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Opinion: Administrative Bloat Drives College Costs

Aug 23, 2010 – 5:00 AM
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Matthew Ladner

Special to AOL News
(Aug. 23) -- As college students start returning to campus they -- and their parents -- face a troubling fact: Higher education costs have been rising so fast in recent years that they're going up even faster than health care costs.

Since 1982, the average cost of college tuition and fees has increased by 439 percent, while the typical family's income increased by a mere 147 percent. College has been put financially out of reach from some students, while crushing others with debt.

But even more troubling is the cause of these skyrocketing costs: administrative bloat.

In fact, as a new Goldwater Institute study finds, universities have in recent years vastly expanded their administrative bureaucracies, while in some cases actually shrinking the numbers of professors.

That study documents the growth in the ranks of university administrators since the early 1990s. The report focuses on 198 leading universities in the United States, including all flagship state public universities and elite private institutions. The analysis is based on information provided by the universities themselves to the U.S. Department of Education.
A chart showing the amount of increased college expenses.
Source: Goldwater Institute
Administrative costs have risen faster than any other cost at universities and colleges between 1993 and 2007.
Between 1993 and 2007, student enrollment at America's leading universities rose by 14.5 percent.

Over those same years, the number of full-time administrators employed per 100 students at America's leading universities climbed more than 39 percent. Meantime, the number of employees engaged in teaching, research or service climbed 17.6 percent.

What's more, inflation-adjusted spending on administration per student increased by nearly 66 percent during the same period, while instructional spending per student rose by 39 percent.

In short, universities are suffering from administrative bloat, expanding their bureaucracies significantly faster than their numbers of instructors and researchers, which should be the core missions of any university.

A big reason that university administrators get away with this is that students pay only a fraction of the expense, despite the rapid increases in tuition rates. These leading public and private universities spent an average of $41,337 per student in 2007 and collected an average tuition of $10,929 per student.

The lion's share of university resources come from the federal and state governments, as well as private gifts and fees for non-educational services. The increasing rate of direct and indirect government subsidies for higher education encourages expansion of bureaucracy by shielding students from the full costs of operating a university.

Scaling back government subsidies likely would prompt students and their families to pay much closer attention to how universities spend their money.

A good example of this can be found at the University of Michigan. By 2003, that university's funding from the state had dropped to less than 10 percent of its budget. Meanwhile, the University of Michigan reduced its number of administrators between 1993 and 2007, while increasing the number of instructors and researchers by 68 percent.

An old saying holds that when something can't go on forever, it won't. The higher education bubble has been inflating for decades, but college costs cannot outpace family incomes forever.

With dozens of states looking for ways to trim their budgets, now is a good time for policymakers to consider reducing state appropriations to colleges and universities and let students and institutions sort through what they want from a university education and how much its worth.

This may sound scary, but it's nothing to fear. Michigan has done it, and the quality of their flagship public university hasn't suffered.

Matthew Ladner is the vice president of research at the Goldwater Institute, based in Phoenix, Ariz.
Filed under: Opinion
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