Trustees | Costs

Daniels says colleges are too top-heavy

Leaders at IU, Purdue say they do not spend too much on administrative expenses
INDIANAPOLIS STAR   |  August 31, 2010 by Dan McFeely

Gov. Mitch Daniels told a large group of college trustees Monday that the days of top-heavy campuses—where administrators get the biggest slice of the budget pie—must come to an end.

But college leaders at Indiana and Purdue universities deny the schools are top-heavy and say they already are wielding a sharp budget-cutting knife.

“No, I don’t think Purdue is top-heavy,” said Keith Krach, chairman of the board of trustees there. “But I do think there are areas we can focus on and look at best practices to make them more efficient.”

Citing studies that show spending on administrator salaries, office space and nonteaching supplies outpaced spending for instructional costs, Daniels said “that is a lopsided way to deliver resources.”

One study of spending habits in Indiana showed nearly every college spent more on administration than on instructional expenses from 2002 to 2008. Administrative areas include business operations, human resources and loan counseling.

The increase in administrative spending at IU was about 100 percent, compared with about 39 percent for instructional spending.

Purdue’s West Lafayette campus committed more to instructional expenses during that period, but its Calumet campus increased administrative spending 144 percent, while instructional spending rose 18 percent.

That period did not include the Great Recession and budget-cutting steps taken to address it.

After Daniels cut $150 million in tax support to higher education last year, Purdue responded with a salary freeze for its employees and a plan to trim $45 million in expenses from its $2 billion multicampus budget through budget cuts and deferred hiring.

Similarly, Indiana University consolidated purchasing and reduced its overall staff by 225 with a plan that called for one replacement for every two staff departures. Its $2.9 billion systemwide operating budget also was slashed by roughly $30 million, and IU is looking to trim $59 million more.

“We’ve been working very hard to significantly reduce our costs,” said IU President Michael McRobbie, who said it was unfair to peg all colleges as top-heavy.

Daniels was addressing dozens of college trustees, who control the purse strings of campuses across the state, at a daylong session hosted by the Indiana Commission for Higher Education. The commission oversees college funding and approves major campus construction projects and academic programs.

Daniels was the keynote speaker and set the day’s tone when he urged trustees to put their love for their alma maters on the back burner in regard to tough financial decisions.

“You are not there to be a mindless cheerleader,” the governor said. “Administrative costs are rising rapidly, and that is a lopsided way to deliver resources.”

Daniels cited a national study released a few weeks ago by the Goldwater Institute in Arizona. It found the number of full-time administrators for every 100 students at 189 top U.S. universities had increased by 39 percent from 1993 to 2007.

The study blamed the administrative bloat on subsidies from federal and state governments and suggested that reducing subsidies would force schools to operate more efficiently.

“The role of trustee has never been so critical as it is today,” Daniels said. “But I don’t want to see you at the Statehouse asking for more money.

“Please stay back at the school and find ways to be more efficient with those dollars.”


One of Monday’s presentations was by Anne Neal, president of the American Council of Trustees and Alumni. She suggested some strategies for colleges to cut costs:

—DISTANCE EDUCATION: Increase online course offerings to reach more students.

—CAPITAL PROJECTS: Look at ways to use existing buildings more efficiently.

—HIRE CONSULTANTS: An outsider might find new costsavings.

—TRAVEL COSTS: Consider prioritizing which educational conferences to attend and which to skip.

—TEACHING LOADS: Can professors take on more classes without hurting the quality of education?

—SPECIALIZED ACCREDITATION: Make sure this is worth the cost.

—TENURE POLICIES: Alternatives such as multiyear contracts could save millions in salaries and benefits.

—ACADEMIC PROGRAMS: Review these regularly to see whether there is enough student interest to renew them.


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