The Forum | Costs

Administrative Bloat Meets the Coronavirus Pandemic

June 18, 2020 by Erik Gross

For decades, colleges and universities have been gradually expanding their administrative functions, adding non-faculty staff year-after-year. Whether it is student services, residential life, or supplementary staff within academic departments, the administrative growth is clear. Sector-wide, per-student spending on administration increased as much as 61% from 1993 to 2007, according to Jay Greene, professor of education policy at the University of Arkansas.

Since 2007, the trend has only accelerated. The National Association of Scholars estimates that non-instructional personnel now make up over half of all payroll costs at the average university. The American Council of Trustees and Alumni’s (ACTA) own research documents the issue at the institutional level. Our website, HowCollegesSpendMoney.com, uses data from the National Center for Education Statistics to track instructional-to-administrative cost ratios, as well as instructional and administrative spending per student, at colleges across the nation. Recently updated with the latest federally verified financial data, the website tracks spending trends from 2010 to 2018. At many institutions, the trajectory is clear: Administrative costs have crept up gradually, while instructional spending has remained stagnant. On average, ACTA found that from 2016 to 2018, colleges’ per-student spending on instruction decreased by 0.7%, while per-student spending on administration increased by 1.4%.

The coronavirus pandemic is now threatening the bottom line of colleges and universities to an unprecedented degree: Spring 2020 revenues, such as room and board fees, were often forfeited when colleges went remote, endowments have shrunk due to the struggling financial market, philanthropy is expected to dwindle, enrollment numbers remain unpredictable, and families are unwilling to pay high tuition prices for a possibly remote fall 2020 semester. Yesterday’s solution—raising tuition to finance institutional growth—is no longer an option. In short, as every source of colleges’ revenues is in jeopardy, there remains only one option: cut costs.

There are many innovations that schools must harness to realize greater efficiency and reduce costs. Among them are more intensive capital usage, academic program prioritization, caps on athletic spending, academic calendar expansions, and more. Unfortunately, many of these fixes take years to enact. In the short term, colleges have to remain solvent and must reduce their immediate costs, most of which lie in personnel. All of this starts with governing boards gaining a thorough understanding of the appropriateness of organizational expenditures and how they affect the institution’s most important goal—student learning.

The challenge for university leadership is to figure out how to lower personnel costs without hurting the institution’s core educational mission. Trustees need to understand that the university exists primarily to produce and distribute knowledge. Staff and resources that directly support research and education, namely faculty, need to be protected vigorously as institutions respond to the coronavirus budget shortfall. Administrative bloat is where trustees should look to cut costs and increase efficiencies.

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