"I’ve always wanted to know exactly where the money goes when we pay for an education? "
I had seen my university’s annual budgets over a 10-year horizon a couple of years ago. My university is a medium size research flagship state university. If my memory serves me correct, the expenditure side is about the following:
Faculty pay and benefit: about 30%.
Staff pay and benefit: about 25%.
Student aids and scholarship: 15-25% (increasing fast over time).
Tod administrators’ (president, provost, VPs, Deans) pay and benefit: about 1%.
The remaining major items are debt servicing (interests and principal), capital expenditure (road, roof, etc.), operating expenditure (utility, etc.).
A university is basically a people operation. The majority of expenditure is on people. Faculty and staff’s cost ratio at my university has been quite stable over time with a total of about 55%. Many people fail to understand how costly staff support can be (25%). Here we are talking about the kind of staff support for student mental health, student advising, student career development, faculty grant application and compliance, equal employment office staff, first-generation dedicated staff, physical facilities staff, PR, HR, etc. These staffs, in general, earn little, but their benefits are decent.
Because the cost of benefits (particularly in the area of healthcare) to faculty and staffs increases at a speed faster than tuition, a little bit of cost cutting (pay on a per course basis) happened in my university, but our situation has been far better than many other universities. The cost cutting concentrated in humanities with the use of more adjuncts. The medical school has also been asked to contain its loss (almost all medical schools in the US are losing money like crazy).
On the expenditure side, student aids and scholarship was the one really losing control. The overall operating environment called for a more generous aids and scholarship to make college more affordable. Over that 10-year horizon, this expenditure components went from around 15% to around 25%. To make up this, capital expenditure has been reduced. For example, old windows would not get replaced and we are still using heat and generating CO2 like crazy.
Too many people also fail to understand that the cost of top administrators accounts for a very small fraction of the overall budget. Think of this way, how many people are we talking about here? Just 20-40 depending on the size of the university. But in a typical university, we have thousands of faculty and thousands of staffs. I am a faculty union member, and I understand why people always point their fingers on top administrators. But the fact remains that even we get rid of all top administrators today, this one-time effect will be no more than 1%. With a natural level of inflation at say 2%, the tuition will still go up next year.