Colleges and Universities: Still on a Road to Nowhere
One cost-saving proposal has been to eliminate courses with ten or fewer students, irrespective of what the course is teachingA little more than two years ago, I made a modest proposal for solving the financial problems menacing higher education: eliminate the faculty and students.
A recent survey of college and university Chief Business Officers (CBOs) indicates that we are well down that road to nowhere. Expenses are rising faster than revenue at both private and public institutions and “CBOs reportedly want the kind of structural change that might help their institutions withstand not just another crisis but the sustained disruption ahead.”
What “structural changes” do the CBOs have in mind?
The survey found that two-thirds of CBOs “strongly agree that their institution has too many” academic programs, departments, and majors.
More specifically, the CBOs were asked to identify “the single most important structural change their institution needs to make in the next three years to remain financially viable.” Here are the top five, along with examples of the CBO comments:
| 1. Academic program restructuring | “Sunset nonviable academic programs.” |
| 2. Enrollment growth and retention | “Increase enrollment through new, scalable programs.” |
| 3. Cost reduction and operational efficiency | “Understand and make targeted cuts of poor-performing programs.” |
| 4. Revenue diversification/reducing tuition dependency | “Diversifying revenues so we are not so tuition dependent. [Barrier:] Lack of knowledgeable staff in fundraising and grant-writing efforts.” |
| 5. Faculty and staff right-sizing (including rethinking faculty tenure) | “We need to align faculty size with the flow of resources in our budget model. This is very difficult to do since, in many cases, we need to wait for retirements or departures for our tenure/tenure-track faculty.” |
It is striking but not surprising that this wish list does not include a reduction in the number of administrators. Nor should you be surprised that one item (#4) actually calls for more administrators. Karen Fagan, Pomona College’s Assistant Vice President for Strategic Innovation, also argues for more administrators because someone “needs to be scanning the environment and thinking about where the institution is headed, full-time, because the people who’d normally do that are already stretched thin.”
In the CBO survey,
more than half (56 percent) say their own offices are managing but struggling somewhat. Another 22 percent report significant constraint, and 8 percent say their offices are in a capacity crisis.
For administrators, the solution to any problem is to hire more administrators. During the 45 academic years that I was at Pomona College (1981‒1982 through 2025‒2026), there was a 320-person net increase in the number of faculty and administrative positions: 1 faculty and 319 administrators, thereby increasing the number of faculty from 174 to 175 and the number of administrators from 39 to 358. Only an administrator would conclude that not enough administrators had been hired.
All about the money
For CBOs, when it comes to faculty, it is all about the money — whether the revenue they generate covers their costs. One CBO wrote that we need to “recognize that higher education is a business. Revenue and expense balance is critical to our sustainability.” So, let’s focus on current revenue and expenses. The reality is that, for most institutions, current revenue does not come close to covering expenses and, without their endowment income, they would be unprofitable “businesses.”
Image Credit: snowing12 - Overall, 83% of U.S. colleges and universities have endowments and, on average, endowment distributions fund 15.2% of their operating budgets. The losses would be even larger for well-endowed elite schools.
In fiscal year 2025, endowment distributions covered 37%, 33%, and 55% of the respective total operating revenue of Harvard, Yale, and Princeton. For Pomona, it was 49%; for Grinnell, 60%. As I noted in my modest proposal, hiring faculty to teach students at these institutions is fundamentally unprofitable. The schools’ financial health would be improved if they got rid of both the faculty and students and used the income from their endowments to sustain and advance the careers of administrators. After all, in the eyes of CBOs, administrators are not subject to any revenue‒cost calculations.
Short of the long-term goal of eliminating all faculty and students, colleges and universities can focus on eliminating unprofitable academic programs, departments, and majors. Thus, one CBO lamented the current “failure to accurately identify the cost/student by program, which would prevent us from focusing our efforts on where we can gain the greatest cost/benefit outcomes.”
Another CBO wrote that,
We need to better align resources with our high-demand academic offerings. Resource allocation changes have not kept pace with market changes, which isn’t an uncommon challenge in higher education, but one that we really need to address….Doing so will maximize our margins.
Specifically, one strategist observed that, “Once you start to offer courses that have fewer than 10 students in them, you are definitely losing money on those courses.”
Good point! Pomona reports that, over a typical two-semester term and not counting independent studies and senior theses, it offers 160 to 190 courses with fewer than 10 students. With a four-course teaching load, the college could eliminate these courses and 40 to 47.5 instructors, which would go a long way towards the ultimate objective of eliminating all professors.
Never mind what these courses are or idealistic arguments about their centrality to a liberal arts education. It is all about the dollars and cents on the academic road to nowhere.
