Colleges Spend Like There’s No Tomorrow. ‘These Places Are Just Devouring Money.

[Hibush]

The headline is from a long read in the Wall Street Journal Aug 11.
The article is paywalled, but many univerisities provide free access.

The article seems to fit with a broader effort to undermine public universities by portraying them as incompetent. But it is good to know the effort is afoot, and the numbers are pretty interesting.

The article focuses very much on the flagship public universities. These schools are maintaining or increasing enrolments and many have a loyal base of support in the state legisltature.

The quotes from some current and former university presidents really make the fiscal controls seem laughable for what are billion-dollar enterprises.

Here is the lede, which captures the recurring theme well. "The nation's best-known public universities have been on an unfettered spending spree. Over the past two decades, they erected new skylines comprising snazzy academic buildings and dorms. They poured money into big-time sports programs and hired layers of administrators.
Then they passed the bill along to students."

The primary argument is that this has all been possible because of easy credit for students "The spending is inextricably tied to the nation's $1.6 trillion federal student debt crisis. Colleges have paid for their sprees in part by raising tuition prices, leaving many students with few options but to take on more debt. That means student loans served as easy financing for university projects."  Dismalist has also pointed to direct student aid as a driver of institutional spending.

They don't let state legislators off the hook. "Public university leaders often blame stingier state funding for the need to raise tuition revenue. And three-fourths of states did cut their support, undermining a longstanding principle that schools educated the populace with government backing. But universities generally didn't tighten their belts as a result. Rather, they raised prices far beyond what was needed to fill the hole."

The scary part comes from descriptions of the budget process. "Many university officials struggled to understand their own budgets and simply increased spending every year. Trustees demanded little accountability and often rubber-stamped what came before them." Could that really be true? Doesn't feel like it at my place. "These places are just devouring money," said Holden Thorp, who was chancellor at the University of North Carolina at Chapel Hill from 2008 to 2013, "Offering everything to everyone all at once is unsustainable." Is that what he was doing? Or is that taken a bit out of context.  "We levered up the balance sheet to avoid dealing with [financial] reality," said Oklahoma President Joseph Harroz, "Across higher education, there was an arms race."

Honolulu attorney Benjamin Kudo, who joined the university's board in 2011, said he was stunned by the lack of information he was given during the budget process. He said he received a packet of pie charts and a PowerPoint presentation with general information on how the university planned to divide up its funds for areas including teaching, libraries, athletics and facilities across 10 campuses. School officials expected him to follow the lead of prior trustees, Kudo said: "It's basically an automatic approval of whatever the administration wants."

The article does a great job of nailing some of the egregious things faculty see: vanity construction projects built by politically connected contractors, expanding administrative ranks, and money-losing athletic programs.

UConn's athletic program has pretty good revenue, but they run a $55 million deficit. Not may departments can score that kind of subsidy!

Other colleges getting a thump are Penn State, Hawaii, Oklahoma and Kentucky. Especially Kentucky.

[dismalist]

I caught the article, for I have been playing with the WSJ's introductory offer of <$2 per month for some years now.

I don't think

The article seems to fit with a broader effort to undermine public universities by portraying them as incompetent.

There is no such effort afoot and public universities are not incompetent.

The reason universities, public and private, spend like drunken sailors is because they can! The money is there, from wherever -- tuition [borrowed], State subsidies, and so on. When the money stops, troubles hit, as shown by the many examples on this thread.

The source of the incompetence lies in the nature of non-profits. Nobody on the Board has skin in the game! So, gambling on sports stadiums, great dining halls, and climbing walls costs the board members nothing, even if they fail. They also can't easily get taken over, like a failing for-profit. 'Ya know, kick out the management and try anew.

There are many good reasons to have non-profits. It's all great until the money runs out.

[ciao_yall]

I caught the article, for I have been playing with the WSJ's introductory offer of <$2 per month for some years now.

I don't think

The article seems to fit with a broader effort to undermine public universities by portraying them as incompetent.

There is no such effort afoot and public universities are not incompetent.

The reason universities, public and private, spend like drunken sailors is because they can! The money is there, from wherever -- tuition [borrowed], State subsidies, and so on. When the money stops, troubles hit, as shown by the many examples on this thread.

The source of the incompetence lies in the nature of non-profits. Nobody on the Board has skin in the game! So, gambling on sports stadiums, great dining halls, and climbing walls costs the board members nothing, even if they fail. They also can't easily get taken over, like a failing for-profit. 'Ya know, kick out the management and try anew.

There are many good reasons to have non-profits. It's all great until the money runs out.

I can assure you that readers of the WSJ appreciated their own (taxpayer subsidized) college educations. And are seeing to it that their own offspring will attend college and have a great experience with comfortable dorms, nice classrooms, well-equipped labs and a lovely gym. Especially if they can send the offspring to State Compass Point University at a fraction of the cost of Local Non-Profit Private College.

Now... are they willing to pay taxes so that other people's offspring will have the same opportunities they enjoyed, and benefitted from?

 

[Wahoo Redux]

Haven't read the article, but the author may have a point.  Every university I have attended or worked at has built something expensive while I was there, and quite a few little things, including the last one which downsized me and several hundred other employees.

I think there is something to be said for updating facilities, particularly in the sciences where it seems necessary, but the buildings I have seen include campus student centers so that students could interact better, a gaming lounge, and a VIP box at the football stadium, among others I can't quite remember.  My last uni had plans to completely refurbish that rather cavern-like but still perfectly usable student union, not sure where those plans stand now.  And the kicker is that my last uni is raising tuition as fewer students enroll each semester.

[Kron3007]

Haven't read the article, but the author may have a point.  Every university I have attended or worked at has built something expensive while I was there, and quite a few little things, including the last one which downsized me and several hundred other employees.

I think there is something to be said for updating facilities, particularly in the sciences where it seems necessary, but the buildings I have seen include campus student centers so that students could interact better, a gaming lounge, and a VIP box at the football stadium, among others I can't quite remember.  My last uni had plans to completely refurbish that rather cavern-like but still perfectly usable student union, not sure where those plans stand now.  And the kicker is that my last uni is raising tuition as fewer students enroll each semester.

This seems a little oversimplified.  From what I have seen, s alot of spending comes from various sources tied to specific projects.  For example, a university may get a large gift to support a new university centre, and has to spend it on that. It is very possible to be Ina. Financial pinch overall, and yet still have dedicated funding to do specific projects.

My university is in a bit of financial pressure right now (hiring freeze etc.) And yet did a major Reno in my building, one that many didn't see the point of.  I suspect that it was either planned well in advance of this recent issue, or could have been supported by federal funding (related to energy efficiency etc.).

Anyway, it is hard to make these conclusions without all the details. 

[Ruralguy]

Not exactly...some schools (most?) proceed on a project once they have some super-majority of funds raised. They hope to get the rest before the opening ceremonies 2 years later, but often don't. So, they get the remaining money raised by getting it folded into a municipal bond, but they can't do that forever. Of course, if debt is eating into budgets, that means less spending on other stuff.

[Wahoo Redux]

Sure, schools need doners who want their names on buildings.  Who determines what development officers go after?

[Liquidambar]

This seems a little oversimplified.  From what I have seen, s alot of spending comes from various sources tied to specific projects.  For example, a university may get a large gift to support a new university centre, and has to spend it on that. It is very possible to be Ina. Financial pinch overall, and yet still have dedicated funding to do specific projects. 

Yes.  We can get funding from the state to build new buildings, and recently we got private donations for a couple new buildings.  However, we can't get state funding to maintain the buildings we already own.  That's a problem.

[Hibush]

Sure, schools need doners who want their names on buildings.  Who determines what development officers go after?

This is an important question, and Development often seems poor at communicating their priorities to faculty.

The answer at my school is that development staff first identify ultrawealthy people who have a connection to the school. Alumni are especially good. The build a relationship for years. Then they suss out what the donor finds interesting. Only then do they start showing the prospect specific "opportunities" that match their giving potential. Deans have some influence over the choice of opportunities, but Development doesn't seem to be informed by College strategic plans.

They have succeeded in having donors put their names on professorships. Since you can't see that in the way you see someone's name on a building, the university instead includes it in every mention of the professor. It gets tedious. When Prof. Sanchez has some notable scholarly achievement, the publicity calls her "the Horace J. and Lily S Fenstermacher-Liu Professor of Basketweaving Rosa Sanchez". The focus is no longer on Prof. Sanchez. It is on the donor.

[Wahoo Redux]

Interestingly, the WVU article on CHE mentions overspending on buildings as one of their pitfalls. 

[Wahoo Redux]

Interestingly, the WVU article on CHE mentions overspending on buildings as one of their pitfalls. 

From the article:

During the 2014 fiscal year, the university paid $2.3 million to acquire nine acres of land for the future construction of a recreational complex, baseball park, and stadium. The following year, the university bought an adjacent 5.6 acres for parking.
Following Mountain State University's closure, WVU in the 2015 fiscal year acquired, for $8 million, nearly 30 acres of the institution's former campus, in Beckley, including two residence halls, a library, a gym, and a student union and bookstore. West Virginia University would come to rely on two loans, for $36.1 million and $42 million, to pay start-up costs and fund various projects associated with the Beckley campus.
From the 2012 to the 2016 fiscal years, WVU completed the acquisition and development of three separate student residence projects.
WVU's building spree didn't stop with student housing. From 2010 to 2023, the university completed construction on a biomedical-science research center, a basketball practice facility, a greenhouse, an art museum, and buildings for the College of Physical Activities and Sport Sciences, student health, the College of Business and Economics, agricultural sciences, and advanced engineering research, as well as student recreation fields and an animal-facility annex.

The university also undertook dozens of renovation and maintenance projects, among them adding advertising video boards to its 14,000-seat sports arena and removing asbestos at its law center.

It would be interesting if we could somehow tally how much colleges actually spend on buildings in particular and how they pay for what they spend.

[lightning]

This seems a little oversimplified.  From what I have seen, s alot of spending comes from various sources tied to specific projects.  For example, a university may get a large gift to support a new university centre, and has to spend it on that. It is very possible to be Ina. Financial pinch overall, and yet still have dedicated funding to do specific projects. 

Yes.  We can get funding from the state to build new buildings, and recently we got private donations for a couple new buildings.  However, we can't get state funding to maintain the buildings we already own.  That's a problem.

Every time we get a new building or building addition, we brace ourselves for the re-direction of $ to maintaining the new space.

[kaysixteen]

Ok, but at least doing this gets Prof. Sanchez a good endowed chair salary.

[Hegemony]

The trouble is that it's an arms race to attract students. I belong to a site for parents of prospective college students, and the discussion is never about class size or course design or those less visible elements. It's all about the sports facilities and the state of the dorms and how many places the campus has to eat. And if you're in competition with East State Directional down the road, that's the kind of thing that will get you the edge on students. Don't get me started on the millions needed to prop up the athletic programs.

[waterboy]

West Virginia just announced major academic restructuring, including closing many degree programs, consolidating others, and a reduction in force (firing people).