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Will Hanlon Pop the Higher Ed Bubble?

In an interview with the New York Times upon being named as the College’s next President, Phil Hanlon commented, “The historic funding model for higher ed is close to unsustainable. We can’t continue superinflationary tuition increases.” It seems that our mathematician-President can read a financial statement as well as understand probability. While Washington debates the soaring cost of medical care, the real bubble has been in higher education:

Higher Ed Inflation.jpg

(And I can tell you that in 1978, when the above graph begins, my parents did not think that the cost of a Dartmouth education was all that reasonable either.)

But is the problem unassailable? Certainly not in Hanover.

In 1999, the College had 2,408 non-faculty employees, including 75-80 at the Hanover Inn. Today Dartmouth has well over 3,200 employees (without the Inn’s staff). That’s a difference of approximately 900 employees — of whom, according to IP Folt, about 300 are in research. What are the remaining 600 new employees doing with their time? After all, Dartmouth was a fine school in 1999, the number of students has not changed materially since then, and the size of the faculty has increased by only about 60 members. I submit that they are not doing much of anything; they are just a manifestation of bad management, given that the number of College bureaucrats has increased in virtually every department. Here’s an excerpt from a column I wrote on the subject for The D in 2009:

In 1997, the President’s Office numbered 6.5 full-time employees; 10 years later there were 10. During that time period, the Dean of the Faculty Office went from 14 to 28 full-time employees. The Dean of the College Office went from 16 to 26; the Provost’s Office went from 6.5 to 11.5; and the combined headcount of the First-Year Office, the Office of Student Life and the Office of Residential Life went from 26.5 to 47.

Additionally, numerous books and articles have noted that the rise of the academic bureaucracy is a nation-wide phenomenon.

Beyond the bloat, as we have noted ad infinitum, the College’s compensation structure (wages, benefits, holidays) is totally out of line with that of the local labor market. In many cases, employees are paid twice what workers earn in similar occupations in the private sector in the Upper Valley.

The solution to the higher ed bubble in Hanover? That’s easy, as any management consultant could tell you. You trim 500 positions from the College’s bloated ranks, and cut compensation so that the College pays a generous 20% more than other Upper Valley employers — but not double. Not only would you save money, but the College would run better.

With the savings from these cuts, you could either reduce tuition to zero, or, better yet, trim it in half and use the remaining savings to fund the kind of academic programs and student pedagogical support that would make a Dartmouth education the envy of the world.

Addendum: Lest you worry that the College’s laid-off employees will be set adrift in the seas of a cruel economy, the unemployment rate in low-tax New Hampshire is well below the national rate of 7.7%: it’s 5.7% right now for the entire state and only 4.4% in Grafton County.

As for people for whom empathetic regard for employees being laid off trumps their empathy for families who take out an additional mortgage in order to pay Dartmouth’s second-in-the-Ivies tuition, or for whom the quality of Dartmouth as an institution is of secondary importance, your umbrage should be directed at the administrators (Jim Wright, this means you) who hired all of the unnecessary staffers whose presence is stifling the College today.

Addendum: A faculty member writes in to note that the administrative support given to the faculty in each academic department is, if anything, proportionately less than it was one or two decades ago. The growth in staffing that has taken place at Dartmouth has been confined to the purely administrative parts of the College.

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