Episode 9

The Rise of the Administrative State on Campus 

The number of administrators on campus has mushroomed over the last 20-30 years.  Why has there been such an increase?  What do all these administrators do all day?  How much does it cost?  We will answer these questions on today’s episode.  I am Larry Bernstein and welcome to Charging U.

“More Employees Than Students at Stanford: Give Each Student a Concierge!”  Headline from an article in Minding the Campus written by Richard Vedder, Professor at Ohio University

The term administrative bloat has been used to describe the increase in the number of non-instructional staff at colleges and universities.   Over the last 30 years, the number of managerial administrators has increased much more than the number of students or faculty and it has been costly.  The Yale Daily News noted that between 2003 and 2019 the number of students went up 12%, the number of faculty there went up 11%, but the number of administrators there went up 45%. The Yale faculty senate committee on governance noted that during this time period, the number of Vice Presidents increased from 5 to 31 at a cost estimated to be $14 million.  The number in public affairs and communication increased from 17 to 55 at a cost of  $4 million, and the number in Student Life more than tripled.  The faculty senate committee estimated that the administrators received raises averaging 7.5% annually while the annual faculty raises averaged one quarter to one half that rate.

Bryn Mawr College, in 2015-16, had 91 administrators for every 1,000 students and spent just over $8000 per student on managerial salaries.

Why has there been such a dramatic increase in administrative personnel and cost?

When I first started investigating this topic, I thought that reporting on compliance matters was the main reason that there are many more administrators now than in the past.  After all, the Task Force on Federal Regulation in Higher Education reported that the number of federal regulations placed on colleges grew by 56% between 1997 and 2012.  Compliance with governmental regulations is one reason institutions hire administrators.  

Vanderbilt University made waves in 2015 when it declared that it spent $146 million, or 11% of its non-hospital budget, to comply with government regulations. A closer look led to a more sobering analysis. $117 million of the $146 million went toward reporting and compliance for the $572 million in research money it received.  As we said in the previous episode, a portion of that money is earmarked by the government for reporting and compliance. That left $29 million, or 4% of the non-research budget, for all other compliance. Half of that went toward higher education specific compliance, including accreditation and half paid for non-higher education specific compliance. With 12,800 students, the total compliance cost was about $2,200 per student per year.

Loyola Marymount University, a private primarily undergraduate university, with 9,200 students and $6.7 million in research expenditures took on the Herculean task of trying to determine the cost of compliance. Herculean, because it found that those who spent even a portion of their work-time conforming the college to regulations spanned numerous departments and numbered 292 or 58 full time equivalents.  The cost they came up with was $88 million or 3.5% of net tuition and fees or $900-$1000 per student.

These numbers are consistent with the National Association of Student Financial Aid Administrators which estimated that $27 billion total was spent by higher education on compliance of which $10 billion went toward research-related compliance and $17 billion went for other compliance. This amounted to 2 to 8% of non-research expenditures and 11 to 25% of research expenditures – consistent with both the reporting of Vanderbilt and Loyola Marymount.

Our old friend Longwood University in Virginia, an institution with just over 5,000 students, estimated that, in 2017, it spent $310,000 to comply with Title IX, $300,000 on financial aid compliance, and $155,000 on the Clery Act which requires a school to maintain a crime log and issue security alerts. Overall, it spent more than $2 million or about $400 per student on compliance.  I don’t mean to pick on Longwood University.  In a sense it is being punished for being transparent when it should be rewarded for doing so and in this case its spending is perfectly appropriate.

Some of the cost of compliance has to do with reporting information on recipients of Pell grants, veterans benefits and other federally funded programs to IPEDS, the Department of Education’s Institute of Postsecondary Education Data System.  Colleges are required to report data on all students concerning tuition sticker price, net tuition paid, financial aid, student loans and default rates, graduation rates, and programs for veterans.  That is a lot to keep track of.   Colleges are also required to keep and report detailed crime statistics, including dating violence, drug abuse violations, and liquor law violations.  That last category alone should keep them busy.  IPEDS publishes data which fueled many parts of this podcast. In some sense, compliance reporting is the price colleges pay for getting so called "free" money. The government feels it has a right to know how its money is being spent and the effectiveness of that expenditure. The issue is whether these questions are being answered and whether the required reporting is appropriate or excessive. In any event, the costs are passed on in the form of higher tuition and fees.

Initial compliance with Title IX was related to intercollegiate athletics.  At least some of those costs are included in athletic budgets.  This was also covered in the episode on Athletics. 

In 2011, the Office of Civil Rights sent out a letter addressed as "Dear Colleague" in which it indicated that sexual harassment interfered with a student’s right to receive an education and thus violated Title IX. This created a whole new area of responsibility for colleges and an infrastructure needed to be built to handle the workload. The Association of Title IX Administrators was created then and, by 2016, had 5000 members. The University of California at Berkeley increased its Title IX spending by $2 million in the few years after the 2011 letter.  For Berkeley's 45,000 students, the $2 million cost was $44 per student but this just covered the cost of reporting, investigating, and running the office. Lawsuits related to Title IX and legal fees for sexual harassment cases, even if the university wins, are tens to hundreds of thousands of dollars and, if they lose, penalties may run in the hundreds of thousands to millions of dollars. Clemson lost a case of defamation in which a student falsely accused of sexual misconduct was awarded $5.3 million. Given the extremely high cost of legal services and damages awarded by courts, universities believe that it makes sense to spend large sums of money to prevent an issue from ever arising.  This is analogous to physicians practicing defensive medicine.  Again, costs are either passed on to students or there is a reduction in other services. 

General outside legal fees for all areas related to running a university may be an even larger cost.  In addition to any attorneys a university may employ, it may also pay outside firms for legal services and this may or may not be a sizable amount.  In 2020, Northeastern University spent $7.6 million, Colorado College spent $407,000, but Texas A&M spent only $38,000, so there is a wide range of expenditures on this service.

The federal government is not the only level of government to place compliance demands on universities. States may also do so. In Ohio, Colorado, Missouri, Mississippi, and New Hampshire students were required to register for the selective service in order to attend public colleges and/or receive state-funded aid.  Someone at the college had to be paid to investigate, document, and report these registrations. 

But the growth in the number of administrators has greatly outpaced the increase in reporting requirements and the compensation of administrators rises more than university employees, in general, so my initial hypothesis that the rise in the administrative costs was due to more compliance reporting was not correct.  Compliance reporting does not explain most of the increase in administrative bloat.  So we need to look at other factors.

When I was in college, information technology consisted of telephones and overhead projectors. The few of us who took a computer course used stacks of punchcards. So, here we have information technology, an entire expense which did not even exist 50 years ago.  It has progressively added significant cost to higher education. Back in 2012–2013, institutional spending per full-time equivalent student, faculty, and other university employee was over $900. If there were one employee for every two students at a college, then the average cost per student was over $1300.  In 2019, Pepperdine University spent $9.7 million on IT or an average of $1270 per student. Colby College spent an average of $1746 per student, University of Dayton $962 per student, and Louis and Clark College $882 per student. In looking at this, I have tried to stay away from universities with hospitals which likely spend much more on IT than colleges not affiliated with health systems. Central IT expenditures account for almost 5% of the total institutional budget at master’s universities and baccalaureate colleges,  Total IT spending was a higher absolute number at schools that did more research; however, because of the larger budgets of research universities, IT accounted for a lower share of the budget: 3% of the spending at public research universities and 3.75% at private research universities. There was some economy of scale, so that larger institutions averaged spending a lower percent of their budget than comparable smaller ones. Information technology is embedded in various areas of the university and so its costs may be covered in areas of the budget other than the central IT cost center.  Therefore, its actual cost may be even higher than what I report.  The hardware and software themselves are expensive and IT professionals are highly trained and compensated better than the average employee in the United States.  All of these factors have led to a relatively new, growing, and sizable expense.

Student services is one category in which spending and the number of personnel have increased rapidly.  It is defined by the Department of Education’s National Center for Education Statistics as “a functional expense category that includes expenses for admissions, registrar activities, and activities whose primary purpose is to contribute to students’ emotional and physical well-being and to their intellectual, cultural, and social development outside the context of the formal instructional program. Examples include student activities, cultural events, student newspapers, intramural athletics, student organizations, supplemental instruction outside the normal administration, and student records.”  In some cases, it may also include information technology.

Student health falls under this umbrella.  At most colleges, students are required to have personal health insurance.  Colleges may pay their own employees to evaluate each student’s plan to make sure it meets their standards or it may choose to spend money outsourcing the services, instead. 

Colleges also charge a mandatory student health fee which, back in 2009 averaged $225. Today, student health fees (not insurance) range from $194 per year at University of Colorado to $1308 per year at Columbia University.  Back in 2009 Keybridge research calculated that $11 of the fee went to campus health programs for drug and alcohol education and healthy eating programs with the rest duplicating services already covered by personal insurance or elsewhere.  Keybridge estimated that students with personal health insurance spent an unnecessary $1.2 billion per year. Some confused families spent another $200 million purchasing an unnecessary second insurance plan. Considering additional factors, back in 2009, Keybridge estimated that, on average, each university student faced unnecessary health costs of $300 per year.  Surely, that number is much larger today.  

My son’s college charges a mandatory $545 per semester fee for its health service. He has personal health insurance.  It is mandated by the university and they have checked the policy to make sure it meets their standards.  For any significant medical problem, my son will see a physician in the community.  As for his flu shot, for $1090 per year, he can be inconvenienced and find a CVS, Walgreens, or other facility that gives the vaccination.  Our family has put up with a lot more bother than that to save a thousand dollars.

It is not entirely fair to say that all the services provided by student health are unnecessary or duplicative. A large and growing portion of what they do is related to mental health and that service is costly. In 2020–2021 California State University spent $45 million on mental health services of which $30 million was funded by campus fees. It was expecting to spend $62 million in 2021–2022. With just under half a million students in the system, this comes to $129 per student, at least half of which comes from student fees. The State University of New York system planned to spend $59 million in 2021–2022 for mental health support. This comes to $159 per student. If universities funded mental health services in the past, it surely was nowhere near the extent to which they do now.

Colleges have also become involved in managing the personal lives of students and the costs associated with that fall under student services.  Stanford University has a Director of Positive Sexuality whose approach centers on the “recognition of sexuality as an integral part of what it is to be human.”   I thought that was something that was innate in human beings, not something that needed to be taught, especially to college age students.  Clearly, this is not an area with which colleges got involved in previous generations.  The number of these positions that have been created in recent years is difficult to know.

Diversity, equity, and inclusion initiatives are also included under student services. Their creation is an entirely new cost. The state of Mississippi was been objective enough to look at these costs and make public their results.  In 2018–2019, the Diversity and Community Engagement Office at The University of Mississippi had a budget of $711,000 or $32 per student.  That did not include funds to provide scholarships. A visit to their website in 2022 showed ten members in the office. 

Jay Greene, Senior Research Fellow in The Heritage Foundation’s Center for Education Policy, reported in 2021 on the number of Diversity, Equity, and Inclusion administrators at 65 universities in the five “power” athletic conferences.  These tended to be large public institutions that together serve over 2.2 million students. His investigation revealed that looking just at central university DEI offices underestimated the total number of administrators at least partially involved in DEI because there were almost 3000 additional personnel concerned with DEI at the individual college and departmental levels of the bureaucracies of those 65 universities. Greene identified a total of 25 DEI personnel at the University of Mississippi as opposed to the 10 listed in that specific department. This was one for every 860 students, which was about the average ratio at the universities at which he looked.  The University of Michigan had the highest absolute number of DEI personnel at 163 or one for every 295 students. That 163 was more than twice the number of history faculty at the University and consistent with a number calculated a few years earlier  by economics professor emeritus Mark Perry.  Three years later, in 2023-4, Greene identified 241 employees whose main responsibility was DEI, an almost 50% increase over the previous league leading total.  He also found at least 71 additional employees with part-time responsibilities for DEI. The total salary of the 241 employees was $23 million with additional benefits estimated at $7 million.   Of course, expenses for office space and equipment, IT, travel, and programs themselves only add more to the total cost.  The $30 million in salary and benefits comes to $585 per student and could have paid the full tuition for 1,700 Michigan residents.  

At the University of Michigan, the percentage of Black students enrolled did not go up between 2012 and 2022, remained below 5% of the total enrollment, and lagged its peer institutions by a large margin.  In addition, in 2021, Black students rated the DEI climate at University of Michigan worse than it did in 2016.  If the purpose of the DEI program was to increase the enrollment of Black students or to make them feel more comfortable, then the current program has not been a success despite its very high cost.  

So here we have a major research institution hiring the most staff, spending over $30 million, not paying attention to the results of its survey, and not looking to determine if it could achieve better outcomes by addressing the problem differently.

Some colleges are now addressing the provision of food and housing for its students who are in need.  The University of California-Irvine now has a Director of Basic Needs whose office has a budget of $2 million.  The need for this service is not equal across all institutions and so spending on this at some schools will be higher than at others.

Three questions then arise with respect to spending on student services:

1. How much does a college need to spend for an additional student to graduate?  The answer to this question is important in determining how much of their scarce resources should be allocated to student services.  A 1% increase in student services spending led to a 0.04% increase in the graduation rate at private colleges and no significant change at public colleges.  That’s 4 more graduates for every 10,000 students at private colleges and 0 at public colleges.

2. If colleges with already high graduation rates spend money to raise those rates even just a very small amount, does it increase their ranking and therefore selectivity and income?  If the answer is yes, and I think in many cases it is, then it would make spending that money a sound investment for the school, especially if the college already has lots of disposable income or can pass the costs on to others.  They may end up spending a lot of money, but if it raises their ranking and they can just pass on the costs, it is in their interest, but not necessarily most of the students’ interest, to do it.

3.  Do all areas of spending on students improve outcomes equally or do some areas provide the bulk of the benefit?  Research on this question would be helpful in determining which programs are worthwhile and should be funded and which are not worth funding.  ACTA, the American Council of Trustees and Alumni, noted that a 1% increase in instructional spending improved graduation rates 2 to 5 times more than a 1% increase in administrative spending and 2 1/2 times more than a 1% increase in student services spending. But in real terms, an increase in instructional spending of 1% at an average size private college only added an average of 3 more graduates per year. 

But not all colleges are equivalent and some may benefit from one type of spending while others may find devoting resources to other areas more worthwhile. Economists Douglas Webber and Ronald Ehrenberg looked at college spending on student services in the early 2000s and concluded that spending more on student services was likely to improve graduation rates at colleges with low graduation rates but not at those with already high rates.

Public expectations, or at least internal expectations, and legal requirements of what colleges should provide have risen. Steven Mintz, Professor of History at University of Texas at Austin, noted that, "Higher education now serves as the infrastructure that American society has refused to build.”  This is true in some cases but universities are also setting up parallel systems in other instances. Colleges are now addressing more issues than they did in the past, and that has cost more money. Colleges now have a hand in the provision of health care, mental health services, and a safe environment, and they are addressing societal issues.  The question is whether colleges should be spending on these areas and if so, do they do it efficiently, because providing these additional services adds to a student’s cost to attend college, prices many out, or causes others to go deeper into debt.  

Thank you for listening to Charging U.  In this episode we saw that spending on compliance only explains a small portion of the rise in the number of administrators on campus.  Colleges now get involved in more aspects of students’ personal lives and societal issues than they did in the past leading to a rapid rise in the number of non instructional administrators which adds significant cost to students.

In the next episode, we will look at how luxurious amenities and the building boom on college campuses affect the price we pay.

If you find that Charging U is clarifying why it costs so much to go to college, please let all those concerned about the personal and societal impact of these high charges about the podcast.  Please leave a rating and/or review.  Send any questions of comments to larry@chargingupodcast.com  Until next time, be well and be safe.