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Real Information About the Budget

Eric Zitzewitz.jpgAt the faculty meeting on June 1, Economics Professor Eric Zitzewitz won Dartblog’s Mark McPeek Award for a cogent, data-rich presentation; Zitzewitz’ was on faculty salaries. I have just gotten my hands on the graphics he used, but to start off an analysis of his talk, let’s think about a statistic that he evoked in his presentation that had more than a few faculty members looking around in surprised wonder. He said:

Faculty compensation is not what is driving increasing costs in higher education. Faculty compensation is growing more slowly than pretty much any other line item in the Dartmouth annual report you want to name. Thus it is declining as a share of total compensation and it’s declining as a share of operating expense. It’s also not a terribly big share of operating expenses. Tenured-line faculty compensation is less than 10% of operating expense. [Emphasis added]

The College’s total expenses in the 2014 fiscal year were $853,110,000, which would put faculty compensation at a total of $85,000,000 or so.

Let’s look at a few other figures to put this figure in proper perspective: it is a small number. For example, the endowmment contributed $187,043,000 to the College’s operations in 2014, and undergraduate tuition income (net of financial aid) was $126,605,160. The College took in research grants in the amount of $177,539,000, and the Dartmouth College Fund and other gifts added $85,584,000 to the coffers.

On the expense side of the ledger, total compensation (salaries and benefits) for all employees (faculty and staff) amounted to $491,932,000 — of which the staff and non-tenure-line faculty received 82.7% of that amount: $406,932,000. For each $1.00 of payroll spent on tenured/tenure-track faculty at the College, another $4.80 goes to the staff and adjunct faculty.

How is Brown doing as a comparison? That school is my favorite example of best practices, even though Providence is a more expensive place than Hanover in which to do business.

First off, Brown has more tenure-line professors than Dartmouth. Brown has 648:

Brown Tenure-track Faculty.jpg

And Dartmouth has 606:

Dartmouth Tenure Track Faculty.jpg

Salaries at the two schools are close. According to data from the Integrated Postsecondary Education Data System (IPEDS), the average salary at Brown is $120,429:

Brown IPEDS Salaries 2014.jpg

At Dartmouth it is $118,207 — though the difference seems to derive mostly from the fact that the College pays less money to its Assistant Professors while paying more money to Full and Associate Professors:

Dartmouth IPEDS Salaries 2014.jpg

Beyond salaries, when one looks at total compensation data (salaries plus benefits) from the American Association of University Professors website, the total cost/compensation of tenure-line faculty at Dartmouth is higher than at Brown:

AAUP Brown Dartmouth Comp.jpg

Without getting too deep into the math, it is probably fair to say that given that Brown has more professors, but Dartmouth pays its faculty more per person, the total compensation at both schools for tenure-line faculty comes to about the same figure: $85,000,000.

Above we looked at the total compensation figure Dartmouth for all employees: $491,932,000, and the compensation paid out to non-tenure-line professors and staff: $406,932,000.

If tenure-line faculty at Brown earn about the same $85,000,000 as at Dartmouth, and the total compensation number for 2014 at Brown was $408,375,000, then the cost at Brown for non-tenure-line professors and staff was only $323,375,000.

To put this figure another way, Brown spends $3.80 on adjunct professors and staff for each $1.00 it spends on its tenure-line faculty — versus $4.80 at the College. Given that Brown has a third more students than the College, either Brown’s support staff is a miracle of managerial efficiency (don’t bet on it) or the College’s bureaucracy is bloated in an utterly unconscionable way. Actually that’s a false question: Brown is poorly run compared to many of its peers, and the College annually sets new records for waste.

Addendum: One difference between Brown and the College lies in research spending. Over the past four years the College has generally received more grants than Brown, with the difference ranging between identical funding and a gap of as much as $30M in favor of the College. Given that a percentage of this funding would go to personnel, non-faculty compensation at the College could be marginally higher than at Brown. However, the College’s research income has varied by a range of only +/-2% or so over the last four years, even as Datmouth’s personnel count has grown each year.

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