Where does the money go at local colleges?
Dollars grow fastest for offices, support services
4:14 PM, Jun. 4, 2011


The Enquirer/Cara Owsley
Rachel Gardenhire, a senior from Strongsville, studies organic chemistry at Miami's King Library in Oxford. Miami spends $11.2 million for its six library locations.

Written by
Cliff Peale

The University of Cincinnati spends $1 million a year to supplement scholarships for female athletes, doled out from a special fund to ensure equity between its men's and women's sports teams.

Northern Kentucky University spends $315,000 a year on a center aimed at retaining on-campus students by helping with financial, academic or other problems.

At Miami University, annual spending of $11.2 million for libraries includes $2.9 million for 38,000 journal subscriptions, many of them electronic.

None of these dollars pays for teachers or classrooms. Instead, they are focused on centralized offices such as finance, student services such as financial aid, and academic support such as advising or libraries.

Across Greater Cincinnati, Northern Kentucky and the country, colleges and universities have increased their spending on those services faster than spending on core instruction.

At UC, the region's biggest university, spending on functions such as the president's office, finance or legal services has nearly tripled during the last two decades, dwarfing the 78 percent growth rate for instruction.

Quote:Spending categories

Instruction: Mainly faculty salaries and benefits and administration of academic departments.

Research: Overhead costs of sponsored research, including building and maintaining facilities.

Public service: Cost of providing services to external groups, including conferences and public broadcasting.

Student services: Student-related activities including admissions, registrar, career counseling and financial aid.

Academic support: Activities that support instruction including libraries, dean's offices, course development and advising.

Institutional support: Administrative services including executive management, legal, public relations and finance.

Student aid: Institutional spending on scholarships and fellowships (does not include federal loans).

Plant operation and maintenance: Service and maintenance of grounds, buildings and utilities.

Auxiliary enterprises: Activities separated from the general fund that are meant to be self-supporting, including housing, athletics and campus services.

At Miami and NKU, the region's other two public four-year colleges, the gaps are less dramatic, but growth in central administration and support budgets still outstrips instructional spending.

Gary Rhoades, national general secretary of one of the biggest unions at UC, the American Association of University Professors, criticized the spending increases that don't directly touch students in classrooms.

He said a better way to more successfully get students to graduation is to pour more money into professors' salaries, which would attract and develop better teachers.

"It's not that these people aren't doing important things," Rhoades said during a recent visit to UC. "But they've developed this whole infrastructure in non-instructional personnel. There are huge educational costs for that."

Combined, colleges here spend nearly $2 billion a year. That's nearly $20,000 for every student, ranging from about $15,000 at NKU and the College of Mount St. Joseph to $32,662 at UC, according to financial statements to the federal government.


The Enquirer/Jeff Swinger
The University of Cincinnati spends $12.2 million a year on the Main Street corridor, mainly to pay debt service on the newer buildings there. The money comes from student fees and is part of about $1 billion of annual spending at UC.

Those colleges have built themselves into huge companies in the last two decades, with thousands of employees and sprawling campuses. UC is the region's biggest employer with about 16,000 workers.

The billions of dollars that colleges collect are part of the equation. Students and families are struggling to pay tuition and states are slashing taxpayer aid.

But as the economy emerges from recession, more people are asking: How does my college spend all of that money?

According to an analysis of six local four-year colleges by The Enquirer:

Less than half of total spending goes to instruction, mainly professors' salaries. Miami University is the only local college to spend more than half of its operating budget on instruction - 52.4 percent in 2008-09, according to figures reported to the government. Even 20 years ago, Miami devoted roughly half of its operating budget to instruction.

UC spent 29.7 percent of its operating budget on instruction, but the $9,687 it spends on instruction for the average full-time student is the highest of any college here.

Private colleges - Xavier, Mount St. Joseph and Thomas More - devoted far more of their budget than publics to student services, such as counseling.

UC and NKU put significant dollars into public service, such as joint programs with local school districts, while Miami and the private colleges spent less. Those programs totaled 6.2 percent of UC's budget and 7.6 percent of NKU's budget.

Since 1991, UC's spending for the "institutional support" budget category jumped 181 percent while instructional spending, largely professors' salaries, increased 78 percent. Instruction was 41 percent of that budget in 1991 and was 32 percent last year.

Institutional support includes top management, plus departments such as legal services and marketing.

At Miami, instructional spending doubled during that 20-year period while central administrative spending jumped 117 percent. Spending on academic support, including libraries, more than tripled.

At NKU, spending on "institutional support" more than doubled since 2002, outstripping the 64 percent growth in instructional spending. The Enquirer analyzed only the last 10 years of statements for NKU because the university is only about 40 years old, making comparisons difficult.

Daniel Langmeyer, a UC psychology professor who has studied the university's budget for decades, acknowledged that it costs more to operate a bigger university. But as colleges grow, he said, they are allocating too much of the growth to administrative employees.

"When you look at specific people, you can't say, 'They don't belong,'" Langmeyer said. "But clearly the money talks."

UC President Greg Williams said tighter budgets in the last several years have tried to maintain jobs that directly touch students. That includes services such as advising.

"We're trying to protect our strongest programs," Williams said. "I think we've had some difficult budget times and we've tried to remain dedicated to our core mission, which is teaching and research."

Susan Mospens, director of the Student Achievement Center at NKU, said it keeps students from dropping out by helping with problems as they arise.

"It's a good investment," she said.

Others point out that the trend has reversed itself in the last two years, with colleges generally protecting full-time professors' jobs even as they've had to slash budgets and lay off workers.

"Maybe that was the truth before this recession," said Kentucky Rep. Arnold Simpson of Covington, chairman of the House budget committee on higher education, on the administrative vs. instructional gap. "If there's any fat, any balance, it's been carved out as a consequence of our inability to fund them."

The trend among local colleges dovetails with those around the country, with spending for those consolidated functions consistently growing faster than money for instruction.

Funding for public universities comes from tuition, taxpayer money and private donations, all under intense pressure in a recession and facing increasing public scrutiny. Private colleges don't get direct taxpayer subsidies, relying more on private donations and tuition.

The late 1990s and early 2000s were prosperous times, as flush governments poured subsidies onto campuses and tuition increased 6 percent or more in most years, double the rate of inflation.

That fueled a raft of new spending on public-service projects, partnerships with local schools and businesses and strategic plans.

At UC, for example, Williams created a $230,000-a-year executive vice president's position in 2010 for Fred Reynolds, a colleague from New York (Reynolds has since left UC).

One of Reynolds' major tasks was to plan the rollout of UC's ambitious UC2019 strategic plan.

According to the Delta Cost Project, a Washington-based research group producing data on college spending, institutional support spending jumped 20 percent per student in public research universities and 14 percent in comprehensive four-year universities for the decade ending in 2008, before the recession started.

Instructional spending increased by about half that rate, 10 percent and 8 percent, respectively, the group said in its "Trends in College Spending" report.

Now the prosperous times appear to be gone. Public colleges are collecting less money from governments, facing limits on how much they can increase tuition and are putting more pressure on private donors to fill the gap.

State subsidies to public colleges now make up less than a third of total revenue. Ohio allocations will decrease an average 14 percent next year as it loses federal stimulus money.

In Kentucky, NKU's annual allocation has been shaved by about $6 million during the past three years.

In the past, colleges have increased tuition to fill those gaps. But both Ohio and Kentucky have capped tuition increases and private colleges are hearing the same messages from families.

Record tuition levels have kept the spending up. Xavier will increase its total spending about $17 million, to $202 million next year, including nearly a dozen new faculty positions. Most of that is funded by new tuition revenue from three straight record freshman classes.

More students means more services are required, colleges say.

"We have done everything imaginable to try to cope with the demand," said Kip Alishio, director of Student Counseling Services at Miami. "These are the bare bones that we're working with here. I do have sleepless nights wondering about whether we put the right person on the waiting list."

Those record enrollments are unlikely to continue, foreshadowing a long-term slowing of the spending that has grown on campuses since the 1970s, said Jane Wellman, executive director of the Delta Cost Project.

That growth, mostly in hiring, produced a set of structural costs that could not easily be cut, such as employee benefits. As the colleges continued to grow, they also spent more on campus security, fund-raising and regulatory costs.

NKU, for example, has budgeted two new $45,000 positions for next year, one to ensure it meets regulations on testing and disability services, and another to coordinate collections of overdue accounts.

Controlling personnel and health-care costs are the key, Wellman said.

"What we're seeing now is that universities across the country, particularly publics, are really starting to look at core cost structures and struggling with what they can do to make long-term changes," she said. "Things like benefits. That's the biggest one."

In her latest report, Wellman tried to combat the popular perception that colleges have wasted millions of dollars on high-priced professors.

"This does not necessarily mean that institutions have shortchanged students, as spending for student services and academic support may be a good way to spend money to increase student success," her latest report said.

"Nonetheless, it does show that the common myth that spending on faculty is responsible for continuing cost escalation is not true."

http://news.cincinnati.com/article/20110.../106050341