A Philosopher's Blog

The University as a Money Funnel

Posted in Philosophy, Universities & Colleges by Michael LaBossiere on March 30, 2015

One serious problem with American higher education is that the cost of a four-year degree is higher than ever—even when adjusting for inflation. The causes of this increase are well known and well understood—there is no mystery about this. One contributing factor is that universities tend to spend considerable money on facilities that are not connected to education. Critics like to, for example, point out that some universities spend millions on luxurious fitness facilities. These sort of expenditures are ironic (and stupid) given that education funding has been consistently reduced across the United States. To use the obvious analogy, this would be like a family putting in a pool, spa, and exercise room when they do not have enough money to pay for their actual necessities.

What seems to be the major factor contributing to costs is the ever-expanding administrative class at universities. This expansion occurs in terms of both individual salaries and overall numbers. From 2000 to 2010 the median salary for the top public university administrators increased by 39%. The top administrators, the university presidents, enjoyed a 75% increase. In stark contrast, the salaries for full-time professors increased by almost 19%.

The money for these salary increases has to come from somewhere and an obvious source is students. My alma mater Ohio State University is leading the way in milking students to pay administrators. Between 2010 and 2012 Gordon Gee, the president of OSU, was paid almost $6 million. At the same time, OSU raised tuition and fees to a degree that resulted in student debt increasing 23% more than the national average.

While some might be tempted to attribute this salary bloating as the result of the usual alleged wastefulness and growth of the public sector, private colleges and universities topped their public counterparts. From 2000 to 2010 private schools saw salary increases of about 97% for their top administrators and their presidents enjoyed a 171% increase. Full time professors also partook of the increases—their salaries increased by 50%.

What is even more striking than the salary increases are the increase in the number of positions and their nature. From 1978 to 2014 administrative positions skyrocketed 369%. This time period also marked a major shift in the nature of faculty. The number of part-time faculty (the analogues of temp workers in the corporate world) increased by 286%. The use of adjuncts is justified on the grounds that doing so saves money. While adjunct salaries vary, the typical adjunct makes $20,000-25,000.

However, the money saved does not translate to a lower cost of education—rather, it “saves” money from going to faculty so that it can go to administrators. Since the average salary of a university president is $478,896 and the number of presidents making $1 million or more a year is increasing, it should be obvious what is helping to drive up the cost of college. Hint: it is not adjunct pay.

There was also a push to reduce (and eliminate) tenured positions which resulted in an increase in full time, non-tenure earning positions by 259%. Full time tenure and tenure-track positions increased by only 23%. Ohio State University provides an excellent (or awful) example of this A&A Strategy: the majority of those hired by OSU were Adjuncts and Administrators. To be specific, OSU hired 498 adjunct instructors and 670 administrators. 45 full-time, permanent faculty were hired.

Interestingly enough, the Republicans who run many state legislatures rail against wasteful spending, impose micromanagement and inflict draconian measures on state universities yet never seem to address the real causes of tuition increase and the problems in the education system. Someone more cynical than I might note that the university seems to no longer have education as its primary function. Rather, it is crafted to funnel money from the “customer” and the tax payer (in the form of federal student aid) to the top while minimizing pay for those who do the actual work.

Tenure has been a target in recent years because tenure provides faculty with protection against being fired without cause (tenured faculty can be fired—it is not a magic shield). This is regarded by some as a problem for a variety of reasons. One is that tenured faculty cannot be let go simply to replace them with vastly lower paid adjuncts. This, obviously enough, means less money flowing from students and the state to administrators. Another is that the protection provided by tenure allows a faculty member to be critical of what is happening to the university system of the United States without running a high risk of simply being let go as a trouble maker. As you might guess, I am a tenured full-professor. So, I can use my freedom of speech with rather less fear of being fired. I also enjoy the dubious protection afforded by the fact that people rarely take philosophers seriously.


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10 Responses

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  1. T. J. Babson said, on March 30, 2015 at 9:06 am

    Mike, you need to take the additional step of understanding what is driving the increase in the number of university administrators.

    • ronster12012 said, on March 30, 2015 at 10:00 am


      According to Professor Doom http://www.professorconfess.blogspot.in/ it is ultimately the student loan.

      He blames them for lots more besides the admin bloat.

    • Michael LaBossiere said, on March 30, 2015 at 11:40 am

      What do you take that to be?

      My own experience indicates that the factors included as a major driver the adoption of a certain business model for education. This model is the idea that the workers (faculty) exist to support the management (admin) and that the admin should focus on their fiefdoms and salaries. The result has been an expansion of administration and the switch to a workforce that is mostly temps (adjunct faculty).

      Some people point, correctly, to all the various rules imposed by the state. However, if you go and research the numbers, it turns out that the administration growth considerably exceeds what would be needed to handle this imposed bureaucratic burden. As such, while this factor did contribute, it does not explain the magnitude of the bloat.

  2. nailheadtom said, on March 30, 2015 at 11:42 pm

    The University of Minnesota, actually a gargantuan parking and medical enterprise, annually receives over 30,000 applications for 5200 freshman admission slots. As long as those numbers aren’t reversed tuition is never going to go down.

    Karl Marx’s vision of class conflict pitted the workers against the bourgeoisie. That ain’t the way it worked out. The real conflict is between white collar bureaucrats (salaried admin) and blue collar workers (hourly labor). Administration bureaucrats always attempt to hire more bureaucrats to do their own work so they can move up to attending more meetings and creating more paperwork. They don’t wish to ever let these people go. The blue collars they hire are simply a pain because they’re the ones that must be “administered”. They have to be given tasks, their success has to be evaluated, their time must be kept and so on. This is true not only in the world of higher education but also in government and in big business and is so onerous that much of the skilled labor is performed by contractors rather than in-house personnel. Of course, bureaucratic expansion cannot go on forever and as Joseph Tainter pointed out in “The Collapse of Complex Societies”, eventually the people that finance this situation check out of it. It’s gotten to the point where it might be economical for a parent to hire a personal tutor for his child, as Emperor Franz Joseph did when he employed brilliant Austrian economist Carl Menger to educate the ill-fated Crown Prince Rudolph.

  3. […] philosopher has provided his viewpoints as well, in a post entitled “The University as a Money Funnel.” One can guess from the title what he has to say, but it’s interesting that a philosopher, not […]

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