Can colleges find ways to reset climbing admin costs?

Following the release of a report which recommended college trustees take a more active role in monitoring and controlling ballooning administrative costs on campus, American Council of Trustees and Alumni President Michael Poliakoff told Education Dive these costs are a huge impediment to college affordability. 

“Colleges and universities, regardless of size, have generally not been good about sharing resources, All too often they want to be everything to everybody and in their own silos, and this is not a productive way to proceed,” he said. “Every institution has to maximize the possibility to deliver the best possible education at the lowest possible cost.”

Resource sharing, in the form of consolidating legal or other administrative services, is one of many potential solutions, and Poliakoff stressed that the report was not prescriptive in nature. “How Much is Too Much?” was released Tuesday, and noted administrative costs were far outstripping faculty costs increases; a 2010 report indicated a 61% increase in administrative spending per student between 1993 and 2007, compared to 39% in instructional spending. Additionally the average salary for full professors was $102,402, in comparison with $202,048 for chief financial officers and $334,617 for college and university presidents, a situation Poliakoff said could be “bad for morale.”

“A lot of it is fueled by the hiring practices; the dependency on professional search firms has encouraged a steep escalation, and what’s happened is there has been a falling off of people coming through the faculty ranks and filling such positions,” Poliakoff said. “There’s a lot more, dare I say, musical chairs, encouraging what amounts to a certain kind of bidding war, rather than encouraging the ethic of being in a service profession, and being at an institution, committed to it’s growth.”

Poliakoff said ACTA used a very conservative definition of administrative services, excising many roles that exist between instruction and administrative work — a librarian, for example, would be considered an instructor, despite aspects of that work that is administrative in nature. On average, administrative spending per student was lower at public universities than private ones, and the spending tended to decrease the higher the education. Large doctoral universities with the highest research activity, had a 0.17 ratio (as in, for every dollar spent on student education, 17 cents were spent on administrative costs). Conversely, at a private, not-for-profit baccalaureate college specializing in the arts and sciences with a small enrollment, the ratio was 0.63.

There have been numerous instances of higher ed institutions considering consolidation of administrative functions, often in response to dire financial situations; Georgia’s public university system decided to consolidate four schools earlier this year, citing a need to cut administrative costs and boost student outcomes. Some have argued that such measures may be the only means left for embattled private universities with relatively small enrollments.

The ACTA report noted that some administrative costs had likely been due to rising regulatory standards, with the report citing the Task Force on Federal Regulation of Higher Education’s conclusion that federal regulations on higher ed institutions had risen by 56% from 1997 to 2012. While he noted many of the regulatory efforts were important, Poliakoff said he hoped to see more institutions become more engaged in seeking regulatory relief, including advocating their position to local, state and federal lawmakers.

“Because of the growth in regulation, institutions do feel like they need more staff to ensure compliance,” he said. “There is an opportunity to seek to seek appropriate regulatory relief and to team with other institutions for legal services and for compliance issues. We need to see some more creative solutions.”

Although it did not probe the statistics of costs increases in student services, the ACTA report noted that staff costs for these types of jobs were on the rise, citing a Delta Cost Project report finding that full-time employment student services saw the quickest growth in salary expenses at some colleges and universities between 2002 and 2010. Poliakoff was hopeful the ACTA and others could direct more attention onto the rise in costs in that sector of college administration. Though the report could not offer definitive prescriptive measures for each individual college and universities, he hoped the median benchmarks could spark new dialogue.

“We’ve gotten some extremely valuable starting points for that conversation,” he said. “At the end of the day, what we want as an organization is for governing boards to be working with their administrative officers to understand every aspect of how funds are used and to take a long, hard look in a world of finite resources … to ask whether everything is spent is spent wisely and prudently to advance teaching and learning.”