Administrative cost is the most fundamental determinant of a university’s financial efficiency. The cost of non-academic staff is the second-largest expense at every university, just behind the cost of academic staff and far ahead of everything else. It has, by far, the greatest capacity for deflecting funds away from teaching, and triggering the need for cuts impacting the classroom and increases in student fees.
While the cost of the Central Admin function (see Operational Support) provides one guide to administrative cost, it doesn’t portray the full picture because some schools take a more de-central approach to administration. Central Admin also includes some significant costs that are unrelated to administration.
Administrative support is provided by staff who fit into CAUBO’s “Other Salaries & Wages” category. They include “All full and part time non-instructional staff”, including clerical & secretarial, professional & managerial, and “payments to individuals who may hold an academic rank, or equivalent thereto, but are engaged in activities other than instruction and research”, such as the president, and vice-presidents.
The cost of providing administrative support to the Academic Mission is incurred in two places – within Central Admin AND in the faculties and departments within Instruction. (The other GO functions – the Library, Student Services, Computing & General, and Physical Plant – are largely self-contained entities that receive high-level supervision, rather than significant administrative support, from Central Admin.)
The chart below shows the change across the Top 25 since 2001 in “Real Dollars” (adjusted for both inflation and enrollment). Positive values denote increases exceeding inflation and enrollment combined:
Those numbers confirm that administration has consistently been accorded a higher priority than teaching since 2001.
This Topic explores that trend in greater depth by taking the cost of Other Salaries & Wages in both Central Admin AND Instruction, and then directly relating that cost to expenditure on Academic staff. This provides a fuller picture of the total cost of “administration” – regardless of whether the school takes a more central or de-central approach.
The insightful measure is not so much the cost of non-academic staff but the relationship between that and the cost of academic staff.
This table provides that insight.6A.2-1
Across the Top 25, the cost of administrative support has risen from 47.7 cents per dollar of faculty salaries in 2001 to 56.8 cents in 2022. That is indicative of the degree to which the administrative component has progressively overpowered the academic component over the last 20+ years.
We can quantify the direct impact of this shift in real dollar terms. In 2001 the average Top 25 university spent 16.5% of its GO budget on the administrative support defined above; last year it was 18.5%. That two-point rise represented around $16.1 million of GO Expenditure at the average Top 25 university in 2022.
That’s a shocking number – all the more so when we consider that increasing computerization since 2001 should have paved the way for some reduced expenditure on administrative staff. The only way to cover that additional cost was with a combination of increased student fees and classroom cuts. But it didn’t just happen in 2022 – each upward tick on that graph line triggered the same scenario.
Moreover, there is an unseen “magnifier” that causes the administrative element of the cost to be understated. It was shown earlier that Benefits cost levels are significantly higher in Central Admin than in Instruction. If it were possible to incorporate this element into the calculation, the administrative element would be larger and would rise even faster.
The 2022 Top 50 Rankings show that this disturbing pattern is widespread. Eleven universities are now spending more than sixty cents on non-academic salaries & wages for every dollar they spend on academic salaries. The U15 is “an association of fifteen leading research universities across Canada”; despite their similarity, their cost ranges from 42.7 cents to 72.9 cents. (See Ranking table 6 B2) below.)
The existence of varying degrees of administrative centralization begs the question “Which approach is best?”
Most of the universities which appear to take a more centralized approach are the best performers when it comes to total administrative cost per dollar of faculty salaries and wages.
However, this is not a definitive indication that a more centralized approach is more cost-effective – and certainly not that implementing a higher degree of centralization is a panacea for rectifying excessive administration cost. Notwithstanding all the complexities, these numbers make it clear that administrative cost is a major issue, regardless of where it is incurred.
Even though this is a topic that directly impacts educational quality, the “jury” is still out on whether a more central or more de-central approach is the most cost-effective, but it really shouldn’t be. CAUBO has existed for almost ninety years, with a central mission of information-sharing, so it’s not unreasonable to expect that this critical question would have been answered by now.
The underlying methodology for the tables below can be seen HERE. Each table opens in a new tab.