The looting phase of (higher) education reform -- the opposite of cost disease

The tuition spiral is a horrendously complex story involving organizational theory and economics and politics and culture, but there are some fairly simple conclusions we can draw with a fair amount of certainty. One of those is that the standard cost disease explanation -- that a lack of technology-driven productivity gains are driving the increase -- fails to meet the facts in at least two respects: first, the compensation of those who do nothing but teach has not gone up that much; and second, the compensation of administrators, whose productivity should have increased many fold due to advances in IT and telecommunication, has exploded.

From Paul Campos:

One thing that rarely gets asked in the context of all this getting and spending is, What exactly is that money supposed to be for? In theory, of course, it’s for “education.” In practice, a whole lot of it goes directly into the pockets of a metastasizing cadre of university administrators, whose jobs, as nearly as I’ve been able to determine after being on a research university’s faculty for nearly a quarter-century, consist of inventing justifications for their own existence while harassing faculty to fill out evaluations of various kinds. (In a particularly Kafkaesque twist, many of these evaluations are supposed to be of the administrators’ own job performance.)

In [ex-president of Ohio State University E. Gordon] Gee’s case, the sums of money involved are disgusting. At the time he was apparently forced out after having made a few tactless jokes in a private meeting, Gee was getting paid about $2 million per year. This does not include the $7.7 million that the university paid for Gee’s travel, housing and entertainment from 2007 to 2012 — a sum that included at least $895,000 for soirees at Gee’s university-provided mansion, more than a half-million dollars for private jet travel and “$64,000 on his trademark bow ties, bow-tie cookies, O-H lapel pins and bow-tie pins for university marketing.”

Ah, yes, “marketing.”

Gee also increased the size of the university’s senior staff by 30% and raised their average salaries by 63%, to $539,390 in 2011. To get a sense of how out of control university-administrator compensation has become, consider that a year before Gee began his first tenure as Ohio State’s president, the president of Harvard was paid $138,044 ($256,000 in 2012 dollars), and only eight university presidents in the entire nation made more than $200,000. Now, thanks to Gee and his ilk, there are dozens of administrators at Ohio State University alone who would consider that sum an insult.

And for more from the OSU campus, here's Deborah J. Merritt:

We also have a problem with the salaries we pay administrators and tenured faculty. Ohio State’s Vice President for Talent, Culture, and Human Resources is earning $425,000 this year–yet she’s underpaid compared to other senior administrators. Back in 2011, they were already averaging $539,390 per year. My salary, as a senior professor in one of the best paid departments on campus, pales in comparison to these amounts–yet I know that even my salary is too high to support the goals of a public university. Ohio State’s motto is “education for citizenship.” But how much of the citizenry, and from what socioeconomic strata, are we educating at today’s prices?

(though outside of the scope of this post, Merritt also has some interesting insights into the shifting mission of schools like OSU. You should read the whole thing when you get a chance.)

And just so our readers in NYC don't feel left out, here's Pam Martens:

According to documents unearthed in a month-long search of public records, NYU Law School has created an array of nonprofits to funnel money into lavish perks for its professors. The money has been used by professors to buy multi-million dollar brownstones and condos in Manhattan and Brooklyn with portions of some loans forgiven over time. In some cases, even the interest charged on the loans has been reimbursed.

The decision to use nonprofit funds to enhance the lifestyles of a select handful of professors and administrators rather than assisting students is under investigation by Senator Chuck Grassley at the Senate’s Judiciary Committee. A referral has also been made by the NYU chapter of the American Association of University Professors to the New York State Attorney General’s Charities Bureau which oversees nonprofit organizations.

From the hundreds of records examined, NYU, under the leadership of President John Sexton, looks like a real estate developer in drag as a university. According to its federal tax returns from 2006 through 2010 – just a five year period, its five highest paid independent contractors received over $568 million for construction work and an eye-popping $173 million to clean its buildings.