America's universities and colleges are a national resource. Ideas nurtured at universities created the computer, electronics, biotechnology, and other high-tech industries. Universities are also big business, making up nearly 3% of gross domestic product. There's the rub. Like many big, complex American corporations, universities and colleges have become bureaucracy-bound, expensive behemoths. From 1975 to 1985, according to one Education Dept. study, nonteaching professional staff, such as lawyers and accountants, grew by 61%, while the faculty increased by only 6%. In public colleges and universities during the 1980s, real administrative expenditures for each full-time student went up 19%, nearly four times the money that went for instruction. Private schools did better: Administrative expenses rose 34% and the cost of teaching rose 26%.
Just as auto makers did, colleges alienated their middle-class customers by raising prices well above the overall inflation rate in the 1980s. Increasingly, college classrooms are filled with rich kids and foreign students who pay full tuition, and students on scholarships. Middle- and working-class students are being squeezed out of the nation's best, most expensive schools to compete for slots at public colleges--where prices are also rising year after year.
The growing army of bureaucrats that feeds off academe has to be defeated. The higher education dollar must be redistributed so that more of it flows back to classrooms and laboratories. We believe that governing boards should learn from Corporate America and begin to weed out marginal departments and build areas of competitive advantage within their schools. Increasing productivity is the only way to control the higher-education inflation infecting America. In the global economy, competitive advantage belongs to nations that excel at creating new knowledge and transforming new technologies into products. America's colleges are still the envy of the world. We must act now to save them.