An Insidious Disease
A new report suggests that if hidden campus costs are not carefully tracked, they could lead to dire straits for institutions of higher education.
"The Cost Disease in Higher Education," from Bridger, a Darien, Ill. consulting and management services firm, lays out startling figures regarding costs and IHEs. Indirect costs, or those associated with campus facilities, auxiliary enterprises, grounds, and outsourced services, account for 40 percent of total operating expenses-and potentially account for between 40 and 90 percent of the growth in average sticker tuition and fees, depending on the school.
The situation is fixable, according to the report. By evaluating indirect costs and taking smart steps to manage them, college and university administrators can gain control of escalating tuition. If they don't, as student debt skyrockets institutions serving middle-income students could experience a net decline of nearly one million students within a decade.
Production costs are often overlooked because institutions don't often have the tools in place, says John Krieger, president of Bridger. "They don't have the general ledger packages, they don't have the line item details." He adds, "If you can't measure it, you can't manage it." Krieger suggests that administrators look closely at line items, come up with cost solutions consistent with the institution's mission, and implement solutions in a transparent manner.
The complete Bridger report can be obtained from Steven Hatch, director of business development, by writing to shatch@bridgerED.com. A new peer comparison tool, which includes indirect operating expenses for a group of roughly 1,100 private colleges and universities, is also available, at www.bridgerED.com. -C.M.F.