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TheStreet Open House

Higher College Tuition? Look at Administrative Bloat

BOSTON ( TheStreet) -- The average rate of college tuition and fees in the United States has increased 440% in the past quarter-century, with an increase of 70% in just the past decade. There has been a lot of speculation about causes, and a report released this month by the nonprofit Delta Cost Project tries to shed some light.

According to the report, Labor Intensive or Labor Expensive: Changing Staffing and Compensation Patterns in Higher Education , the exponential growth of the higher ed workforce is at least partly to blame for the rising cost of college.

The report finds that the number of non-faculty staff positions at colleges and universities rose 28% between 2000 and 2012. The bulk of these positions (accounting for 20% to 25%) have been administrative, with the biggest growth in student services. The report contends that the increasing cost of college can also be correlated to the associated benefits packages for these staff positions and declines in state funding.

"When we look at the growth in administrative staff, it's the hiring for new professional support positions -- such as business analysts, counselors, admissions staff -- rather than executive positions that's driving the increase in these types of jobs," says Donna Desrochers, principal researcher at the Delta Cost Project and an author of the report.

What is not driving up the price of college: faculty wages. The project found that over the past decade faculty wages have remained essentially flat. Not only that, but many full-time faculty positions have been replaced by part-time adjuncts, who now make up about 76% of college-level instructors in the U.S. This is especially the case at public colleges.

Surprisingly, the researchers at the Delta Cost Project couldn't detect significant savings from the widespread replacement of full-time faculty members with part-time adjuncts, even with full-time faculty and staff members per professional or managerial administrator shrinking by 40%. Private research institutions were found to be in the lead for hiring administrative staff -- at an average of 456 employees for every 1,000 students, up from 434 in 2000. Yet private research universities were also the only institutions adding full-time professors to their payroll (just at a slower pace than previously) by an average of 16 per 1,000 full-time students.

On the other side of the equation, community colleges were found to be losing full-time and part-time faculty and still adding administrative positions, albeit it at a much lower rate than other kinds of colleges -- by three positions per 1,000 students.

"Colleges have turned to part-time faculty to try and rein in costs, since these instructors are paid less and typically do not receive benefits," Desrochers says. "However, it appears that other factors, such as rising benefit costs and hiring of noninstructional staff, have undercut these savings, and compensation costs per employee continued to rise modestly over the much of the past decade."

Another thing that has risen in the higher-ed sector over the past decade is president's salaries.

In December, The New York Times reported that 42 private college presidents were paid more than $1 million in 2011 (up from 36 the year before), and that more than 180 college presidents in the country now earn more than $500,000 dollars a year -- up from 50 in 2004. Several presidents were even found to have multimillion-dollar salaries, with Robert J. Zimmer of the University of Chicago making $3.4 million annually and Joseph E. Aoun of Northeastern University making $3.1 million.

According to the The Chronicle of Higher Education, which tracked the compensation of 550 presidents at 500 private colleges with the largest endowments, the median base salary for college presidents was found to be $301,299. Meanwhile, Mother Jones reported last year that compensation packages for college presidents more than doubled in 2011 for 11 of those presidents who earn more than a million dollars annually.

Presidential compensation also takes the form of generous severance and retirement packages. Boston Globe staff writer Todd Wallack noted last November that the former president of Suffolk University, David J. Sargent, got a severance package worth about $850,000 in 2011.

Though the Delta Cost Project did not study the influence of college presidents' salaries and other forms of compensation on the cost of higher education, Desrochers does not think that would account for much of the increase in college tuition.

"Typically [presidents' salaries] represent a very small portion of overall college and university budgets," Desrochers says.

It still begs the question of whether stagnant faculty wages and the general decline of full-time faculty positions are occurring as a way to offset the increase in compensation for presidents and other upper-level positions.

"From an accounting perspective, it might seem higher salaries for presidents and senior administrators have a relatively small impact on a college budget overall," says John Curtis, director of research and public policy at the American Association of University Professors. "But when you compare those salaries with those of faculty members and other staff on campus, it does seem an indication that priorities are out of line, with significant raises for senior positions while salaries of faculty and other staff members stagnate and benefits are reduced."

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