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 needless increases in student fees. That explains why this is the most-visited page on the site.
While the cost of the Central Administration 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:
6A1
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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 in Instruction. 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 cost and the university’s expenditure on academic staff.
This table provides that insight.
6A.2-1
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Across the Top 25, the cost of administrative support has risen from 47.7 cents per dollar of faculty salaries in 2001 to 58.2 cents in 2023. That is indicative of the degree to which the administrative component has progressively overpowered the academic component over the last 20+ years.
(For clarity, those numbers do not include the cost of Student Services staff, which is addressed separately on this site. The above ratio measures administrative support to the academic program, whether central or decentral.)
The direct impact of that cost escalation was quantified in real dollar terms on the HOME page – a staggering $28.7 million at the average Top 25 university in 2023. The number is all the more shocking when we consider that increasing computerization since 2001 should have paved the way for some reduced expenditure on administrative staff.
The chart line is a combination of two components – Other Salaries & Wages in Central Administration and Other Salaries & Wages in Instruction, but they certainly haven’t contributed equally to the cost escalation. The Instruction component has increased moderately, from 30.2 cents in 2001 to 32.6 cents in 2023. However, the Central Admin component has increased from 17.5 cents to 25.6 cents.
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 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 2023 – each upward tick on that graph line triggered the same scenario.
The 2023 Top 50 Efficiency Rankings – Table 6 B) below – show that this disturbing pattern is widespread. FIFTEEN of those 50 universities are now spending more than sixty cents on non-academic salaries & wages for every dollar they spend on academic salaries.
It is important to note that the relationship between the two components of the cost is impacted by the way in which each university chooses to provide administrative support. Some opt for a more centralized approach, under which a higher proportion of the administration in performed in Central Admin, while others opt to do less centrally and more within the individual faculties.
That angle is explored in Table 6 B2) below. This Table ranks the universities based on their expenditure on Other Salaries & Wages Per Dollar of Faculty Salaries (the factor addressed in the graph above), but it also includes a measure of the “centralized vs decentralized” factor – the share of the total cost incurred in Central Admin.
The existence of varying degrees of administrative centralization begs the question “Which approach is best?”
Table 6 B2) shows that most of the universities which appear to take a more centralized approach are better performers when it comes to total administrative cost per dollar of faculty salaries and wages.
However, that’s not a definitive indication that a more centralized approach is more cost-effective – and it’s certainly not an indication that implementing a higher degree of centralization is a panacea for rectifying excessive administrative 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 student cost and 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 sharing information and “best practices”, so it’s not unreasonable to expect that this critical question would have been answered long ago.
The Two Components of “Central Administration”
As outlined in the Operational Support topic, Central Admin is an “as you were” re-amalgamation of two components that are now separate under the CAUBO reporting structure – Administration & Academic Support, and External Relations.
In order to provide deeper insight into administrative cost, the components used in this year’s Efficiency Ranking are different to those used last year. This year’s components assess the cost of Administration & Academic Support and External Relations individually, instead of grouping them together as Central Administration. It can be seen that some universities spend much more than others on External Relations.
Due to that change in the utilized efficiency measures, the “Last Year” rank in this year’s table differ from last year’s rank for some universities. This would impact the Overall Ranking of those universities in the same way.
SOME CLOSING THOUGHTS ON ADMINISTRATIVE COST
The major growth in administrative cost and its consequences are deeply disconcerting. The actual numbers support the frustration long voiced by Faculty, but usually only backed with anecdotes about increasing head counts in Central Admin.
However, it’s important to add some tempering notes.
Some of the additional cost is attributable to valuable additions to the scope of administrative endeavour in worthy and important areas such as campus security, occupational health & safety, environmental awareness and responsibility, and making the university more accessible and welcoming to indigenous students.
Further additional cost is imposed on the universities by outside parties, especially federal and provincial governments, requiring them to meet ongoing reporting duties; some of these are important, but others can be bureaucratic “red tape” exercises that have built over the years and incur significant cost for little real benefit to the university. (If this really is a substantial element of the cost, it would be a worthwhile exercise to review these activities with a view to seeking the removal of reporting requirements that offer little real benefit to anyone.)
And then there’s the unknown cost, especially since 2010, attributable to the intensifying quest – and competition – to attract more international students.
But those tempering notes only covers some of the additional cost, certainly not all of it.
If the factors outlined above really were the main causes of the increase in administrative cost, especially within Central Administration, most universities would be impacted to a similar degree. But they are not. As the Rankings tables show, administrative costs are far higher at some universities than at others.
Most of the factors outlined above were advanced back in 2010 as explanations for the major escalation in administrative cost levels, but it just keeps continuing, year after year; that graph line is still climbing. At some point, those factors cease to be an explanation and turn into an attempt to explain-away the inexcusable.
As shown in the Operational Support topic, the cost of Central Administration was a whopping $115 million at the average Top 25 university in 2023 – an inflation-adjusted increase of 131% since 2001 (40% since 2010). This increase was far more than the 77% inflation-adjusted increase in Academic-Focused expenditure since 2001 (19% since 2010). That’s a damaging, unsustainable picture.
This pattern is even more troubling for the fact that the far higher level of computerization, compared with 2001, should have paved the way for major administrative cost savings.
There are certainly some mitigating factors for the dramatic escalation of administrative cost, but there is nowhere near enough mitigation to justify the extent of the escalation. and the impact it has exerted – and continues to exert – on student fees and the “Core Mission” academic program.
Rankings Tables
The underlying methodology for the tables below can be seen HERE. Each table opens in a new tab.
Please Note: The “Last Year” rank in this year’s table might differ from last year’s rank for some universities. This is due to a change made in the Administrative Cost assessment criteria outlined above.
6 B) 2023 Efficiency Rankings – TOP 50
6 B2) 2023 Efficiency Rankings and Centralization % – TOP 50
6 C) 2023 Relative Cost Impact vs 2020 – TOP 50
6 D) 2023 Relative Cost Impact vs 2010 – TOP 25