After the BOT mandate to cut 15 full-time equivalent (FTE) positions was announced, students began to show interest in the budget—namely, where our money is going. While the administration will not release the budget, VP Finance Mike Frandsen gave a presentation at the Mar. 15 student senate meeting that made it clear that Albion evaluates itself comparatively via a number of peer groups.
Two of those peer groups are the Great Lakes Colleges Association (GLCA)—a group of 13 private liberal arts institutions in the Great Lakes area, and the Faculty Salaries & Compensation Research Team peer group (FSCRT)—a peer group of 29 schools created by our administration to help evaluate our finances in relation to other four-year liberal arts undergraduate institutions around the country.
The use of multiple peer groups was questioned by students at the Mar. 15 student senate meeting because different groups are used depending on what aspect of the school is being evaluated, a seemingly convoluted method of comparison. If we are trying to evaluate ourselves objectively, shouldn’t we adopt a fixed base of comparison so we have an immovable common denominator, not multiple scales that can be used alternatively depending on the situation?
In order to find out more about these peer groups, using the Albion College 990 forms and the website guidestar.org, a nonprofit organization that provides data on the finances of nonprofit organizations all over the country, I analyzed tax information for Albion as well as the 34 available (of 37 total) peer institutions to see exactly how everyone spends their cash. Moreover, I have converted everything to percentages—since every school’s budget is a different size, this standardizes the relative amounts of money that go to
1. Academics Costs
2. Administrative Costs
3. Fundraising Costs.
Thus, this is a look at the 990 tax forms for Albion College as compared to our “peers,” no smoke and mirrors, just the numbers from the federal government. Let’s see what happens.
Looking first at the Albion College tax records from the 1984-85 academic year to 2007-08:
- After holding steady at ~88% of our total budget funding academics (pretty good compared to other colleges, as we’ll see), this number dropped steadily from 88.62% to 74.91% from 1997 to 2008.
- In this same time frame our percent spending on administrative costs rose from 7.70% to 20.50%—almost tripling!
- Using the enrollment numbers for each year, the per student cost that goes to administrative spending has climbed in ten years (1998-2008) from $2,083.26 to $5,516.43, while cost to academics has meandered from $19,147.51 to $20,160.50. So in 10 years the student cost increase for academics is just $1,012.99, but for administrative costs, it is over three times that much, $3,433.17.
Comparing our 2006-2008 (the years currently available on guidestar.org) data to that of the other schools in the GLCA:
- The average percent academic spending of our GLCA peers is 87.09%, ours is 72.01%–a difference of 15.08% of the total budget and lower than all of our GLCA peers.
- The next lowest percent academic spending is 77.37%, still 5.36% higher than us.
- One peer in the GLCA spent over 94% of its total budget on academics, and less than 3% on administration.
- The average percent administrative spending of our GLCA peers is 9.78%, ours is 22.95%, over twice as much and higher than all of our GLCA peers!
- We spend the greatest percent of our budget on fundraising in the whole GLCA, but we gain the smallest percent (of our total budget) in funds raised!
- We spend 5.05% (peer average 3.12% ) of our budget on fundraising, and we make 12.5% (peer average 22.03%). Does that seem right to you?
- Some peers regularly fundraise for almost one-third of their total annual budget. Some have raised over half of their total annual budget in a single year. Just fundraising.
Comparing our 2006-2008 (the years currently available on guidestar.org) data to that of the other schools in the FSCRT peer group:
- Once again, we have the absolute lowest percent academic spending of all these 27 schools. Our average is 72.01% and the peer average is 87.44%.
- Unsurprisingly, we again claim the title of highest percent administrative spending in the whole peer group with an average of 22.95% and a peer average of 9.38%.
- Not last this time! Albion spends the second highest on fundraising and only gets the third-worst return in funds raised as a percent of our total budget. Savor this victory.
Bottom line: For all the confusion that these multiple peer groups provide to complicate and blur comparisons of budget spending with other institutions, this data suggests that it doesn’t even matter. Even if these three sample years are uncharacteristic, the Albion data alone shows a trend away from academics and toward administration that is over 20 years strong. If this makes you wonder exactly what it is that our school values, good—it should. Our academic programs do amazing things with the money they’re given—think of what they could do if they received the amount of funding that they deserve.
Moreover, if the reason these number s are so startling is that Albion calculates our academic/administrative spending differently than these other schools, it still doesn’t matter. It doesn’t matter because potential donors are going to look at these numbers the same way I did, the same way you’re doing right now, and so they will arrive at the same conclusions.
We may not have access to many numbers, but the ones we do have are plain and simple. No number of mirrors, no sleight of hand, and no misdirection can change the fact that compared to every single one of our peers we spend too much on overhead and not enough on our education. So tell me, how are we planning to cut our spending again?