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Section 2: Use Fewer Resources

Chapter 6: Reduce Administrative Staff

Abstract: Recent studies by Daniel Bennett of CCAP, by Jay Greene of the University of Arkansas, and by the Delta Cost Project substantiate what many faculty have long claimed: administrative costs are soaring at universities, mainly through the growth of staff, though also by large increases in compensation, particularly at the highest levels.  For example, from 1997 to 2007, the proportion of full-time equivalent employees in the categories “executive, administrative, and managers” and “other professionals” rose from 22.6 percent to 26.1 percent, continuing a trend that had begun still earlier. Universities and even many liberal arts colleges suffer from a huge bureaucracy that is not only expensive, but contributes to slow and often non-innovative decision making. It is not uncommon for schools to have more people working in an administrative capacity than serving as faculty members.

In the private sector, businesses facing intense competition often slash administrative staffs—the auto companies are a good recent example. Administrators do not make cars, nor do they teach classes. You can have a university without administrators, but not without students or faculty. The minimization of administrative costs and bureaucracy should be sought in any university reform. A few decades ago, few universities had more than a small centralized public relations staff. The typical mid- to large-sized school today has PR people in units throughout the university. Similarly, the number of people involved in affirmative action, diversity coordination, or serving as multi-cultural specialists has soared. As the nation shows continued and often spectacular progress in eliminating the vestiges of discrimination, is it still necessary to have all of these people? Do campuses really need to hire sustainability coordinators? Do they need associate provosts or vice presidents for international affairs?  All of these types of jobs simply did not exist 40 years ago.

A related problem is the explosion in salaries, particularly for senior administrators.  Even five years ago, $500,000 was considered an extremely high salary for a university president, whereas today a growing number make $1 million or more. Chief financial officers of universities that made $175,000 five years ago often make $300,000 or more today. Universities argue they need to pay these amounts to keep up with their peers and to be competitive with the private sector.  But universities offer benefits including higher job security not available in the private sector and for decades were able to attract very competent administrators for salaries that, relative to other workers, were far lower than they are today.

The expanded version of this work offers some suggestions on combating administrative bloat. No doubt the root problem is that there are few incentives to reduce administrative costs, and little or no accountability of top administrators to external forces, in part because of huge amounts of third party subsidy payments.
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Chapter 7: Cut Unnecessary Programs

Abstract: In university environments, it is painful and politically explosive to try to eliminate programs. Professors expecting lifetime employment security fiercely fight these measures, often with the support of sympathetic and powerful faculty members and administrators. Sometimes alumni get into the act. Yet, a dynamic society needs change. Majors that once flourished now have few students. Programs that were fashionable a generation ago are now viewed as outmoded. Resources need to be freed up for new areas of academic inquiry based on technological advances, changing income and tastes, etc.

Cuts can be made selectively or across-the-board. Ultimately, however, if serious reform is to occur, some programs should be eliminated. Writers like Robert Dickeson have elaborated upon the process that is appropriate in program evaluation.  Certain questions must be asked: Is the program critical? Is there sufficient student demand and faculty interest? Is the program financially viable? Does it have a superior national academic reputation?  Only rarely, and probably never, can a university truthfully answer “yes” to all these questions for every single one of its programs.

Major budget cuts arising from the 2008 financial crisis and subsequent recession offer institutions the opportunity to overcome otherwise intractable political opposition to eliminating unnecessary programs since not doing so is prohibitively costly to the rest of the institution. Washington State University, for example, eliminated its Department of Community and Rural Sociology, the German major, and the Department of Theater and Dance. Other universities should use the current period of financial stringency to make similar cuts.
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Chapter 8: End the “Athletics Arms Race”

Abstract: There is remarkably little evidence that the massive subsidies to intercollegiate athletics (ICA) have had significant positive spillover effects for universities in the form of greater financial support, improved recruitment of students, higher national rankings, etc. There is abundant evidence, however, that only a handful of ICA programs break even, and that subsidies for these programs have grown rapidly—as much as 15 percent in some years—fueled by soaring costs for coaches, more elaborate facilities, etc. Using generally accepted accounting principles (that, for example, include all capital costs), it is doubtful that any programs are truly profitable. Many programs actually lose significant sums of $10 million or more annually. Since the schools where these subsidies are greatest often have relatively lower-income students, it can be argued that there is a regressive “athletics tax” that burdens students and taxpayers alike. Indeed, even the profitable, or nearly profitable, programs should probably pay a tax (i.e., make payments) to the rest of the university to cover indirect resource costs associated with their operations, such as the time the president spends dealing with athletic matters.

Like arms races in the world of geopolitics, athletic arms races probably require a joint agreement in order to end—in this case a mutually agreeable means of cutting expenses. Whether this is done through the existing arrangements (especially the National Collegiate Athletics Association) or through other means (e.g., a presidential summit conference involving most leading schools), unified action is necessary.

By far the largest expense item is salaries. Football coaches command multi-million dollar salaries because successful teams add millions of dollars to university coffers. Salaries, however, are inflated because players are “paid” trivial amounts relative to their contribution to earnings, so coaches largely capture the income that normally would go to the student athletes.  Limiting football coach salaries to that of the university president would dramatically reduce salaries (or, perversely, increase them for the presidents!) Scholarships for students might legitimately be viewed as wages for student employment, but even here team sizes are excessively large –why, for example, does a sport that fields teams with 11 players need a playing squad of more than 60 players (allowing for multiple persons in each positions in both offensive and defensive units)? The median school in Division 1 of the NCAA spent $2.5 million annually on team travel in 2006. Why can’t distance limits be placed on travel to all but a few special games?  Is the practice of having teams stay in hotels before home games necessary? Why can’t playing seasons be shortened, both for academic and financial reasons?
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Chapter 9: Overhaul the FAFSA

Abstract: Students wanting to obtain federal student financial assistance must complete the Free Application for Student Aid (FAFSA) form, which is also used for making decisions on financial aid by others, notably the colleges themselves.  In the 2009-10 academic year, the number of questions on the FAFSA form exceeded 100. Susan Dynarski and others have argued the marginal gain in knowledge about applicants from having an elaborate form was far more than offset by the adverse impact that the complexity of the form had on students’ willingness to apply, particularly in the case of low-income families. Some estimate well over 1.5 million aid-eligible low income people fail to apply for assistance, probably in large measure because of the complexity of the application process. Some small progress has been made in simplification, but the form is still complex and intimidating, particularly for people with limited educational backgrounds.  However, with the cooperation of other federal agencies (notably the Internal Revenue Service) and minor changes in law, it would be possible to abolish the FAFSA completely and still obtain the truly vital information needed to assess whether loans should be awarded to an individual. Another alternative would be a postcard-sized form asking for information regarding basic income, family size, and the age of children.

The problem with the FAFSA form is merely the most tangible indication of a broken, dysfunctional and byzantine system of federal financial aid. A strong case can be made for the federal government to abandon its role of providing loans and moving to alternative forms of financing. However, as long as the existing system is in place, the simplification of well over a dozen loan and grant programs into one or two would seem to be a top priority. At the very minimum, barriers to participation such as the FAFSA form should be broken down. See also our discussion of student financial aid reform, #22.
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Chapter 10: Eliminate Excessive Academic Research

Abstract: Universities have two major academic functions: the dissemination of knowledge (i.e. teaching), and the creation of it through research. There is a strong bias in the academy to emphasize research at the expense of teaching. Faculty promotions are heavily research-based. Widely circulated research results create a national reputation, whereas the reputation for good teaching tends to be localized. Universities improve their ranking in the U.S. News & World Report or Times Higher Education World Rankings by emphasizing research.  Salary increases for faculty have averaged more in the highly research-intensive universities than in other institutions.

Yet research is subject to diminishing returns. In the humanities and social sciences, for example, most enduring topics have been heavily researched, and there is little new to say—over 26,000 articles have been written on Shakespeare since 1980, for example. Many of these articles are published in obscure academic journals with very small readership. Professorial teaching loads have declined to permit greater research, thereby increasing the per student cost of instruction. No one has done a serious cost-benefit analysis on conducting so much research. This is not to argue for the elimination of research, an end to federal research support or the like; , but rather, it is to note that the rate of return at the margin for additional research is no doubt typically very low.

At mid-quality universities, professors may teach six courses per year, with some occasional reductions for research leaves of absence or for teaching particularly large classes. Suppose a department has 90 courses to teach annually, and average professorial salaries including fringe benefits are $100,000 a year. If the average teaching load is five classes a year, it takes 18 professors to cover the teaching, costing $1.8 million. With an eight course load, it takes fewer than 12 professors, costing over one-third less. Is the incremental research occasioned by the lower teaching loads so valuable as to justify huge increases in instructional costs?  In most cases, objective analysis would almost certainly conclude that increased teaching loads for professors make sense on cost-benefit grounds.
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Chapter 11: Streamline Redundant Programs at the State Level

Abstract: One of the strengths of American higher education is the diverse number of institutions, all following a slightly different path to their mission. This diversity gives students more choices and increases competition, but it also sometimes leads to expensive duplication of effort and resulting inefficiencies. Universities are run by empire-building humans who engage in mission creep, adding degrees and majors, often without fully considering the duplication of effort involved.

The level of duplication varies by state. Tennessee reported in 2009 that it had 24 doctoral programs with fewer than three graduates apiece in the period 2004 to 2009.  Similarly, a large minority of academic programs at state universities in Pennsylvania seemed to award 10 or fewer degrees annually. Do we need all of these low demand programs? Are they being maintained because of inertia, or to meet the teaching wishes of certain faculty rather than the vocational or academic needs of students?

The problem of program duplication is particularly acute at the advanced level of instruction. Ph.D. programs are extremely expensive to run: essentially very high-salaried professors intensively teach very small numbers of students. Couple this with the notion that a Ph.D. program needs to be physically located near every potential student and the prospect becomes economically unfeasible. Nationally, where there are, say, 125 Ph.D. programs in a discipline, the elimination of 50 of these programs would still allow national competition and diversity while potentially saving a good deal of resources by weeding out programs of marginal quality and limited demand.

The use of electronic means of communication can be used to allow faculty from multiple institutions to participate in joint degree programs. Merging two or three marginal programs into one of greater substance can save resources in the long run as a single integrated program is established. Sometimes joint programs can involve two schools in close proximity, and may even involve a mix of public and private schools. Duke and the University of North Carolina at Chapel Hill, for example, have a joint program in German Studies.
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Chapter 12: Promote collaborative purchasing

Abstract: Private companies like Wal-Mart use their enormous purchasing power to negotiate low prices from suppliers. Colleges that band together to buy goods and services can often obtain lower prices on goods and services used than if they buy separately. Agreements can be made between institutions on a bilateral or multi-lateral basis, through statewide agreements, or even by regional agreements involving schools in many states. The distinction between “state” and “private” institutions need not be important here, with small private liberal arts colleges joining larger state universities to try to get the benefits of large-scale purchasing.  A consortium of schools can be created as a separate entity to do group purchasing, for example.  Collaborative purchasing is no panacea, and there is some reduction in institutional flexibility if all purchasing is done in this manner. But for a large portion of purchases, group buying of goods is a worthwhile strategy to pursue.
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