UW administrative spending higher than peers

Administrative spending growth at the University of Wyoming appears to be among the highest of its peer institutions, and greater than all but one other institution in the Mountain West Conference.

That’s according to a report and an internal examination of trends in administrative spending at UW. Though some of the comparators used in the report prepared by a national higher education nonprofit might be inappropriate for UW and internal accounting foibles could account for skewing the perspective, President Laurie Nichols said her administration would be committed to keeping those costs in check.

“As we’ve been working on budget reductions, one of the things I’ve said and that our campus is committed to really working on is reducing administrative overhead,” Nichols said during the Board of Trustees meeting Friday. “I’m not saying we’re out of line here, but I just observed that over this time period of 2007-2016 that the personnel costs have gone up … While I understand there may be a few pay adjustments in there, I hope so, and that as we hire people, you have to be in the market, so there’s all kinds of explanations for that, but I just want to point out that we have gone up and I think that, to some extent, illustrates why we’re committed to looking at administrative overhead and seeing if we can bring that down as well while we’re working on the budget.”

The American Council of Trustees and Alumni (ACTA) put together the report using publicly available data published through the U.S. Department of Education’s Integrated Postsecondary Education Data System (IPEDS).

Looking at trends in administrative spending and instructional spending through a five-year period, the study found UW’s administrative expenses grew by more than 33 percent, compared to just less than 10 percent growth in instructional spending.

Only the University of Hawaii-Manoa saw greater increases in administrative spending and a lower rate of instruction spending growth when compared to the nine colleges in the Mountain West Conference.

“Essentially, our administrative growth has been about three times the instructional growth, and therein lies the concern,” Nichols said.

However, UW does not typically consider colleges in the Mountain West Conference its peer institutions, Nichols said. Of the nine, Nichols said only the University of Nevada-Reno is considered a peer institution — such as the University of Idaho and Utah State University — with Colorado State University and the University of New Mexico as stretch peers.

To demonstrate a more apples-to-apples approach, Nichols and Board of Trustees President John MacPherson tasked the Office of Institutional Analysis with comparing UW’s administrative spending to its 10 actual peer institutions, as well as another six stretch peers.

But when compared to the list of institutions UW considers its true peers, the ACTA’s findings appeared to hold true.

“There’s no question when you look at our peers, we are very high in terms of institutional support dollars,” she said. “Looking at us with our close peers, we’d be right up near the top. Then if you look at it as a percentage of institutional support to instruction cost, we’re not at the very top, but I think we were second; still very close to the top. And with analysis with our stretch peers, even then, we’re very close to the top.”

Sue Koller, manager at the office of institutional analysis, said they found personnel expenses in compensation and benefits increased 3 percent between fiscal years 2009-2014 when adjusted for inflation. Non-personnel expenses — consisting of supplies and services — increased just less than 350 percent.

“When you first look at this information, you probably think there was a huge increase in personnel dollars,” Koller said. “But what we’re finding … is that non-personnel dollars actually fluctuate quite a bit over time — they really do change pretty dramatically. It just so happens when they chose those five years to report on, those were some of the biggest changes, as well.”

Though large increases in non-personnel spending was relatively consistent among UW’s peers, Koller said it was worth investigating what made spending at UW go up.

Further analysis of the spending trends found errors in UW’s accounting and financial systems could have skewed the numbers, said Janet Lowe, vice president of fiscal administration. With UW’s current financial system, Lowe said some of the expenditures considered institutional support as part of administrative spending — such as a one-time $3.5 million endowment to pay for maintenance in the Michael B. Enzi STEM Building — don’t really fall into that category. Volatility in non-personnel expenditures could be created by one-time expenditures while some years showed no increases, she said. As UW works toward implementing a new financial system, Lowe said it would be important to pay “extreme attention” to how financial functions are captured.

“In our new configuration, we’re working very hard to make sure we have a better system of integrity when these functions are attached to expenditures,” she said. “My apologies, half of this increase is accounting related and some things we need to fix.”

In terms of personnel costs, Lowe said the increase in spending would also include benefits, including the rising cost of health insurance. She said her division could continue its analysis by breaking out benefits versus compensation to present a more detailed picture if the trustees desired.

Trustee Mike Massie said there were also several other costs related to administrative personnel spending, such as severance packages and UW’s policy of paying administrators who go to faculty positions a portion of their administrative compensation rate, known as the 5/6th rule.

“Over the last few years, we’ve issued more golden parachutes than on D-Day,” Massie said.

Massie said there were several top administrators — including but not limited to former President Bob Sternberg — whose departures resulted in expensive severance packages that UW paid in a lump sum or is still paying.

When it came to Nichols’ commitment to transparency and goal of keeping administrative overheads in check, Massie said he thought she’s on the level.

“I think there’s a great deal more transparency under the current president than others recently,” Massie said.

Massie said he was not referring to Nichols’ predecessor Dick McGinity when bringing up a lack of transparency.