Privatized bookstore could mean higher prices

Under pressure from the governor's office, the University of Arizona is considering privatizing the Motor Pool, UA's Printing and Publishing Services and the University of Arizona Bookstore, said Julius Parker, the UA's associate vice president for business affairs.

Bookstore Director Frank Farias said three companies have expressed interest in acquiring the bookstore: Follet's, Wallace Book Co. and Barnes & Noble Booksellers.

The move is another in a push by privatization-minded legislators and regents to turn university-run businesses over to private companies, said Rudy Campbell, Arizona Board of Regents president.

"There's a long list of things that are now privatized," he said. "We all believe in privatizing everything that we can."

Some food and construction services at the UA are privately owned, said Associated Students President Gilbert Davidson.

Farias said the bookstore is one area that should not be privatized.

He said all university-owned bookstore profits funnel back to the university. If it is privatized, the money will go to the company's headquarters instead, he said.

ASUA received $375,000 for fiscal year 1998 from the bookstore's proceeds, Davidson said.

Davidson said ASUA's funding will suffer from the re-direction of funds. He said campus clubs and organizations could also face drastic funding cuts.

"The amount of money we receive from our bookstore will not be matched," he said.

Farias said that if the bookstore changes hands, it may have to raise its prices.

The prices, which could initially seem lower, would increase as the company reaches toward its profit margin, Farias said.

"Gradually, they'll raise prices," he said. "They're not accountable to the students, they're accountable to the shareholders."

Farias said that in April, he plans to tell a national association of independent and commercial bookstore administrators in Indianapolis why bookstores should not be privatized.

He said he wants to spread the word nationally that bookstore privatization hurts student finances. Farias said he adheres to that position although he has been offered jobs with private bookstores.

Tim Palmieri, director of the Barnes & Noble-owned bookstore at Yale University, said privatization can better serve student needs.

Barnes & Noble gained control of Yale Bookstore in January 1997 when its independent bookstore lease ran out. The chain spent more than 10 months and $600 million renovating the bookstore and building up the book stock.

"We have the highest diversification of titles in the state and the ability to become an arm of the New Haven community," Palmieri said.

He said because Barnes & Noble has more resources, it can make improvements like provide computer outlets and extended operational hours to better serve student needs.

Palmieri said his expanded bookstore hired more workers while keeping prices lower than the previous bookstore prices.

"The prices are lower; they're based on the contractual margins," he said.

Parker said although bookstore privatization is becoming a national trend, about 37 percent of all college bookstores are owned by private companies and they are usually privatized when management is shoddy and profits are low.

That is not the case at the UA, Parker said.

"We are within the top 20 of the bookstores right now, so from a management perspective, we felt that a private company could not provide better management," he said.

Parker headed a committee last year that examined the pros and cons of bookstore privatization. He said the analysis team concluded the bookstore should not be privatized.

"In the analysis I conducted and based on the information available to me from private firms, my analysis showed the benefits that are provided by the bookstore outweigh the benefits provided by a private organization," he said.

Farias said despite the bookstore's healthy profits and the committee's recommendation, legislators are pressuring auditors to favor privatization.

"They (the auditors) feel like they are caught in a rock and a hard place," he said. "They're being pressured to recommend something that's not being supported by the findings."

To counter pressure from the state Legislature and the governor's office, Parker said an outside committee will review the university committee's decision.

"This will lend more credibility," he said.

Parker said the UA has made no decision on bookstore privatization and is only weighing the options.

"We will not privatize for privatization's sake just because the state feels that privatization is a prime concern," Parker said.

If privatization saves money, however, the university is obligated to do it, he said.

UA President Peter Likins said yesterday that, although he is not aware of any specific plan to privatize the bookstore, he has been asked to report the university's privatization efforts to the regents.

"There is no inherent preference for private operations of university services, but we must at all times be willing to compare what we do for ourselves to what the private sector can do for us," Likins said in an e-mail interview.

Parker said the university's operating budget is about $900 million a year. The state supplies only $300 million, creating a gap that must be bridged, he said.

The difference, Parker said, comes from research and campus businesses - whether or not they are university-owned.