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Phil’s Own Words: Tuition (Comment)

Is Phil Hanlon correct in arguing that colleges and the College are “the ultimate innovation places,” and does innovation explain the rising cost of tuition? Needless to say, Phil presented no proof at all to support this self-flattering assertion.

Let’s look at some numbers. In 2009 I wrote a column for The D entitled Waste and More Waste. The piece contained the summary of an analysis of the staffing levels in numerous College offices based on the number of names in the College’s personnel directory during Jim Wright’s presidency from 1999 and 2007. If the College were innovating, one would expect that most areas of the bureaucracy would see little growth, and other areas would have grown to an important extent. Not so. We found that virtually all areas of the bureaucracy had grown by at least 40% (some by much more), including the President’s office itself:

In 1997, the President’s Office numbered 6.5 full-time employees; Ten 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.

I don’t have data for faculty growth during the same time period, but in the 2004-2015 interval, the number of professors  in Arts and Sciences grew by only 15% — which leads one to conclude that the College’s “innovations” did not often involve faculty members.

Hanlon’s argument ignores the fact that on one occasion, after the 2008-2009 financial meltdown, the College did effect some meaningful cost reduction. In the 2009-2010 budget year, Jim Wright’s last budget, spending actually dropped from $735 million to $717 million (expenses in 2015 were $891 million), even though the number of faculty members remained stable:

Annual Expenses 1999-2015.jpg

Amazingly enough, during the same brief time period, the number of non-faculty staff declined from 3,417 in 2008 to 3,056 in the fall of 2010:

Non-faculty staff 2006-2014.jpg

Did the College stop “innovating” in this period? Ha! Were academic programs cut? No. The real story is that layoffs and incentivized retirements took place in order to reduce the size of the College’s expensive, unproductive bureaucracy.

However from 2010 onward the bureaucracy resumed its inexorable growth, soaring from 3,056 people in 2010 to 3,497 today. Those figures mask the fact that approximately 75 employees of the Hanover Inn left the College’s payroll for good in 2010, but they were more than replaced by staffers in other areas.

While staffing grew by about 500 people (taking into account the Inn’s reduction), the growth in the Arts and Sciences faculty was only 47 people, and total faculty growth for the entire institution was 62 professors (from 1,004 to 1,066). Put another way, during this time period we hired more than eight new staffers for each new member of the faculty. Such behavior hardly bespeaks “innovation”; it indicates bureaucratic bloat.

Can anyone point to significant “innovation” between 2010 and 2015. Did Jim Kim, Carol Folt or Phil Hanlon pioneer new academic or research programs during this time period? Kim’s Science of Health Care Delivery program added about 35 people to the payroll (some of them faculty), and we have more of Phil’s postdocs in town now, but where did the remainder of the 500 or so new faces go? Answer: they went a little bit everywhere: the bureaucracy grew fatter and fatter once the endowment started growing again (it dropped by 23% in 2008).

As any competent manager will tell you, the very nature of a bureaucracy is to grow, unless restrained by vigilant leaders. Bureaucrats always want to manage more people (the better to justify salary increases), and dismissing non-productive employees is against the ethos of these sprawling offices. In fact, each time a mistake is made in hiring, extra hiring takes place beyond it to compensate for the low productivity of the mistaken hire. And so it goes.

In industry, the pressure of competition obliges companies to run as leanly as possible; at the College, a surging endowment and the ability to raise tuition at rates far above inflation have ensured that there is no need to exercise any budget discipline at all — except after the market crash in 2008. Of course, private sector companies are not immune to such temptations: America’s car companies were so rich in the 1960’s and 1970’s that the size of their head offices and administrative functions soared. The same thing occurred at market-dominating IBM in the same period. Only after punishing competition hurt these behemoths did they put their houses in order.

The data clearly show that Phil’s “innovation” explanation for the College’s cost growth (and therefore tuition growth) is laughable. Dartmouth’s faculty growth and overall academic program have been stuck in the mud for two decades now; but spending continues to climb as the administration hires ever more non-faculty staffers. Phil, it’s time to roll back such institution-destroying behavior.

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