Privatizing dormitories

This week the University of Kentucky announced that it was going to transfer all of its dormitories to a private firm.  Do not be surprised to see other universities (maybe even NC State?) move in this direction soon.  Most dorms were built for the boomer generation in the 1950s and 1960s and let's just say they need some work.  Money for new construction or modernization is scarce, especially in states with significant pension and retiree health care obligations.  Privatization gets UK out of a business that is poorly aligned with its core competencies of teaching and research.  Most universities have exited the bookstore business.  Perhaps privatizing dorms is the first step toward getting out of the property management business altogether.

One way for states and cities to cut budget deficits

Sell assets.  WSJ writes about various state and local governments who have decided to convert various properties into revenue streams.  You name it: office buildings, airports, parking meters, toll roads, and zoos have all been auctioned off to the highest bidder. 

What does this mean for economic well-being?  The good news for consumers is that private owners are likely to run these assets more efficiently than state or local governments.  The not-so-good news is the substitution of private for public monopoly could mean higher prices and less output.  Also, asset sales provide one time relief -- you can only sell I-95 off once.  Unless state and local governments take other steps to bring their income in line with their expenditures, these sales only postpone the ultimate day of reckoning.