ACTA: Trustees must work to rein in administrative spending on campus

Dive Brief:

• The American Council of Trustees and Alumni released a report Tuesday found small baccalaureate institutions have the highest cost ratios across higher ed, spending in general at least 50 cents on administration for every dollar spent on instruction. Research intensive institutions have much lower cost ratios, which an ACTA spokesperson called “a bit curious and worth looking at” in an email to Education Dive.
• The report concludes that trustees need to take a more active role in monitoring and scaling back on administrative growth on campus to help better manage costs as a way to help rein in the overall cost of higher education.
• Specifically, the report calls on trustees to “familiarize themselves deeply” with trends surrounding administrative spending; “create and utilize financial dashboards with at-a-glance metrics to monitor spending”; review annual financial reports for consistency and clarity to ensure trends can be accurately tracked from year to year; and “consolidate and streamline programs wherever possible.”

Dive Insight:

The Trump administration proposal to cut back on administrative reimbursements associated with research grants has been met with a predictable amount of outcry from institutions across the country. Whether the proposal makes it through the FY2018 budget cycle or not, it gives good insight into the types of things which are top-of-mind for officials in government, and it’s worth sparking a conversation on campus about how to scale back administrative bloat. Much of this conversation has been the driver for many merger proposals, with state officials recognizing consolidation as one cost-saving option. 

There are likely simple fixes institutions can consider before turning to anything more drastic like salary cuts and eliminating positions. For example, executive travel can be more efficiently scheduled to maximize each trip’s value, and there is likely money to be saved by grouping trips by proximity where appropriate. And consolidating job functions to ask administrators to fill multiple roles  could be another way to get better return on spending— for example, at several smaller institutions, the president also teaches some courses. Learning to effectively leverage data to make sure administrators are focusing on the right things and using their time efficiently is one easy fix that can be applied at every institution.