As higher education budgets come under pressure around the world, so the spotlight falls on administrative budgets. One account doing the rounds amongst politicians is that universities are bloated bureaucracies and that it would be quite possible to keep the same number of academics “at the front line” if only these bureaucracies were cut back.
It’s an interesting thought. But …
To begin with, much of what is counted in many universities’ budgets as administration is directly student-facing. Think of admissions, the careers service, student welfare, and so on. So cutting these budgets is likely to mean a cut in student services – not what the politicians intend at all. Then there are the various statutory obligations which cannot be gainsaid. Then, a lot of the rest of the administrative budget is made up of basic infrastructure: the library, information technology, security, utilities, and the like. Making cuts in these services is often self-defeating.
In fact when you start looking, very often only a relatively small amount of university administration is what might truly be called central administration, is administration for administration’s sake, so to speak.
So although there may be some room for manuver, the main issue that needs to be tackled is probably efficiency. It is certainly true that a lot of universities around the world are looking at shared services, outsourcing, and the like, as a means of gaining greater efficiencies. Other universities are adopting kaizen techniques of continuous improvement in a bid to reengineer their basic administrative processes from the ground up. It must be the case that all of these solutions have something to offer but the 64,000 dollar question is “how much?”
Take the cases of shared services and outsourcing. The fact of the matter is that shared services probably only bring costs down if network economies cut in, that is you need quite a lot of people in the network to start producing real economies which mean that the charges come down and the economic case becomes compelling. In fact, so far the record on shared services has not been terribly encouraging, though that is no reason not to keep trying.
Equally, outsourcing can only really work if there are a lot of subscribers that can bring the unit cost down and it has to be utterly reliable: quality of service is crucial. For example, you’d have to be a very brave university indeed to outsource a lot of finance or admissions, given the marginal finances of most institutions. Private companies will no doubt make inroads into this arena – after all, most universities already subcontract some payroll functions to the bank – but I suspect that any further progress will be in universities which do a lot of just a few things and can therefore produce something akin to mass production (though our sector will never ever go far down this route, I fervently hope).
I think the real advances will come in another way, through a set of similar universities getting together – as already happens with some functions like high-end computing – and producing corporate administrative arrangements that make genuine sense – and save money. These arrangements might include some private-sector involvement but of a limited kind: control would be vital since universities are about service, not profit. Even such a limited compact as this would no doubt produce all kinds of thorny issues, most particularly of leadership and governance. But it could be a realistic first step towards a model with elements of shared services and outsourcing – and greater efficiency.
16 Responses to Cutting Administrative Costs
rsmart - August 25, 2010 at 6:15 pm
Regarding your last paragraph, it should be of interest to readers to become familiar with the enormous progress being made by the Sakai and Kuali Foundation Community regarding COLLABORATION. Over the past 6 years many leading colleges and universities have come together to develop and implement “open source” ( Community Source) software. The software is “built by HE – for HE”. These solutions are made available to all HE institutions on a license free basis and will be maintained by the rapidly growing Community, which includes commercial partners. These solutions are hosted (“cloud”) or available to be run by one’s own institution.This model has become widely accepted by those who have looked into the relative merits of this model. The economies, quality solutions, prospective innovation, ability to guide one’s own destiny, professional training due to the active interaction that occurs, are all reasons supporting the author’s suggestion that COLLABORATION can be a contributing factor to “cutting costs” while substantially enhancing an institution’s technological capabilities. Fro more information on these very successful initiatives visit http://www.Sakaiproject.org and Kuali.org
gzerovnik - August 25, 2010 at 7:08 pm
In general I agree with the article, BUT here in Southern California I have seen institutions that have too many deans and/or vice presidents, whose pay is of course a good deal higher than a full professor’s salary.If I were king of education, I would want to elevate department chairs in status and pay, with a reduced teaching load and a bigger administrative load, and have a VP for instruction (or provost), a VP for external relations (fundraising, PR, etc.), and a VP finance. And that’s it.
11242283 - August 26, 2010 at 6:16 am
Well, I teach in the CSU and I think it might qualify (on paper) as the kind of institution described in the last paragraph with somewhere between 3 and 400,000 students. At great cost, we were even supposed to have “centralized high end computing” (don’t ask how that worked out!). But I’ve never seen an organization that exemplifies “administrative bloat” more than the CSU, unless it’s the UC. Let’s be clear: the California State University system has an entire campus (that’s what the administration often calls it) at Golden Shores in Long Beach that teaches no students and yet has the second highest monthly payroll in the entire 23 campus system. That’s right, it’s monthly salaries overshadow campuses with 20,000+ students and it is rife with vice-chancellors and assistant vice-chancellors and directors of things that do little except replicate or piss on things done at main campuses. I’m not willing to generalize from the CSU that administrative bloat occurs everywhere but neither am I willing to accept Thrift’s blanket generalization that it’s a myth either. Indeed, while he cites places like student services as necessary places where you need staff, it is my experience that often that’s true, but that instead of real staff who work hands on with students (why are there never enough student advisers, for example!), what you often get are a plethora of “directors” (honestly, a “director of Greek life”!) each making a six figure salary who have few if any real staff to do the actual work. And while I’m sure that many staff and adminstrative positions exist to ensure compliance with federal and state regulations, if we examine the way in which universities (at least in the US) have become entertainment and experience centers for young people rather than places that put education first, then we can see where many of the staff and their directors are. Anyway, as a faculty member, I’ve been to too many budget meetings where administrators explain why everything they do is absolutely essential to the university and so that while they hate to do it (after all, they say apologetically) they have to cut even more out of academic affairs.
daveapostles - August 26, 2010 at 6:26 am
Agree with rsmart above. The failure to adopt OpenSource in UK HE is lamentable, from at least three perspectives: HEIs are precisely the sort of organizations that should be ethically propagating the use of OpenSource; the financial costs of proprietary OSs and apps are wasteful; and HEIs, by their dependence on M$, are simply perpetuating the M$ strategy of inculcating the use of M$ products in educational environments (through reduced licence costs) so that these products are expected in other environments at full licence costs. HE should, IMHO, be cultivating the use of OpenSource in its own organizations (and organizational culture) and liaising with businesses to introduce OpenSource there too. As rsmart also indicates the benefits of collaboration across the sector are immense – let’s also mention VUE (Visual Understanding Environment) and QGIS (Quantum GIS) as examples of this productivity.As to the general point about administration, much of it has been necessitated by governmental requirements, to ensure accountability. Flexibility will be needed in the face of the current fiscal and financial predicaments, but the Coalition, despite its protestations, will simply make more demands from above – prediction! Besides, if the administrators don’t do it, academic staff will have to – with all the hidden costs.
daveapostles - August 26, 2010 at 6:29 am
BTW, just to get my penny’s worth, one of the biggest mistakes, IMHO, in UK HE was the diversion of tuition fee income stream to salaries rather than purposeful bursaries. Only 25% of this income stream is directed to bursaries and they are pitiful (£1k norm – totally inadequate for social recruitment) – whether one agrees with tuition fees or not.
oh_richard - August 26, 2010 at 9:42 am
There’s been a joke on our campus since Spring, following on the iphone ads. “Wanna do *whatever*? There’s an AVP for that…” since we seemed to have an announcement about a new AVP being hired every two weeks in Spring. Mind you… we didn’t have a budget for the academic departments last year, but somehow central administration was able to hire AVPs, and do so very quickly and very easily…
jthelin - August 26, 2010 at 10:20 am
Applause for and Agreement with comment 3. 11242283 using the CSUC system as one example. Author Nigel Thrift also is welcomed to visit the University of Kentucky.To add insult (and expense) to injury, each time a university adds a new Vice President or Associate VP and so on, be sure to include expenses for that person to pick and hire their own Assistant, plus administrative and clerical staff, office space and so on. To me the worst abuse is that in a time when many presidents and provosts talk about reducing or elimnating tenure for faculty, please note that new academic administrators often demand and receive tenured faculty positions — so that at a later date they can “return to their teaching and research” at a very high administrative salary — even though they may ahve not taught or conducted research in a long time, if ever.In Kentucky, one former university president holds the rank of tenured Associate Professor at the adjacent commu nity college system — makes $210K per year plus benefits, and does NO teaching that any one can document. Now, that is bloat!
esgphd - August 26, 2010 at 10:26 am
I work in a medical school within a health sciences university. In addition to all the normal compliance/regulation related bloat that universities have, we also have all the stuff that comes with health care systems. We are constantly being flogged to cut costs and to justify every moment of our time by connecting it to a specific revenue streams (one of which is teaching, but only SOME teaching), yet the chairs and deans and EVPS and so forth never seem to have to justify THEIR time in this way. Also, when the school falls on financial hard times, they are never the ones who get any fallout from it, even though they are the ones supposedly in charge. Their credibility would be greatly enhanced if next time RIFs or pay cuts were implemented, they stepped up and said, “I’ll take some pay reduction to help the cause.” Never will happen…..
jthelin - August 26, 2010 at 10:43 am
Number 8 esgphd — perfect timing. About two weeks ago our Provost held a “retreat” with all academic deans. The word is that the VP of the Medical Center used this as an opportunity to suggest that all academic units adopt the very kind of measures you described above for your health sciences campus. The VP’s salary is $750K per year plus incentive bonuses. The VP for University Business Affairs who also is VP of the Hospital checks in at $450K per year. Another Hospital Finance Officer makes about $425K. And this is the model that Arts & Sciences should use to reduce expenses?
cwinton - August 26, 2010 at 11:07 am
I find it pretty cheeky for an administrator to claim administrative bloat is a myth despite the evidence of massive growth in academic administration (and salaries) that has occurred over the past 50 years. Administrators instinctively seek to justify their existence in ways that waste other people’s time. As but one example, I could fill a trunk with “strategic” plans which had no measureable impact other than the number of hours of time that went into their production. I thank posters like #3, who have far better examples than I of the consequences of administration begetting yet more administration. I will concede that a great deal of administrative growth can be attributed to the reporting demands of governmental overlords (who after all are seeking to justify their existence), but that doesn’t explain the need to commit resources to a dean or AVP for freshman orientation or whatever other inanity we can all cite examples of.
22113683 - August 26, 2010 at 11:08 am
On our campus, it’s “How many Vice Presidents does it take to change a light bulb?” A: “One more than you currently have.”Bureaucies sooner or later (and probably sooner) get to the point that the VPs and AVPs and Provost and Asst. Deputy Provosts, and Deans and Asst. Deans don’t have enough to do to justify their offices, salary, secretaries, and staff, so they find it necessary to create busy-work for the faculty and other riff-raff to do–more reports, study committees, special commissions, conferences . . . on the ludicrous assumption that we’re as underemployed as they are. And because they are pulling down six figures and we’re not, we’re expected to click our heels or bow deeply. Then they’re free to file our reports away as their accomplishments for the year. Yet the same administrators who so readily hire more AVPs can’t find the money to hire assistants for overworked and stressed-out office personnel, or to treat the contingent faculty like real people. Would it help efficiency if we could all hire a firm which would do our 990s, our Compliance Reports for NAIA/NCAA, FERPA, ADA, Diversity, etc.? Maybe we could all just use a template, based on enrollment and private/public status, and turn in the same statistics for all of us? At least we’d find out if anybody actually reads the stuff!
12080243 - August 26, 2010 at 11:15 am
Large details and small details monitored real-time are the key to understanding potential university/college cost savings. At the University of Southern Mississippi (USM), both faculty and administrators participate in the failure to control costs. And, if you should ask administrators to consider the need for specific expenditures, at USM you are apt to have them organize faculty to mob you and spend millions to rid the school of the observations and details that cast their expenditures as unnecessary or wasteful. Real-time details include unnecessary expenditures, like required fees students pay for their own copy of The Wall Street Journal when there are multiple copies to be read for free at the library (that all business students pay for a WSJ, faculty get theirs free); attorney and litigation costs of approximately $2.5 million to organize the mobbing and dismissal of the faculty member who brought wasteful spending and misconduct to the attention of administrators; costs of maintaining the President’s mansion; President Martha Saunders’ purchase of an airplane which cost several million. A major problem is obtaining information from administrators who hide costs. For example, when we began to monitor the expenditures of President Saunders’ airplane (keep in mind, we are a regional state supported school) by reviewing its use on “FlightAware”, the information was cut off. We recently obtained cost data concerning the airplane through a Mississippi Open Records (MOR) request. We are now able to continue our cost analysis which will be in a series of reports on http://www.usmnews.net. We learned from the MOR data that President Saunders had paid $250 to have a web block of the information on “FlightAware.” A trivial amount of money to accomplish hiding her wasteful spending habits. Such childishness is embarrassing to anyone who wants to be proud of USM. Over the years, usmnews.net has provided and will continue to provide reports of administrative and faculty misconduct and wasteful habits.Chauncey M. DePree, Jr., DBAProfessorSchool of AccountancyCollege of BusinessUniversity of Southern Mississippim.depree@usm.eduwww.usmnews.net
bekka_alice - August 26, 2010 at 11:38 am
Let’s increase the Federal reporting requirements, that’ll help cut down on our need for administrative staff. More seriously, maybe politicians looking at cutting costs should take a look at the entire chain of events that leads to needing more personnel. I’m from a Community College background so we don’t have the same degree of push toward making every office have its own VP, but we have seen a need for staff driven specifically by Federal programs and related reporting needs which makes up a good percentage of our staff who aren’t in the “front-facing” categories or technical services noted above. I do believe that our shared system office, unlike the one for the CSU poster above, does result in efficiencies for us, because our schools don’t have to maintain separate individuals all doing this federal reporting, they also have joint assistance in planning for Career and Tech Ed programs and similar guidance, and they share many network resources as well. But it might be easier to keep joint administrative assistance close to the budgetary bone when you’re seen as a workhorse college system instead of a prestige one – egos are still in play but not quite at the same frenzied level.
daveapostles - August 26, 2010 at 12:14 pm
There seems, in some posts, to be some confusion between administration and management – they are different and require different qualities and capabilities.
_perplexed_ - August 26, 2010 at 12:15 pm
Regarding state and federal guidelines, regulations, etc.– The cost of actual compliance is generally less than the cost of demonstrating compliance. I’m guessing the same may be true for internal regulations and procedures.
goodeyes - August 27, 2010 at 6:30 pm
The best way to cut administrative costs is to pay based on the value of the job instead of the value of the degree. There are many high level campus positions that are only high paid because there is a Ph.D. doing the work. Let’s be honest.