Administrative Bloat and Racial Inequity in Higher Ed

Source: James V. Koch

by James A. Bacon

Recently, I told the story of how Virginia Commonwealth University, which prides itself for embracing minorities and first-generation college students, is enacting a left-wing social justice regime. While fostering a culture of minority victimhood and grievance, VCU charges its students $25,419 in tuition, fees, room, and board. Among the “students of color” who graduate, seven out of ten borrow money to pay their way through college. On average they entered the job market $31,500 in debt.

Where does all this money go? Does it actually cost $25,400 a year to provide a residential four-year education? Or does the tuition support a bloated administrative structure that serves the pay, perks and priorities of college administrators and faculty? Now, thanks to James V. Koch, economist and president emeritus of Old Dominion University, there is a way to answer those questions.

Administrative costs at VCU amounted to $5,800 per weighted, full-time-equivalent (FTE) student in the 2017-18 academic year, according to data Koch compiled for his forthcoming book, “Runaway College Costs.” Among the ten Virginia public higher-ed institutions surveyed, VCU has seen the greatest percentage increase — 128% — in inflation-adjusted administrative costs over 14 years.

Source: James V. Koch

By comparison, Virginia Tech’s administrative costs are roughly $3,900 per weighted FTE student. If we use Virginia Tech as a benchmark, VCU students are paying a minimum of 1.900 more per year — $7,600 over the course of a four-year degree program — for bureaucratic bloat. (Low faculty productivity is a different source of high tuition costs, which I hope to address in a separate post.)

On the other hand, it must be said that VCU is not the worst offender. That honor goes to the College of William & Mary, which, by Koch’s measure — spends roughly $11,000 per student on administrative overhead. Little wonder that W&M has the highest tuition, by far, of any Virginia public university.

As I have argued repeatedly, the real “structural racism” that exists in American society is usually found in places and institutions run by liberals and progressives — not just criminal justice systems in places in inner-city hell holes like Baltimore and Chicago, but in K-12 education, health care, and higher education pretty much everywhere. Progressives enact and execute policies that exacerbate the misery they seek to ameliorate.

From a social justice perspective, higher education is best regarded as a mechanism for extracting  wealth from students and transferring it to the faculty and staff elites who run the institutions. Every student pays excessive tuition, but the cost falls most heavily upon the poor and minorities who can least afford it. The senior administrators and tenured faculty who benefit most from this system are disproportionately white.

That is the way I frame the issue, not Koch. In our correspondence, he has neither endorsed nor disputed my narrative of higher-ed institutions as engines of wealth redistribution.

A brief discussion of methodology

Before we go any further, let me explain how Koch got his numbers. Higher-ed institutions report extensive financial and enrollment data to the Integrated Postsecondary Education Data System. IPEDS does not break out “administrative costs” as a separate variable. Koch calculates the number by compiling data reported for institutional support + academic support + student services expenditures.

“Note that this notion of administration probably does not include many of the expenses associated with faculty research, intercollegiate athletics, medical schools, auxiliaries such as residence halls, etc.” Koch says. “It is a more narrow, tailored version of a university but one that most individuals probably visualize in their minds.”

Koch divides these administrative expenditures by the number of Full Time Equivalent (FTE) students to get expenditures per student, giving twice as much weight to graduate student as undergraduates. He makes that adjustment to reflect the greater costs (space, time, smaller class sizes, etc) associated with graduate education. When calculating the increase in administrative expenditures, he adjusts the numbers for inflation.

Because one of his research interests is the impact of intercollegiate athletics on admissions applications, retention, graduation, and financial gifts, he excluded institutions that don’t have Division I basketball or football programs. That choice eliminated Virginia State University and the University of Virginia-Wise from  his data set. He also excluded the Virginia Military Institute on the grounds “it is simply too different.”

Back to our regularly scheduled programming…

Based on Koch’s data, three Virginia institutions stand out for high administrative overhead — W&M, the University of Virginia, and Norfolk State University. As “public ivies” with strong national reputations capable of charging what the market will bear, UVa and W&M can get away with high overhead. By contrast, one must question whether NSU, which has little pricing power, can afford its cost structure.

Other than those three, VCU carries the highest administrative burden. Particularly worrisome is VCU’s trajectory. All universities have experienced significant increases in administrative costs over the 14 years surveyed, although Longwood University and Virginia Tech are noteworthy for having restrained their increases. VCU stands out for a growth rate administrative expenditures that is positively metastatic.

Affordability and access is the greatest issue facing higher education today. Virginia colleges and universities have papered over the impact on minorities by increasing financial aid — but not enough to fully mitigate the impact of their tuition increases. The white intelligentsia running most of Virginia’s higher-ed institutions have mastered the art of deflection — blaming cutbacks in state aid and decrying racism, even as they have presided over massive spending increases that feather their own nests.

Perhaps African-American students at VCU should worry less about micro-aggressions committed by their fellow students and focus on the real, lasting sources of inequity.

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20 responses to “Administrative Bloat and Racial Inequity in Higher Ed

  1. I have several questions/comments:
    – Do white students who graduate from VCU on average borrow less money than students who are people of color?
    – Regarding the difference in administrative costs between Virginia Tech and VCU. Does Koch or his data provide any information about how those lower administrative costs are achieved? Are there differences in services or programs offered by the universities that would account for the differences in cost? I also don’t see that cost-of-living was accounted for. Since the majority of a university’s budget is usually spent on salaries and benefits for its employees, I would assume that cost-of-living for a particular geographic area would have an impact on any category of spending that includes employees. According to a brief jaunt in Google search results, the cost of living is lower in Blacksburg than in Richmond, so perhaps that accounts for a small amount of the difference. I wonder if there are other, similar factors that may come in to play?
    – Regarding your provocative statement that “higher education is best regarded as a mechanism for extracting wealth from students and transferring it to the faculty and staff elites who run the institutions”: This is an interesting idea, but ignores the fact that students are paying for something they gain (a degree), and that faculty/staff are doing work to earn (at least some portion of) their salaries. One can argue the value of each (the degree, the work done by university employees) but it’s not quite as simple as you propose.
    – I am very skeptical of data derived from IPEDS. As a person responsible for generating and reporting IPEDS data in a small, specific area for my own institution, I know how flawed the reporting process is. The disparity between how VA Tech reports its costs vs. W&M or some other school may be partly due to differences in how financial data is gathered, collated and reported. Even with definitions for reporting (which IPEDS provides) I have found that there is often not a way to report what IPEDS is asking because the data aren’t available for various reasons, which leads to omissions, inconsistencies, and other data problems. It’s the best we have, I guess, so we have to rely on it. Ironic side note – the requirement to spend lots of time reporting out statistics for things like IPEDS is part of the administrative bloat burden!
    – I agree that affordability and access is the greatest issue facing higher education today and that simply increasing financial aid does not address the growth in cost. I am not convinced, however, that the blame can be pinned solely on an increase of administrative costs, nor am I convinced that services supported by those administrative costs are unnecessary. I’d be interested to see you delve further into exploring how some schools have achieved lower administrative costs, what differences in services (or not) are supported by those admin costs, other areas of the university where costs have increased or decreased over past decades, how the presence or absence of certain services effect recruitment of faculty, staff, and students, etc.
    – Finally, I don’t understand the point of your concluding jab at black students who you say “should worry less about microaggressions committed by their fellow students and focus on the real, lasting sources of inequity.” Can’t there be more than one problem that has a lasting impact on black students? What evidence do you have that microaggressions don’t have any real lasting impacts on black people?

    • Excellent comments and questions, Ms. Martin. I hope to address some of them in future posts. For now, I will merely answer two.

      First, yes, students of color graduate with a higher student loan debt at VCU than white students. However, the difference is not dramatic, as I recall off the top of my head, maybe a differential of 5% to 8%.

      Second, yes, it is true the students get something in exchange for their tuition, fees, room and board. My argument is that they pay more than necessary. They are paying for “pay, perks and prestige” of senior administrators and faculty. Governance of universities has, in effect, been “captured” by those who manage the institutions. Unlike public corporations, in which shareholders can exercise pushback, the only pushback at universities comes from generally feckless boards of visitors. Students exercise little consumer power. They are anesthetized to the costs by limitless federal loans.

      • “Shareholders exercise pushback in public corporations”. Really? Maybe if you are a multi-millionaire and own more than 10 percent of the shares.

      • As alluded to in my comment on your article about the UVA logo change, the reduction of the overall cost of higher education is a good goal, but it won’t change the need for POC students to take on more debt than white students, on average, for the same degree. Making college more affordable is important, yes, but we also need to address the longstanding gap in wealth between black and white households in the United States. Black students will only have to take on less debt than their white peers if they have the same amount of money to start out with.

        Another thought regarding admin costs – how many of those costs are paid via grants and endowments, i.e, funds that are restricted in how they can be spent? Just because the money is spent doesn’t mean that the money could be used or something else or that the cost is being passed on to the student / taxpayer.

        • Your comments highlight a basic truth about higher ed finance: it is frustratingly complicated and does not lend itself to easy conclusions.

  2. Time to increase the price of a parking pass.

    On the other hand, that disgusting Liberal weekly rag, US News & World Report continually ranks dear W&M as a top bang for the buck. It held the #5 position, immediately behind the The Academies, for several years.

    Alas, as it constantly pointed out, “Freedom ain’t free” and it takes the educated to assure that.

  3. You are making a lot of good points about the cost of higher ed, but trying to tie it to racial inequity undermines your argument. There is little relationship between the two, especially when high ed institutions are anxious to increase diversity and recruit black students (much to the consternation of some who do not like affirmative action) and provide financial aid to those from poor families.

    Also, I disagree with your premise, ” From a social justice perspective, higher education is best regarded as a mechanism for extracting wealth from students and transferring it to the faculty and staff elites who run the institutions.” One of the chief functions of higher ed institutions is social mobility–enabling people to move beyond the social strata into which they were born. Some schools do that much better than others. (This is an opportunity for me to put in a plug for an alternative to the U.S. News ranking of colleges and universities. The journal, Washington Monthly, a neoliberal pioneer, has an annual ranking of colleges and universities, using a much different methodology than U.S. News. One of the criteria used is social mobility.)

    That being said, these administrative expenses and their increases need to be looked at critically. I am not familiar with the IPEDS data, but there is another data source, probably better. That is the CARDINAL data that the schools use to code their actual expenditures, which is reported to the Dept of Accounts. That is public data, but is not easily accessible. I am working on getting better public access.

    • Dick (and Virginia), I am merely applying progressives’ logic to higher-ed. To the Left, racial disparities are prima facie evidence of structural racism. Where disparities exist, it is racist. Look at any university. The top administrators and faculty are predominantly white. At many institutions, like VCU, minorities are a majority. Runaway tuition has the greatest impact on poor (often minority) students. Ergo….. Progressives apply this logic to every other institution the United States. They just don’t apply it to themselves.

      • It seems that your rhetorical device of “applying progressives’ logic to higher-ed” is more confusing than effective.

      • Some progressives may use that “automatic” logic. Others see disparities and then examine the applicable structure or system to see if race is a relevant factor. For example, blacks constitute a disproportionate share, relative to their percentage of the population, of arrests for possession of marijuana. But, polls and studies show that blacks and whites use marijuana at about the same rate. The examination reveals that police are much more likely to stop black drivers and search their cars than they are for whites. The same is true for other types of searches. The disparity is due to systemic racism.

      • Since you are not a “progressive” you are actually applying “mock progressive” logic, or more specifically, mock progressive mock logic.

        Where disparities exist, they do not exist because of race. They exist because of ignorance — the ignorance of racism — that created those disparities.

        Take one, 1000 acre Mississippi plantation that remained intact after the war and it’s owners, add 100 years of Jim Crow and access to the advantages of the government and education, throw in two generations of nepotism, and guess what you get?

        John McCain.

        Where do the descendants of the 100 or so slave households from that plantation end up? On average, with a net worth of $17,000.

        Considering that the average white household has 10x that, why yes, yes higher tuitions do impact black students more than white students.
        https://www.taxpolicycenter.org/fiscal-fact/median-value-wealth-race-ff03112019

  4. VCU should be asked to explain the reasons for the differences shown in the chart. The Legislature could make this happen and could create an incentive by limiting its funding to apply to only 75%of the current administrative positions. Organizations rarely streamline voluntarily. They need the equivalent of Samuel Johnson’s ” a hanging concentrates the mind wonderfully.”

    • VCU would just use tuition and fees to make up the difference. The legislature would need to be more aggressive and limit tuition increases, as well as fee increases.

  5. As one of the tenured, white faculty members you describe as benefiting unfairly from students, I protest. Not all of us are among the highest paid. Some of us put more time and energy into working with students than others. Some of us work with more first generation, minority, and more students from lower income areas (not necessarily minority always) and seek to help them succeed. This is neither recognized nor rewarded. Those who bring in the most money and get the most research published are the most rewarded. Women, especially in non-STEM areas, earn less. We do not all fit into the categories into which you so delight in lumping all associated with universities. Again, all faculty are not ultra-liberal and progressive. There is wide variation among faculty. Painting all as exactly the same is inaccurate and wrong.

    • That’s all part of my argument. Universities have extremely hierarchical structures that are highly protective of those at the top. From your description, you are not one of those at the top.

      • “Those” would be the president followed by the football coach.

        Correction: the football coach followed by the assistant football coaches, then the basketball coaches, the director of athletics, and THEN the college president,… and a large chunk of cash under the table to the NCAA.

  6. Of course, there is nothing funnier than someone railing on the high cost structures of state colleges and universities unless it is someone from the political party that championed the cuts to state funding that led to those cost structures.

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  7. Here is another view, suggesting that the status quo cannot stand and the alternatives to it are limited, should the interests of students, and those footing the bills for their education, be afforded the priority it deserves, given today’s vastly altered reality.

    “Defending Against the Jacobins

    Peter Wood

    In a recent article for The American Conservative, Senior Editor Rod Dreher quotes at length a sobering email sent to him from a professor in the southern Appalachian mountains. The unnamed faculty member relays the rather dire state of affairs at his institution in this excerpt:

    Instead of figuring out how we are going to deal with a second wave of coronavirus, or how to replace international students who shore up enrollment while getting to play sports they love (and enriching a fairly cornbread corner of America) and may not come back after the pandemic, or the myriad other problems big and small that plague us, we are putting together a “social justice initiative” whose purpose as yet remains vague.

    A general call went out to everyone. If you join, you’ll be expected to trumpet a hard-Left reading of woke ideology. If you refuse… well “silence is violence.” …

    If you just want to teach, scratch out a living and make a difference, hoping the furies will forget about you: you are wrong. …

    “An hour of wolves and shattered shields…” It is here.

    Dreher shrewdly identifies the closing quote as part of a rousing speech from soon-to-be king Aragorn in J.R.R. Tolkien’s The Return of the King, in which the heir to the throne exhorts his fellow men to stand up and fight against the forces of darkness that threaten to extinguish all that is good in Middle Earth.

    This is in some ways the very same fight we presently face within higher education. On one side are those who, like our anonymous professor, resist the ideologically-driven profligacy within colleges and universities and stand for a substantive education grounded in the liberal arts. On the other side are the encroaching hordes of woke faculty and administrators who, despite the COVID-19-accelerated financial disaster their schools face, continue to push for even more activist programs to supplant traditional education.

    The email Dreher quotes confirms my guess as to how colleges would initially react. It and other similar responses have led some to believe that our colleges and universities are a lost cause. Common-sense recommendations for reform, it is claimed, such as those presented in our report Critical Care, will be brushed aside by university officials who have long since blurred the goal of educating students with the dream of transforming them into loyal supporters of progressive ideals.

    These university officials, faced with the unprecedented financial crisis, would rather do almost anything other than shrink the apparatus aimed at promoting “social justice” in the name of education. They have already frozen salaries (and in some cases reduced them); indefinitely suspended searches to fill open positions; and halted construction projects. Discretionary spending has been curtailed and many of the perquisites of university life have gone missing.

    These steps fall far short of what will be needed to balance their budgets at a time when every stream of revenue has turned into a trickle. Tuition revenue is drastically diminished; room and board revenue is gone; summer programs are cancelled; the fall semester may be COVIDed into oblivion as well, and it is not clear what percentage of new and “returning” students will simply stay away. The prospect of paying big dollars for the chance to take online courses isn’t stirring much enthusiasm among would-be matriculants. Will enrollments drop by 15 percent? Twenty? Thirty?

    How cutthroat will the competition be? After all, colleges and universities derive a large portion of their operating budgets from students, and if the students stay away, disaster awaits all but the most richly-endowed institutions.

    The prospect of hanging is supposed to concentrate the mind, and you would think that college presidents and their boards of trustees would be poring over their budgets trying to figure out how to jettison every unnecessary expense. But they aren’t. The emergency declarations issued by almost every college president in the country in the last two weeks focus on the need for each institution to acknowledge its history of “white privilege” and become more focused on promoting “anti-racism.” Black Lives Matter is in ascendency over every other consideration.

    If history is any guide, that means these colleges and universities will commit to spending more money on diversity, multi-culturalism, and what might be called mea-culpa programs. Where will the money come from?

    Two possibilities. First, the higher education establishment is dreaming of a colossal federal bailout, something in the range of $50 billion—to start. Second, colleges and universities are considering dramatic changes to their curricula, including abolishing whole academic departments and eliminating the positions of many full-time and tenured faculty members.

    I can imagine the approbation that some will feel on learning the Marxist-dominated sociology department is going away and the soi-disant revolutionaries will have to move to the Capitol Hill Autonomous Zone of Seattle. Indeed, liberal arts departments across the country have made themselves vulnerable to such a purge by their plunges into intellectual triviality and ideological pandering. If they are winnowed, who will care?

    Well, the National Association of Scholars will care. Once the traditional disciplines are wiped away, so will be the hope of genuine educational reform. Sociology isn’t all nonsense. Durkheim and Weber count for something. And the same can be said of other departments in this fallen age. Can we clear cut the English departments and expect anyone will be left to teach Shakespeare?

    What will replace the vulnerable disciplines is the winning combination of vocationally oriented programs and more ideological posturing. Or so the college presidents now think.

    More likely, what will replace them is empty campuses. Many college presidents appear to be betting on balancing their budgets by sacrificing the faculty to sustain their fleets of diversity deans, identitarian counselors, social justice peace workers, Title IX enforcers, and BLM appeasers.

    It is a formula that will drive these colleges out of business even faster than COVID hysteria. As much as the public may feign enthusiasm for the anti-racist revolution, few will be willing to sacrifice their only opportunity for a college education to pay extravagant fees for training in White Guilt and Black Grievance.

    I’ve heard from NAS members who are worried about the instant reflex of most college presidents to save the political orthodoxy at the cost of educational coherence. The worries are justified, but the question remains: What happens next? Will boards of trustees walk with their college presidents over the edge of the cliff?

    Trading in whole academic departments and cashiering full-time faculty in order to save the sinking boat, while doubling down on diversity programs, has little chance of working. Our college presidents and other administrators will want to do this. Some will want desperately to do this, in order to be “the right side of history.” But they also have a strong desire to save their own skins. Running the college into the ground is not a good career path.

    My more precise forecast is this: the administrators will start out on the path we fear. Low-enrollment social sciences and arts programs will be proposed for outright elimination, consolidation, or deep cuts. Some of these will happen. But the college’s financial analysts, auditors, and—let’s hope—trustees will observe that the college is still in a deep deficit.

    Efforts will be made to rouse alumni support, and elected officials will be besieged with lobbyists explaining how crucial colleges are to the local economy and to their future election plans. Bailouts will be proposed. College presidents, like gamblers on losing streak, will bet everything on the bailouts coming through.

    Who knows? The bailouts may come and may save many colleges. A lot depends on coming elections. But if this plan falters, the only way out for dying colleges will be to abandon the old business model. Diversity Inc. will have to go, along with a host of other student “services” and amenities.

    NAS doesn’t know exactly how students and parents will respond to the situation. Nor does anyone else. But I doubt that their “wokeness” will lead them to matriculate in large numbers to colleges that have given up the pretense of general education, let alone liberal education, in favor of non-stop indulgence in the moral panic.

    The moral panic itself simply cannot endure that long. People get exhausted. They move on. Even Melanesian cargo cults had an expiration date. Global warming hysteria still has proponents and lots of people financially dependent on keeping it alive, but much of the public has moved along—even Michael Moore and the German government. Black Lives Matter moral panic will likewise subside. The colleges that have over-invested in it will pay a heavy price.

    Peter Wood is President of the National Association of Scholars.”

    For more see: https://www.nas.org/blogs/article/defending-against-the-jacobins?

  8. Norfolk State gets the most General Fund money per FTE from the state, followed by Virginia State, UVA, and W&M, I believe, so the source of funding for administrative bloat is not all from tuition and fees. Three of the four top spenders on administration are included there (and Virginia State is not shown in the graph).

    IPEDS data can hide and distort a lot of things. The Instruction category actually includes departmental research, so if you compare the Instruction to Administration ratios, it doesn’t tell you what you might think it tells you.

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