials have maintained that they
hoped to devise a new plan and privatize Midway anyway.
The Wall Street Journal
OK: Lawmakers: Donations had no sway on workers' comp privatization
Two state lawmakers and a Chandler insurance company said Thursday that
there is no connection between contributions to Rep. Dan Sullivan,
R-Tulsa, and Sen. Cliff Aldridge, R-Midwest City, and a presentation by
the firm's executives to a task force whose co-chairmen are Sullivan
and Aldridge... Ethics Commission records show that the campaigns of
Sullivan and Aldridge each received $12,000 from executives of National
American Insurance Co. and a related political action committee in late
September. National American Insurance made a presentation Oct. 7 to
the task force, which is studying how to privatize CompSource, the
state-operated "insurer of last resort" for workers
compensation....Task force records indicate that a majority of its
eight members favored mutualizing CompSource, meaning it would be run
by the policyholders. Sullivan and Aldridge prefer selling CompSource,
which they say could be worth $300 million. Some legal authorities
argue that the assets of CompSource, which is not subsidized by the
state but was started with state funds in 1933, belong to the
policyholders and not the state. Ultimately, the state Supreme Court
will decide the matter.
Tulsa World
CA: Public-private pairing envisioned for S.F. parks
San Francisco may rely more on corporate and philanthropic sponsors and
community volunteers to fund and maintain its parks and recreation
centers as it struggles with a mounting budget deficit. That is the
hope of Phil Ginsburg, general manager of the San Francisco Recreation
and Park Department, who recently returned from New York City and was
wowed by the public-private partnership operating Central Park. The
Central Park Conservancy, relying heavily on money from sponsorships,
has invested more than $500 million in the showcase urban park in
nearly three decades. "Everything- everything - is named: every bench,
every tree. And it's done very modestly, very tastefully," Ginsburg
said....But Ginsburg may be stepping into dangerous territory. The
left-of-center Board of Supervisors often has bristled at even a hint
of privatizing public resources, and voters have gone back and forth
about adding a corporate name to Candlestick Park. Ginsburg said he has
no plans to privatize public assets but is intent on finding new
sources of revenue, "and if that means putting up tasteful plaques"
acknowledging donors, then so be it. Golden Gate Bridge administrators,
attempting a similar scheme, found that's easier said than done. A few
years ago, public backlash forced them to drop plans to help close a
budget gap with "low-key" corporate sponsorships of the span. The
sustained economic downturn has since resurrected the idea. San
Francisco Supervisor Ross Mirkarimi said he agrees with Ginsburg that
the city could and should do a better job making money from park
concessions in appropriate settings.
San Fransisco Chronicle
LA: State leaders honored by Reason Foundation for privatization efforts
Louisiana’s Commissioner of Administration Angèle Davis and state
Superintendent of Education Paul Pastorek have been honored by the
Reason Foundation with Innovator in Action Awards for 2009. Reason
Foundation bills itself as a nonprofit think tank dedicated to
advancing free minds and free markets. The group lauded Davis for her
role in streamlining state bureaucracy for Gov. Bobby Jindal, including
efforts to privatize some services, to implement budget reforms and to
install other sound fiscal management strategies. Improved bond ratings
resulting from her work will save taxpayers millions of dollars in
interest, Reason Foundation said.
The Advocate
CA: Privatizing convention center would hurt nonprofits, panel learns
Redding can outsource management of its Convention Center to a private
firm - and risk losing Kool April Nites, Big Bike Weekend, Kids
Unlimited and other popular events staged by community groups that
cannot afford higher rents. Or the city can continue running the
Convention Center - and sacrifice $1.2 million each year to that
operation's chronic deficit. Those are dollars the city could
presumably spend on essential services. The Community Services Advisory
Commission (CSAC) has spent the past six months grappling with the
question of what Redding's 40-year-old civic auditorium is really
worth....Proposing Convention Center privatization has been
eye-opening, Susan Hinz, a Redding attorney who chairs the group, said.
"I did not realize the Convention Center was so important to so many
people," Hinz said. The auditorium is especially important to nonprofit
corporations, service organizations and charity groups relying on
volunteer labor. That's because the city, as part of a long-standing
policy, charges these groups lower rental fees than it charges
for-profit groups. But profit-driven firms producing shows and other
events at the Convention Center also urged the commission to reject
privatization. Higher rental rates could ultimately force some
performers to skip Redding, concert promoters based in San Francisco
and Chicago told commissioners in letters.
Record Searchlight
