Administrative bloat at top schools

collegehelp · 07-12-2008, 09:07 PM

Here is a list of top universities and LACs sorted by the percent of expenses that are administrative in nature.

I did this calculation using IPEDS data:
Total Institutional Support Expenses divided by Total Expenses

The percentage indicates how "lean" the operation is. Are schools spending too much on administrative overhead? How efficiently are the schools run?

Are there "economies of scale"? Some of the schools with the least administrative waste are pretty small (e.g. Vanderbilt).

The most bloated schools are at the top.

Bennington College 27.9%
Thomas Aquinas College 27.4%
Spelman College 27.3%
Millsaps College 26.7%
Austin College 26.7%
Earlham College 26.2%
Pepperdine University 25.1%
Southwestern University 24.4%
Principia College 24.3%
Franklin and Marshall College 23.7%
Reed College 23.7%
Southern Methodist University 23.4%
Trinity College 22.6%
Hendrix College 22.3%
Agnes Scott College 21.7%
Sewanee: The University of the South 21.2%
Claremont McKenna College 21.2%
Wheaton College 20.8%
Wofford College 20.8%
Sweet Briar College 20.7%
Swarthmore College 20.7%
Randolph-Macon College 20.6%
Vassar College 20.3%
Knox College 20.0%
Ursinus College 19.8%
Macalester College 19.8%
University of Notre Dame 19.8%
Middlebury College 19.6%
Wellesley College 19.5%
Skidmore College 19.4%
Mills College 19.3%
Beloit College 19.2%
University of Richmond 19.1%
Connecticut College 19.1%
New College of Florida 19.0%
Marquette University 18.9%
Sarah Lawrence College 18.8%
Carleton College 18.7%
Albion College 18.6%
Centre College 18.6%
Hollins University 18.6%
Colgate University 18.5%
Dickinson College 18.4%
Lawrence University 18.3%
St Mary's College of Maryland 18.3%
Rensselaer Polytechnic Institute 18.2%
Davidson College 18.2%
Presbyterian College 18.2%
Birmingham Southern College 18.0%
Barnard College 17.7%
Harvard University 17.7%
Gettysburg College 17.6%
Illinois Wesleyan University 17.5%
College of Saint Benedict 17.5%
Juniata College 17.5%
Bryn Mawr College 17.1%
Williams College 17.1%
Hobart William Smith Colleges 17.0%
Hanover College 17.0%
Pitzer College 16.9%
Haverford College 16.8%
College of the Holy Cross 16.8%
Pomona College 16.8%
American University 16.7%
Boston College 16.6%
Whitman College 16.5%
Allegheny College 16.4%
Bowdoin College 16.3%
St Lawrence University 16.3%
Harvey Mudd College 16.3%
Wheaton College 16.2%
Saint Johns University 16.2%
Georgetown University 16.1%
Colby College 16.1%
Drew University 16.1%
Augustana College 15.9%
Colorado College 15.9%
Bates College 15.7%
Kenyon College 15.6%
The College of Wooster 15.5%
Brandeis University 15.5%
Lafayette College 15.5%
Lehigh University 15.4%
Bucknell University 15.2%
Muhlenberg College 15.2%
Grinnell College 15.1%
Wesleyan University 15.0%
Worcester Polytechnic Institute 14.8%
Hamilton College 14.7%
Union College 14.7%
Oberlin College 14.7%
Goucher College 14.6%
Brown University 14.6%
Fordham University 14.3%
Furman University 14.3%
Cornell University 14.3%
Occidental College 14.3%
Kalamazoo College 14.0%
Smith College 13.9%
Bard College 13.9%
Wabash College 13.8%
Willamette University 13.7%
Washington and Lee University 13.6%
University of Denver 13.6%
Amherst College 13.6%
Clark University 13.4%
Stevens Institute of Technology 13.1%
Indiana University-Bloomington 13.0%
Massachusetts Institute of Technology 13.0%
Baylor University 12.9%
Mount Holyoke College 12.9%
St. Olaf College 12.6%
Yeshiva University 12.5%
University of Puget Sound 12.2%
Rhodes College 12.2%
Wells College 12.0%
George Washington University 11.8%
Tulane University of Louisiana 11.7%
Northwestern University 11.7%
Denison University 11.6%
Tufts University 11.4%
Gustavus Adolphus College 11.4%
Princeton University 11.3%
Dartmouth College 11.3%
DePauw University 11.2%
Ohio Wesleyan University 11.2%
Syracuse University 11.2%
Case Western Reserve University 11.0%
University of Pittsburgh-Pittsburgh Campus 10.9%
Saint Louis University-Main Campus 10.6%
Wake Forest University 10.6%
University of Southern California 10.5%
Rice University 10.1%
Hope College 10.0%
SUNY at Binghamton 9.6%
Boston University 9.3%
Scripps College 9.3%
University of Delaware 9.1%
New York University 8.8%
Stanford University 8.7%
University of California-Riverside 8.7%
Miami University-Oxford 8.7%
Yale University 8.5%
Virginia Military Institute 8.3%
University of Connecticut 8.3%
Columbia University in the City of New York 8.1%
Duke University 8.0%
Purdue University-Main Campus 7.9%
Brigham Young University 7.8%
Auburn University Main Campus 7.7%
University of California-Berkeley 7.7%
College of William and Mary 7.6%
Rutgers University-New Brunswick 7.2%
University of Chicago 7.1%
Carnegie Mellon University 6.9%
Johns Hopkins University 6.8%
University of California-Santa Cruz 6.3%
University of Minnesota-Twin Cities 6.0%
Pennsylvania State University-Main Campus 6.0%
University of Florida 5.9%
The University of Tennessee 5.8%
University of Maryland-College Park 5.6%
University of Georgia 5.5%
University of Miami 5.3%
Virginia Polytechnic Institute and State University 5.2%
The University of Texas at Austin 5.1%
University of California-Santa Barbara 5.1%
Georgia Institute of Technology-Main Campus 5.0%
Washington University in St Louis 4.8%
Clemson University 4.8%
Emory University 4.6%
University of California-San Diego 4.5%
University of Washington-Seattle Campus 4.5%
Michigan State University 4.4%
University of Pennsylvania 4.3%
University of Colorado at Boulder 4.0%
Texas A & M University 3.9%
Ohio State University-Main Campus 3.8%
University of Virginia-Main Campus 3.7%
University of California-Los Angeles 3.4%
University of Iowa 3.4%
Iowa State University 3.3%
University of California-Davis 3.1%
University of Wisconsin-Madison 3.0%
University of California-Irvine 3.0%
University of Rochester 2.8%
California Institute of Technology 2.6%
University of Michigan-Ann Arbor 2.6%
Vanderbilt University 2.3%
University of Illinois at Urbana-Champaign 2.0%
University of Missouri-Columbia 1.5%

Titan124 · 07-12-2008, 09:40 PM

HAHAH look at Bennington then look at the massive publics like UMich and UIUC. That's simply embarassing. Universities with 30k students are being run at a lower cost administratively than tiny, 1000 student Bennington.

interesteddad · 07-12-2008, 10:48 PM

You need to be very careful looking at this standardized reporting. Colleges do no lump their expenses into consistent slots.

For example, some schools lump the cost of operating dorms in Auxilliary Services. Others as Eductional Expense.

This category, Administrative Expense, includes the cost of all maintaining the campus. Or does it? Does Emory, for example, account for the cost of the Law School campus under Admistrative Expense? Or is it charged to the Law School? The answer is "we don't know".

Comparisons using this data are so flawed that most academic researchers won't use it. They use total expenditures because it's the only consistent number, and even there you find some issues.

redwingshockey · 07-12-2008, 10:57 PM

assuming this list is somewhat accurate, i'm really surprised to see how bloated some schools are compared to how lean other are (ex. Pepperdine vs. Emory) -- really interesting stuff, thanks for the post!

collegehelp · 07-13-2008, 06:40 AM

Institutional Support-Total includes the following components:
Institutional support-Salaries and wages
Institutional support-Benefits
Institutional support-Operation and maintenance of plant
Institutional support-Depreciation
Institutional support-Interest
Institutional support-All other

Institutional support A functional expense category that includes expenses for the day-to-day operational support of the institution. Includes expenses for general administrative services, central executive-level activities concerned with management and long range planning, legal and fiscal operations, space management, employee personnel and records, logistical services such as purchasing and printing, and public relations and development. Also includes information technology expenses related to institutional support activities. If an institution does not separately budget and expense information technology resources, the costs associated with student services and operation and maintenance of plant will also be applied to this function. FASB institutions include actual or allocated costs for operation and maintenance of plant, interest and depreciation. GASB institutions do not include operation and maintenance of plant or interest, but may, as an option, distribute depreciation expense.

johnwesley · 07-13-2008, 06:40 AM

there's nothing surprising here. the tiny schools are on top; the big state schools are on the bottom. It's called economy of scale. the bigger the college the more expense they are able to spread over a greater number of students.

rjkofnovi · 07-13-2008, 06:48 AM

I agree johnwesley. However, the most interesting figure I see is actually towards the middle of the list. IU Bloomington appears to be very bloated compared to other public schools. I mean 13% at IU compared to 2% at UIUC seems totally out of whack. I would imagine they have a different method of determing administrative costs as was mentioned by interesteddad.

collegehelp · 07-13-2008, 09:07 AM

Some interesting apples-apples comparisons:

Scripps 9.3%
vs
Bennington 27.9%

Harvard 17.7%
vs
Stanford 8.7%
Yale 8.5%
Penn 4.3%

U Missouri Columbia 1.5%
U Illinois Champagne-Urbana 2.0%
vs
Indiana U Bloomington 13.0%

Notre Dame 19.8%
vs
Emory 4.6%
U Rochester 2.8%
Vanderbilt 2.3%

RPI 18.2%
WPI 14.8%
vs
CMU 6.9%
Caltech 2.6%

collegehelp · 07-13-2008, 09:10 AM

Regarding economies of scale, how do you explain large Notre Dame on one hand and tiny Caltech or Vanderbilt on the other hand?

interesteddad · 07-13-2008, 10:14 AM

Quote:

If an institution does not separately budget and expense information technology resources, the costs associated with student services and operation and maintenance of plant will also be applied to this function. FASB institutions include actual or allocated costs for operation and maintenance of plant, interest and depreciation.

Right. That's what I'm saying. If you read the fine print on how FASB (private universities) allocate expenses, you see that the expenses can be allocated to all the business units. We know that that they allocate operations and administration to their research grants. Mowing the lawn is allocated to the various schools. IT is budgeted and allocated to all the various schools. Every dollar of overhead that is allocated to the schools or research grants is taken out of the institutional support category.

That is not the case as the small liberal arts colleges. There's nowhere to "allocate" the expenses. You aren't comparing apples to apples if you include the full cost of the internet and computers for one school, but not for another.

The instructions also say to simply disregard all expenses related to housing and dorms, as if that doesn't count. OK, the unversity can do that. They just allocate x percent of all institutional expense to residential dorms and don't count it. There's no mechanism for that at a liberal arts college. There's one electric bill. One wireless budget. One lawn mowing and grounds crew. It's in the institutional support budget whether they are mowing around the chem labs or a dorm, whether a computer is purchased for the library or for the computer room in one of the dorms. A big screen TV is institutional support whether it is going in the student lounge next to the mail room or the common room of a dorm.

If you look at total spending for similarly endowed and similarly sized schools, you will see that they are nearly identical. In other words, Williams and Swarthmore spend virtually the same per student. They just put stuff in different accounting boxes.

RacinReaver · 07-13-2008, 03:02 PM

I can definitely see Caltech being that low. There are very few administrators here, and everyone in a position of power feels way more accessible than they did during my time at CMU (which is still relatively low on that list).

johnwesley · 07-13-2008, 03:59 PM

yea, now that I look closer, there are some interesting apples to apples things going on, Amherst , Grinnell and Wesleyan seem curiously efficient considering their size and endowments per student.

interesteddad · 07-13-2008, 05:18 PM

Again, you guys are looking at inconsistent data whenever you try to compare schools. The IPEDs data is notoriously unreliable because its expense categories are not applied uniformly.

For example, here the ipeds results for Amherst and Swarthmore, expressed as per student spending in Fiscal Year 2006:

Code:

Chart/Indicator	   Amherst	Swarthmore
Instruction  	       $20,472 	  $25,972 
Research  	       $2,085 	  $2,233 
Public service  	 $0 	     $997 
Academic support  	$8,813 	  $9,598 
Institutional support  	$9,212 	 $13,866 
Student services    	$8,534 	  $7,634 
Other core expenses  	  $854 	         $0 
	               $49,970   $60,300

According to this, Swarthmore spent $10,000 more per student despite having virtually identical per student endowments. That's just pure baloney. In fact, a quick glance at the actual annual financial reports for the two schools shows that they both spent between $71k and $73k per student that year. Obviously, ipeds is not capturing all the spending -- we can see that from the fact that they show Amherst spending zero on public service, which is not the case.

A quick look at actual expense items from the two annual reports shows the problem. They don't use the same categories.

Swarthmore:

Instruction 41,540,000
Academic support 15,139,000
Student services 10,336,000
Institutional support 23,684,000
Auxiliary activities 20,298,000
Research and public service 3,664,000
Total expenses 114,661,000

Amherst:

Instruction and academic programs 31,538,336
Academic and student services 18,408,380
Library 6,466,098
Research and public programs 5,951,806
Operation and maintenance of plant 13,083,272
Administrative and general 16,252,623
Pensions and professional fees 332,198
Academic prizes, fellowships and awards 1,402,459
Auxiliary activities 16,034,856
Interest expense 5,425,303
Other 1,513,327
Total expenditures 116,408,658

Remember, the IPEDS instructions say NOT to include maintenance of the plant if accounted for as a separate line item, so Amherst doesn't. Swarthmore doesn't account for this as separate line item. It is included in the Institutional Support category, both in the Annual Report and the IPEDs data.

Likewise, where is the library in the Amherst IPEDS data? Probably not there, since Amherst reports it as a separate line item (it has a separate endowment). Swarthmore's library expenses likely fall under Academic Support (operations) and Institutional Support (maintenance, carpet cleaning, electricity, and so forth).

Likewise, I'm sure that the $10 million difference in instructional spending reflects different accounting buckets, not an actual difference in magnitude of instructional cost at Amherst and Swarthmore.

Nobody in college higher education finance puts any faith in the IPEDS categories for institutional comparisons. It's never apples versus apples.

johnwesley · 07-13-2008, 06:56 PM

^^I think there's a huge difference between not putting ANY faith in something and accepting it with a credible explanation. Some of us have advocated rather hard for getting these places to publish ther IPEDS numbers. For now, it's as close to apples versus apples as we're likely to get.

interesteddad · 07-13-2008, 07:18 PM

Quote:

For now, it's as close to apples versus apples as we're likely to get.

Actually, the best approach is to go the college's website and download the annual financial report.