Administrative Bloat and the Rising Cost of Higher Education

In a Goldwater Institute study released today, Jay Greene, Brian Kisida, and Jonathan Mills turn over a rock and discover that most American colleges and universities have been increasing their administrative staffs much faster than their faculties or student bodies.

We keep hearing woeful lamentations about how higher-ed costs (and thus tuition levels) keep going up as though the decision to spend money were somehow just mystically happening. (Which reminds me of Jimmy Carter’s explanation for inflation, but I digress.) No force of nature compels schools to spend money. Officials decide to, and they’ve decided to hire an awful lot of administrators.

Naturally, the bloat is more pronounced at some institutions than others. Wake Forest University seems to lead the pack, while the University of Michigan was one of a small number of schools to reduce the number of administrators between 1993 and 2007.

Why all this administrative spending? The authors offer this explanation: “Growth in enrollments and higher rates of government subsidy have made universities flush with extra funds. Being nonprofits, they do not return excess profits to shareholders; instead, they return excess profits to their de facto shareholders, the administrators who manage the institutions. These administrators are paid dividends in the form of higher compensation and more fellow administrators who can reduce their own workload or expand their empires.”

A further point the paper doesn’t get into is the high compensation for administrators. The Chronicle of Higher Education, in “Great Colleges to Work for 2010,” provides a wealth of data on the difference between administrative and faculty compensation. At most of the schools listed, administrators make substantially more. For example, at Centre College in Kentucky, administrators earn on average $96,241, while full-time faculty earn $66,250. At Georgia Tech, the difference is even more striking, with administrators making an average of $194,065, and faculty only $94,215. There are a few instances where faculty members earn more, but in most cases, the administrators are taking in more. That’s a phenomenon worth looking at.

George Leef — George Leef is the director of research for the John William Pope Center for Higher Education Policy.

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