A thorough analysis of the data reveals that American colleges and universities are increasingly bloated with administrative bureaucracies. The composition of the higher education workforce has shifted dramatically in favor of administrative and support staff in recent years, substantially outpacing the growth in enrollment. College expenditures on administration and support services have grown at a much faster rate than education expenditures, resulting in a less efficient workforce. Despite a lack of clear performance measures, this workforce is very well compensated. This trend suggests that institutional priorities have shifted from research and providing an education to empire-building. The following chapter provides a compelling case that schools need to reduce their administrative staffs in order to make college more affordable.
Composition of the Workforce
The administrative bureaucracy on college campuses is comprised of two main classifications of employees: (1) executive, administrative or managerial and (2) other professionals, or noninstruction-related support staff. Combined, these two classifications of employees made up 26.1 percent of the total workforce (31.6 percent of full-time equivalent employees) at colleges in 2007, an increase of 15.2 percent (a 19.4 percent increase for FTE) from 1997.
Table 6.1 displays the total and FTE staff by occupation at degree-granting institutions, in terms of both absolute and percentage of staff, in Fall 1997 and Fall 2007. Table 6.2 shows the percentage change, in terms of the absolute number and composition of the workforce, for the total and FTE staff between the two periods.
Job Growth at Colleges
Using the IPEDS Fall Staff Surveys data collected for a previously released CCAP report,136 a sample of 2,782 institutions revealed that colleges added 690,373 full-time equivalent (518,489 full-time; 515,651 part-time) jobs between 1987 and 2007, an increase of 39 percent (33% FT; 85% PT). Of this increase, 51.6 percent of the new positions were either managerial or support staff (356,347 FTE jobs), whereas only 47.1 percent were instructional (325,029 FTE jobs). Figure 6.1 shows the aggregate nominal increase in jobs at the colleges included in the sample between 1987 and 2007, by occupation and status.139 FTE instruction and management positions each increased by 53 percent during the period (36% vs. 53% FT employees, respectively; 113% vs. 43% PT employees, respectively), whereas FTE support staff increased by 100 percent during the period (101 % FT; 81 % PT).
The growth of non-instructional staff is so fast that if these job growth trends were to continue, the number of managers and support staff (administration) at 4-year not-for-profit colleges would outnumber instructors by 2014. Using the average annual percentage increase between 1997 and 2007 for each of the three job categories (managers, support staff and instructors) as the respective rate of growth and combining support staff and managers into one category as administration, figure 6.2 shows the job growth projection for the combined 4-year public and private not-for-profit institutions that were included in the sample.
Growth of Administrative Staff Relative to Enrollment
While the previous section discussed the growth of college administrations in absolute terms over the past twenty years, colleges have also experienced a growth in enrollment during the period. Therefore, a measure of administrative growth relative to enrollment is perhaps more appropriate. Figure 6.3 displays, by sector, the ratio of FTE administrative employees141 per 100 FTE students in 1987, 1997 and 2007. This ratio has increased over each time period for all four of the sectors mentioned. The private not-for profit 4-year institutions had the highest ratio of FTE administrative employees per 100 FTE students, 9.3 in 2007, an increase of 30.2 percent since 1987. The public 4-year institutions had a ratio of 7.5 in 2007, an increase of 38.2 percent over twenty years. The private not-for profit 2-year institutions had a ratio of 7.0 in 2007, an increase of 47.8 percent since 1987. The public 2-year institutions had a ratio of 2.1 in 2007, an increase of 36.4 percent over twenty years. Thus, it is clear that the growth of administrative employees has occurred not only in absolute terms, but also relative to enrollment.
Spending Trends Indicate a Shift in Priorities
The data in the previous sections described the shift in the composition of the higher education workforce towards administrative and support staff and the growth in these positions. These trends suggest that college staffs are increasingly inflated with administrative personnel. A report released by the Delta Cost Project (DCP) suggests that the growth of college bureaucracies has resulted in a shift in institutional priorities away from instruction. Table 6.3 displays education and related expenses (E&R) spending by educational category and institutional sector on a per FTE student basis as well as a share of total E&R spending in 1995 and 2006, as reported by DCP.
In absolute dollars, E&R spending (which is comprised of instruction, student services, and some administration spending) on instruction increased between 1996 and 2006 in all six sectors; however, as a share of all E&R spending, it declined in all six. Additional resources were disproportionately allocated to student services and administrative support, which increased in both absolute and relative terms in all six sectors.
In the public research sector, combined spending per FTE student on student services and administrative support grew 15.5 percent, or by 1.5 percentage points as a share of total E&R spending. The public master’s sector experienced an increase of 20.5 percent in combined spending per FTE student on student services and administrative support, or an increase of 3 percentage points as a share of total E&R spending. In the public community college sector, combined spending per FTE student on student services and administrative support grew 18.7 percent, or by 2.6 percentage points as a share of total E&R spending.
In the private research sector, combined spending per FTE student on student services and administrative support grew 49.5 percent, or by 4.3 percentage points as a share of total E&R spending. The private master’s sector experienced an increase of 30.9 percent in combined spending per FTE student on student services and administrative support, or an increase of 2 percentage points as a share of total E&R spending. For the private bachelor’s sector, combined spending per FTE student on student services and administrative support grew 34.3 percent, or by 2 percentage points as a share of total E&R spending.
Using the IPEDS 2007 Fall Staff Survey data, we were able to determine the number and percentage of administrative employees with salaries above $50,000, $65,000, $80,000 and $100,000 by institutional type. At doctorate/research universities, 58 percent of administrative employees (245,310) earned a salary above $50,000, with 9.9 percent (41,905) drawing a salary greater than $100,000. At master’s colleges,150 48.9 percent of administrative employees (63,056) were paid a salary greater than $50,000, with 8.4 percent making more than $100,000 (10,787). At baccalaureate colleges, 42.5 percent of administrative employees (27,132) were paid more than $50,000, with 6.8 percent (4,328) taking home a salary above $100,000. Table 6.4 displays the earnings level of administrative staff by institutional level for fall 2007, with the number of schools included in parentheses.
The salaries of senior administrators increased by 4 percent in 2008-09, according to the College and University Professional Association for Human Resources (CUPA-HR), which conducts a series of annual salary surveys of college administrators. This was the third consecutive year at that rate, and the twelfth straight year that salary increases outpaced inflation, as measured by the Consumer Price Index. CUPA-HR also conducts an annual survey which measures the salaries of midlevel administrators and found that their salaries increased by 3.5 percent in 2008-09,154 down slightly from the 3.9 and 3.8 percent increases received in the two prior years, respectively. Table 6.5 reveals the typical salary for senior and midlevel administrative workers by functional category and institutional type, as reported in the 2008-09 CUPA-HR salary survey.
The Case for Reducing Administrative Salaries
Administrative staff at colleges has grown in both absolute number and relative to student enrollments. The growth of administrative employees has outpaced that of faculty and instructors. If this trend were to continue in the future, administrative employees would outnumber instructors at 4-year colleges by 2014. Expenditures on education and related expenses are increasingly allocated to administrative and support services and less so to instruction, with expenditures on the former already outnumbering that of the latter in some sectors and approaching parity in the remainder. The majority (58%) of research/doctoral college administrative employees received a salary above $50,000, and nearly 10 percent were paid a six figure salary in 2007-08. In contrast, only 32 percent of individuals over the age of 25 in the U.S. workforce made more than $50,000 in 2007, while 7.7 percent of these individuals brought home $100,000 or more.
Administrative and support staffs in higher education should be reduced in order to lower the costs of providing a college education, to improve employee productivity, and to refocus the mission of colleges to the production and dissemination of knowledge.
Lower the Costs of Providing a College Education
According to the National Center for Education Statistics, the nominal costs of attending college (tuition, fees, room and board) increased by 67 percent at public and 56 percent at private institutions between the 1995-96 and 2005-06 academic years. After accounting for inflation, these figures equate to real increases in the cost of attending college of 30 and 21 percent at public and private institutions, respectively. This amounts to an average annual real increase of 3 percent at public and 2.1 percent at private colleges.
The proliferation of university administrative and support staffs has contributed to this rapid rise in the cost of college. As discussed earlier, the number of such employees has grown substantially over the past two decades. The costs associated with having such a large administrative bureaucracy are substantial, including not only the salary figures previously mentioned, but also other forms of compensation (e.g. health and life insurances, retirement contributions, tuition discounts, and housing and car allowances for some senior officials).
Reducing the size and scope of the bureaucracy on campus by 5 percent would result in considerable savings – an estimated $1.78 billion, or $106 per student, at non-profit 2- and 4- year institutions in 2007 alone. Table 6.6 displays the estimated total and per student savings that would result from a 5 percent reduction in administrative staff in 2007 by sector, with the number of schools included in the calculation in parenthesis.
Improve Employee Productivity
The rapid rise in administrative staffs has resulted in a decline in employee productivity. The two main means of measuring output in higher education are number of students enrolled and the number of degrees awarded. Using these data points, it is possible to estimate two measures of administrative staff productivity: (1) students per administrative employee and (2) degrees awarded per administrative employee. In terms of enrollment, administrative employee productivity in the non-profit sectors declined by between 23.2 and 27.6 percent between 1987 and 2007.164 In terms of the number of degrees awarded, administrative employee productivity in the non-profit sectors declined by between 15.8 and 19.1 percent between 1987 and 2007. A small reduction (5 percent for instance) in administrative and support staff would increase productivity significantly.
Refocus the Mission of Colleges to the Production and Dissemination of Knowledge
As mentioned earlier, expenditures on administrative and student services have increased disproportionately compared to instruction, suggesting that institutional priorities have shifted away from their primary purpose of education. Adding credence to this argument is the fact than twice as many full-time administrative and support staff as full-time instructional positions were created between 1987 and 2007. Colleges have increasingly staffed classrooms with part-time adjunct instructors, who are paid a small fraction of their full-time counterparts’ wages, often without any benefits. The savings associated with this shift in paradigm, which is arguably worse for students, have been squandered away in a higher education arms race that includes a doubling of support staff over the past twenty years. Higher education needs to trim down the bureaucratic fat that has encompassed campuses and refocus its mission on the production and dissemination of knowledge.
The evidence strongly suggests that administrative staffs have overpopulated college campuses. If the current trends in staffing were to continue, the number of administrators would outnumber instructors in the higher education industry within five years. Roughly a quarter of 4-year non-profit colleges reported having more full-time equivalent administrative support employees than instructors in 2007. This is a serious disease that has plagued higher education and needs to be eradicated. The ongoing financial crisis has created a cost-cutting environment on many campuses. This situation has led some colleges to implement a number of measures, including employee layoffs, furloughs and consolidations. Our recommendations include eliminating redundant or comparable departments and positions, filling administrative positions with students, implementing an incentive-based compensation system, outsourcing services and making effective use of technology.
Consolidate Redundant or Comparable Departments and Positions
It is not uncommon for different departments to offer very similar educational programs, or for similar services to be provided by multiple administrative offices on a college campus. When this happens, it imposes additional administrative burden and costs. Colleges should evaluate their program and student service offerings to identify redundancies and potential areas for streamlining activities. Doing so will permit colleges to consolidate their offerings in a more efficient and cost-effective manner. Several recent cases highlight the potential cost savings.
Case Study 6.1: Converse College, an all-women’s liberal arts college in South Carolina, announced in late April 2009 plans to reorganize over the next two years. The initiative will include consolidating academic programs and departments, streamlining student services and reducing expenses with an 8 percent reduction in staff. The changes include “the housing of all Converse academic programs under the umbrella of three distinct areas: a School of Humanities and Sciences, a School of Arts and a School of Education and Graduate Studies,” and the consolidation of student services into four clusters (Student Advancement and Transitions Center, Enrollment and Billing, Student Engagement, and Distance Learning and Continuing Education). The reorganization will permit Converse to eliminate 11 staff and 7 faculty positions over two years.
Case Study 6.2: In May 2009, the University of Florida announced cost-reducing job cuts that included the elimination of approximately 150 faculty and staff positions. It plans to save up to $30 million, in part by merging some small departments and offices, including the departments of operative dentistry and dental biomaterials, the department of Communication Science and Disorders in the College of Liberal Arts and Sciences and the department of communicative disorders in the College of Public Health and Health Profession, and the Mental Health Center and the Counseling Center within Student Affairs.
Fill Administrative Roles with Students
Many students are willing to take at least a part-time job while in school. According to the College Board, 48 percent of full-time and 84 percent of part-time undergraduate students under the age of 25 were employed in 2005. A Federal Work Study program provides funding to institutions to be allocated to low-income students in exchange for part-time work on campus or in the community. Work study students are guaranteed minimum wage, suggesting that colleges could employ students in an administrative capacity at a fraction of the cost of professional full-time employees.
Filling more administrative roles with students would be a win-win strategy for both students and colleges. Students would benefit from gaining hands-on job experience, as well as earning money to help offset the cost of college. Colleges would directly benefit by reducing their labor costs. There would also be indirect benefits to colleges, such as a low-cost probationary screening of potential future employees and providing students with much-needed work experience that will make them more employable upon graduation, which would be an imageboosting reflection on the college.
Case Study 6.3: Rhodes College, a liberal arts school in Tennessee, began a student associate program in 2004 that provides funding for 100 students to “work in jobs that reinforce their classroom learning and earn up to $4,500 a year.” Most Rhodes Student Associates work in academic departments and administrative offices doing work that is proposed and guided by professors or staff members who assure that the work is of a “professional level and relates directly to each student’s area of study or desired career.” Such positions are funded by the institution and pay between $10 and $12 an hour. The program provides students with meaningful work experience and the college with low-cost employees that save an estimated half million dollars a year, according to Bob Johnson, VP for student and information services.
Implement an Incentive-Based Compensation System
The compensation for many administrative positions, especially senior ones, is currently determined by industry benchmarking – in other words, by determining how much comparable employees at similar institutions are paid. This has resulted in a run-up of administrative salaries without consideration for the employee’s actual worth. College presidents are generally compensated in this regard, often with little in the way of incentives for performance in their employment contracts (the common exception being a dubious incentive to move up in the rankings). This method does not consider the value that an employee adds, nor does it provide an incentive for employees to engage in entrepreneurial activity to continually improve processes, enhance performance, reduce costs and streamline activities.
Colleges should consider implementing an incentive-based compensation system that rewards exceptional performance and is punitive for lousy performance. A few examples of measurable goals that could be incentivized include recruitment and enrollment objectives, retention and completion rates, graduate job placements, and cost-saving initiatives. Schools in the for-profit sector reward employees with bonuses and stock options based on performance criteria. While non-profit schools are not publicly traded, they do provide very similar educational services as the proprietary colleges and would be wise to implement some of the management practices used in the for-profit sector, especially ones that incentivize improving performance.
Colleges are engaged in a plethora of non education-related functions and services that could be outsourced to private providers, reducing the need for administrative employees. We devote an entire chapter to outsourcing, so we will not spend too much time discussing it here, other than mentioning that outsourcing often leads to cost reductions and efficiency gains.
Make Effective Use of Technology
Many colleges still practice an arcane way of conducting business that involves the inefficient shuffling of paperwork among administrative offices, with multiple offices often performing repetitive processes due to a lack of communication and visibility of workflows. This confusion increases the cost of information sharing, as more administrative and support staffs are employed than ought to be required. This is still occurring despite multi-million dollar investments in enterprise resource planning (ERP) systems on many campuses. It is true that some college processes, such as library services, registration and admissions have moved into the digital age, but much more efficiency can be achieved with the effective use of technology. There are many more processes that should be integrated into existing systems. This step, as well as improvement of existing electronic processes, will reduce the administrative burden on colleges and ultimately save money.
Bernie Kluger, CEO of FairChoice Systems, provided us with a few examples of how colleges could utilize technology to their advantage. He estimates that colleges could reduce the cost of administering student housing by 3 to 5 percent by doing online housing contracts. His firm also estimates that colleges could save an annual $25,000 per 1,000 entering students by “migrating its vaccination certification process from paper to the Web.” The implementation of such processes would require a one-time fixed cost, but would reduce labor costs and inefficiencies for every subsequent year.
The recent explosion in tuition is at least partially attributable to the fact that administrative bureaucracies have ballooned out of control. This trend simply cannot continue as public sentiment over the upward spiraling costs worsens. Colleges need to refocus their mission on providing a quality education at an affordable cost. This requires increases in worker efficiency and a return to a realistic pay structure. These goals can be achieved in a multitude of ways, including the consolidating comparable departments and positions, implementing an incentivebased compensation system, filling administrative roles with students, outsourcing noneducation related services and making effective use of technology.