The statistical analysis I provide here is pretty rough. I understand that there are many different factors that I simply didn't take the time to consider. However, the numbers are correct, and I believe the information raises some interesting questions and concerns.
Methodology:
I am comparing the expenditures of several different Colleges and Universities. I'm not analyzing tuition costs, but the overall economic cost of these institutions. I gathered all of my information from the 2007 and 2008 annual reports for these institutions. I did not include any expenses for university hospitals, research, athletic programs, or student unions.
The Data:
Total Yearly Education Expenditures:
University of Utah: $1.256 BILLION
University of Kansas: $877 Million
Utah State University: $442 million
Utah Valley University: $167 Million
Southern Utah University: 85 Million
Dixie State College: 47 Million
Yearly Expenditures Per Student:
University of Utah: $43,928; For Instruction: $9,262 (% of Total: 21%)
University of Kansas: $29,161; For Instruction: $9,680 (33%)
Utah State Univ: $18,101; For Instruction: $4,715 (26%)
Southern Utah: $12,216; For Instruction: $3,367 (28%)
Dixie State: $10,831; For Instruction: $2,237 (21%)
Utah Valley: $6,684; For Instruction: $2,511 (38%)
State Funding Per Student:
Utah: $9,430
Kansas: $9,069
Utah State: $5,932
Southern Utah: $4,374
Dixie State: $3,038
Utah Valley: $2,023
Analysis:
First of all, it's really hard to determine the quality of an education. So many factors go into the evaluation: salary at graduation, overall learning experience, level of happiness, finding a career that matches your goals/personality, etc.
I went to Dixie State college, and I'm here to tell you that it wasn't a great education, but it got me into a good Law School, and I had a good job before that. I can't say how the education compares to the University of Utah, but I doubt the U of U is 4 times better than Dixie (UofU spends 4 times as much money per student)
Also, I recognize that the big universities have more graduate programs and that they cost a lot of money, but I have removed a lot of the graduate related expenses (i.e., research costs, medical clinic costs)(I removed 800 million in expenses at the UofU and still included grad students in the per student equation, double bonus for utah), and I have the numbers for several large Universities.
Next, I want to briefly talk about the law of diminishing returns. I'm no economics expert, but I have a basic understanding of this "law". Picture a house full of furniture that needs to be moved across the street. If one man was moving alone, it would take him a very long time, say 20 hours. If two men were working, it would be more than twice as fast, or something like 7 hours. If four were working, it might only take 2 hours. If 20 men were working it would take 30 minutes or so. Somewhere along the line, the "returns" would start to diminish. IF you had 200 men, it's unlikely that they could move the stuff 10 times faster than the 20 men. There's no way 200 men could move the stuff in 2 minutes. There simply aren't enough doors, and you just don't need that many people. Men would be standing around, and the efficiency per person would go down.
This principle applies to schools as well. At some point, a university would get too big for it's britches, and would be less efficient per employee. (And less efficient per student). So two universities with 20,000 students might actually be more efficient than one university with 40,000 students. However, I'm fairly certain that a school like Dixie State, with around 5,000 students, could get more use out of its facilities and its teachers if it had more students.
My point is, there's no way that Dixie State should be more efficient than all the bigger schools. However, it is possible that UofUtah could actually get cheaper per student if they cut back a little.
NOW, if you're actually reading this, you'll see my argument.
I'm suggesting that Universities should be able to run on the same expenses per student (or less) as Dixie State College. Also, you may have noticed above that Utah Valley kicks everyones butt in this category, but I know nothing about the level of education at UVU, and so I won't be using it as an example. Even though they must be doing something right.
So let's finally get to it. Dixie State spends about 10,000 bucks per student per year. The revenue for these expenses comes in through Tuition, State Funding, and Donations/grants.
After the State pays up, Dixie has to raise around 7,000 per student in tuition and donations.
Here's how the other Universities Stack up:
Utah: They have to raise $34,498 per student after the state pays
Kansas: $20,092
Utah State: $12,168
Southern Utah: $7,842
Dixie: $7,171
Utah Valley: $4,660
Now, if all the schools were as efficient as Dixie (10,000 per student) Here's how much they'd have to raise in tuition and donations after the state pays up (per student)
Dixie: $7,171
Southern Utah: $6,456.95
Utah State: $4,899
Kansas: $1,762
Utah: $1401.34
So basically, the University of Utah gets enough money from the State to offer a free 4 year education to all 25,000 of it's undergrad students. The rest could easily be raised in donations (U of U raised nearly 3000 per student in gifts)
I can just feel some of you out there saying, "come on John, Utah is 5 times more expensive per student because it's way bigger and way better."
But this doesn't really happen in the business world. Huge walmarts are not usually more expensive per customer than small Walmarts. Large Airplanes are not more expensive per passenger than small airplanes.
As far as I can tell, Universities get so gluttonous, not because it's more efficient, but just because they can get away with it.
In conclusion:
I know that the "better" professors teach at the "better" schools, but the professors at Dixie were excellent. They all had practical real-world experience and they worked directly with all of us (as opposed to a grad student TA) Students all over the country are going into crazy high amounts of debt in order to get degrees from these ridiculously expensive schools. And who is at fault? Employers. Employers are under the strange impression that it's better to hire someone from a more prestigious school, and so students try to go to these schools so they have a better chance to get a good job. These schools can rake you over the coals because they know that they are the doorway to the career you want.
It's time for all of this to change. It's time for schools to learn to get more efficient as they grow larger, and it's time for them to start spending more than 21% of their expenditures on Instruction (I'm talking to you Utah.)
3 comments:
This argument assumes that the the primary goal of universities is to educate students. However counter-intuitive it may seem, universities don't really care all that much about the quality of undergraduate student education. Most universities are "research institutions" and not "teaching institutions." Professors spend 90% of their time researching. Professors are hired because of their research and writing ability (as demonstrated by publication). Professors are neither hired nor promoted on the basis of performance in the classroom. And once a professor gets tenure, there's no incentive for the professor to do anything at all. In fact, he may take a semester or a year sabbatical to go "do research." The professor then takes his salary without stepping into a classroom and then publishes his "research" in an academic journal which is only purchased by other university libraries. Universities all have way more professors that they need to account for sabbaticals and the like. While a typical student takes 15 credits a semester, a professor may only teach 6 credits every other semester, while always taking a full-year salary.
There are some unique schools, like BYU-I (and to a lesser extent UVU), who forget about research and publication and rankings and focus on undergraduate classroom instruction. The consequence is that exposure of the university is limited. When professors don't publish, they are not recognized in their fields. This focus on teaching is also done to the detriment of intercollegiate sports. No sports programs means that there's no national visibility or exposure and the value of the school's diploma is limited to a small geographic area. But this works for BYU-I because they simply don't care about all that stuff. Plus BYU and BYU-I only have to pay their president's a nominal salary (but they get an Avalon).
Sports are a huge financial aspect of universities that is somewhat mind-boggling. Take Florida for example: Urban Meyer (who is one of the greatest and most talented football coaches of our era) is paid $4 million a year and he never enters a classroom. What about the biology professor who's also one of the greatest biology researchers in the country? Does he/she also make $4mil/year for teaching biology to undergraduates? Why not? Did the biology professor go to less school than the football coach? Less experience? Teaches few students?
Moreover, universities have no incentive to run efficiently. What's in it for them? Schools do not admit students to their graduate programs on the basis of how many students they can educate efficiently. Rather, class limits are often made by job market forces. For example, a university's law school has the incentive to only admit as many students as it thinks will be employable in the economy (so they can keep their school's employment stats up). This same general principle also applies to other graduate programs in both professional and non-professional fields.
My point is that universities don't care about undergraduate student instruction. If they did, then things would be different.
John, I enjoy your reasoning and following your logic and I agree with your criticism of the University system. And Josephs comment is spot on.
However...
...it seems to me that some of your points rebut your "Defense of Capitalism" blog. Most of the Universities are business at heart. And the employers you blame certainly are!
Hopefully the free market efficiencies will eventually roll down to benefit the students.
I agree with everyone's comments and think the university system is screwed up. I am a MBA student at SUU and am pretty unhappy with the program here. Joseph mentioned that most universities are "research institutions" but SUU is not one because they do not offer any PhD programs. The faculty's sole purpose should be to focus on the betterment of the students education thus bringing a better reputation and better employment possibilities to the students after graduation.
So, does SUU have 100% placement for their MBA students? No. They'll tell you they have 96% placement and the other 4% are women that just wanted to get the degree and be a stay at home mom. So do they have small classes to enhance better learning? No. Not at all. My finance and marketing class each have over 50 students. Yes, that is correct, 50 students. That's more than any class I EVER had at Dixie. Do you think either of my teachers know me specifically? Not a chance.
Now, I can't complain totally about SUU. I am getting my MBA in 1 year (Summer, Fall, Spring) and it will only cost me around $8,500. A MBA is a MBA right? That's what I keep telling myself.
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