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The Office of Budget and Institutional Analysis issued the following on Aug. 24, in response to the Goldwater Institute's Aug. 17 report,

The �ٺ���Ƶ Office of Budget and Institutional Analysis has studied the recent Goldwater Institute report and concluded that the institute’s particular approach and definitions have resulted in a distorted view of true administrative growth at �ٺ���Ƶ during the 15-year period of its review, from 1993 to 2007.

In addition, because of the time period that the institute studied, the report misses the positive steps that �ٺ���Ƶ is already taking to improve and streamline its administrative operations. The recently launched Organizational Excellence initiative addresses two primary goals:

• The significant budget shortfalls in administrative units (over the past three years, the campus assigned much larger budget reductions to central administrative units than to academic units).

• Chancellor Linda Katehi’s vision that continuous improvement in administrative efficiency will allow the campus to redeploy resources from administrative units to its core academic mission and its academic priorities, while at the same time improving the quality of administrative services.

The Goldwater Institute Policy Report, “Administrative Bloat at American Universities: The Real Reason for High Costs in Higher Education,” was released on Aug. 17, 2010. Many of the employees that the policy report classifies and counts as �ٺ���Ƶ “administrators” actually are staffers in direct service to the campus’s core academic mission of teaching, research and public service, and who work in academic departments. These are computer-IT employees (programmers, desktop support, database managers and engineers), veterinarians, librarians, physicians and nurses on the Davis campus, coaches and others.

In addition, and just as important, many of the employees that the Goldwater report classifies and counts as “administrators” actually are supported by research grants from federal, state and local agencies. That means that neither state general fund dollars nor student fees support those employees, who, in fact, are central to the research and public service missions of the university.

Not surprisingly, therefore, a look at data from audited university financial schedules supports a very different conclusion about where growth in spending occurred at �ٺ���Ƶ over this same 15-year period. These data confirm that much of the growth in the number of so-called “administrative” employees — as defined by the Goldwater report — actually occurred in academic units in direct support of teaching, research and public service. During that period:

• Spending at �ٺ���Ƶ from all sources grew by approximately $800 million.

• Nearly three-quarters of this growth in spending— approximately $585 million or 73 percent — occurred in the areas of teaching, research and public service. Of that $585 million in spending, 39 percent of that total was in teaching, 29 percent was in research and 5 percent was in public service.

• In contrast, spending for administration accounted for approximately $130 million or 17 percent of the total growth.

Operating expenditures

Amounts are in millions. Groupings follow Goldwater report definitions from Page 18.

Total expenses (without medical center)
1992-93: $651.5
2006-07: $1,454.8
Change: $803.3
Percentage change: 123%
Change as a percentage of total change: 100%

Teaching, research, public service
1992-93: $398.3
2006-07: $983.8
Change: $585.5
Percentage change: 147%
Change as a percentage of total change: 73%

Academic support, institutional support, student services (“administration” per Goldwater)
1992-93: $130.8
2006-07: $263.5
Change: $132.3
Percentage change: 101%
Change as a percentage of total change: 17%

Operation and maintenance of plant, auxiliary enterprises, financial aid
1992-93: $122.4
2006-07: $207.6
Change: $85.2
Percentage change: 70%
Change as a percentage of total change: 11%

Organizational Excellence initiative

Regarding the Organizational Excellence initiative designed to improve and streamline its administrative operations, the campus is making great progress toward these goals. Over the past six months, the campus has been engaged in a systematic, critical evaluation of its business functions in three areas: financial and accounting services, human resources and information technology support.

Based on this evaluation, Katehi and the campus’s leadership team recently charged five major administrative units to consolidate their administrative operations in these three areas into shared service centers. These centers, employing streamlined processes, expert employees and improved technology, will enable the campus to conduct its administrative business with fewer employees. ScottMadden, a consultant to �ٺ���Ƶ, estimates that the result could be $9 million to $16 million in administrative cost reductions over the next two to four years. These centers will be designed and the associated business processes redesigned over the next six to 12 months. The first service center, most likely financial and accounting services, may become operational as early as next spring.

The five administrative units participating in this project are: Administrative and Resource Management, Information and Educational Technology, the Offices of the Chancellor and Provost Student Affairs and University Relations.

Data references