Rising Administrative Costs: Seeking Explanations

By essentially any measure, administrative costs in colleges and universities have risen dramatically during the past two decades, disproportionately more than the costs of instruction and research. Accelerating a four-decade pattern, expenditures for presidents, deans, and their assistants grew 26 percent faster than instructional budgets in the 1980s [3]. The increase for administrative costs per full-time equivalent student in the 1980s, nationwide, was 46 percent, exclusive of monies spent on the administration of libraries, student services, research, and physical plant. Between 1973 and 1974 and 1985 and 1986, the share of "education expenditures" spent on administration (institutional support, student services, and academic support minus libraries) increased 2.7 percentage points for all public universities, while the instruction share declined 2.0 percentage points - changes that measure in the billions of dollars, nationally [24]. According to HEGIS/IPEDS data for 1975-86, administrative costs increased faster than academic costs in all higher education sectors [35, 39]. In private colleges, the median rate of increase for administrative and support expenditures was 4 percent per year, in real terms, versus less than 3 percent per year for academic expenditures. Regarding changes in the number and salaries of administrators, Equal Employment Opportunity Commission data for 1975-85 showed a 6 percent growth in full-time faculty; an 18 percent growth in "executive, administrative, and managerial employees"; and a 61 percent growth in "other professionals," who are degree-holding employees often accounted for in administrative categories.(1) For 1985-90, the increases were 9 percent, 14 percent and 28 percent, respectively [21, 22]. Secretarial and clerical staff grew at a faster rate than faculty. The only group to show a decline was service and maintenance personnel. At some large universities, the numbers were even more dramatic. At UCLA the number of faculty members declined 6.8 percent from 1977 to 1987, at the same time that executive, administrative, and managerial employees increased 35.8 percent. AT MIT, faculty members increased by 7.6 percent from 1981 to 1989, whereas administrative personnel increased by 37 percent. Even when faculty numbers increased substantially, as at Ohio State University, where they increased by 29.2 percent between 1979 and 1989, the increase in executive, administrative, and managerial personnel well outpaced that growth, being 71.2 percent, while other professionals increased by 139 percent.(2) If we consider salaries, the declines were somewhat less for administrators: between 1971 and 1972 and 1984 and 1985, the average real salaries of faculty and administrators declined by 16 and 13.1 percent, respectively. When those figures are disaggregated for administrators, the data reveal increased salary dispersion among administrators, as well as among faculty [26, 33]. Concerns are widespread. Three-quarters of the member institutions of the Association of American Universities report having recently attempted to reduce administrative costs [23]. State legislators and institutional trustees specifically have targeted administrative costs; in two states legislatures recently have mandated 10 percent reductions in administrative expenditures. When Arizona's Joint Legislative Budget Committee launched a study of administrative costs in higher education in 1992, Arizona became only the most recent of several states to express concern over the increasing allocation of higher education's resources away from instruction to institutional administration. In chairing the subcommittee responsible for the Arizona study, it has become clear to the senior author of this article that the Arizona study, like similar efforts in many other states, merely will estimate and compare growth in administrative costs to comparable costs in peer institutions, over time. By contrast, in this article we hope to focus future studies of costs in ways that will sharpen the understanding of why administrative costs rise and will inform decision making and practice. …