Budget analyst: U's administrative costs are still really high

Bunsis

Remember last Friday’s presentation on University of Minnesota finances by accounting professor Howard Bunsis, an officer in the American Association of University professors?

He said spending on administration was a big factor in the rise of university costs.

He was confronted at the session by the U’s CFO, Richard Pfutzenreuter, who said Bunsis was presenting a misleading picture.

Pfutzenreuter

Pfutzenreuter essentially said Bunsis had inflated administrative spending by including categories that either weren’t really administrative expenses, or were indirectly tied to instruction.

The brief exchange came up after I’d posted my story, so I covered the basic elements on Twitter:

(Read from the bottom up.)

Looks like a standoff/standstill in that issue. #UMN

MPRAFriedrich Oct 07, 4:09pm via HootSuite #UMN finance chief (Pfutzenreuter) says Bunsis is not using the right numbers, hasn’t looked closely enough at U’s cost system.

MPRAFriedrich Oct 07, 4:06pm via HootSuite Bunsis says he had no need to call #UMN finance chief. He looked at all public data. Any anomalies should have been in notes.

MPRAFriedrich Oct 07, 4:04pm via HootSuite #UMN finance chief is confronting Bunsis about his methodology, calls it misleading.

In the last day or so I got an e-mail forwarded to me from Bill Beeman, a U professor and secretary of the local association chapter:

He wrote, “Here is Howard’s response to CFO Pfutzenreiter’s objections.”

Here’s the main section of the e-mail:

None of this would have changed my approach or conclusions.

Let me first report some more detail which supports the conclusion that administrative costs have increased significantly over the last several years.

This data is critical to rebutting any assumption that administrative costs went up for ancillary reasons. Do not let your group be (persuaded) into agreeing that there has not been an astronomical increase in administrative costs.

Per Audited Statements (all campuses) 2002 2010 % Change
Institutional Support Salaries and Benefits 99,424 172,929 74%
Institutional Support Supplies and Service 4,232 61,379 1350%
Institutional Support Total 103,656 234,308 126%
Instruction Salaries and Benefits 457,444 582,468 27%
Per IPEDS (TC only) 2002 2009 % Change
Institutional Support Salaries and Benefits 88,757,000 190,237,439 114%
Instruction Salaries and Benefits 412,028,930 512,636,014 24%

The data above is very revealing (I am trying to convince all of you of this, as some faculty seem to accept the CFO’s explanations that there was not a “real” increase in institutional support; that is simply not true, and I hope you let the data tell the story):

If we take out the “accounting change” and other stuff that the CFO claims is in institutional support, then we still see a 74% increase in institutional support salaries and benefits.  Per IPEDS at TC, institutional support salaries and benefits increased 114%.  Notice how those

increases dwarf the increases in instructional salaries and benefits. No amount of (persuading) can explain away those numbers.

Now, the supplies and services part of institutional support went up quite a bit. But here is the thing; there may be some additional items in there, but this is mostly the budgets of the upper-level administrators for services, supplies, travel, etc. It will be interesting to see what that yields.

Using the IPEDS data, comparing 2002 to 2009 (2010 is not yet available), the 114% increase in institutional support salaries and benefits is startling.  When we  get the 2010 and 2011 numbers, the same conclusion will be true: There has been a tremendous increase in administrative costs.

Now, I can do a year-by-year analysis as we proceed; for now, please use this data to rebut any conclusion that institutional support increased because of extraneous factors; there are too many administrators making too much money at the U.