Intermediaries in the university sector?

Here is a question for you: of the funds going into the university sector via the commonwealth ministries (DEST), how much actually ends up paying for research and teaching versus other uses of the money? Included in research/teaching here would also be the buildings and rooms in which the students get taught and all the preparation of the lecturers. Yet, any other uses of the money that do not themselves constitute teaching and research can be viewed as an ‘intermediary’ between the tax payers/students and the actual services being bought. So how much do the intermediaries siphon off?

The answer clearly cannot be 0% because one needs intermediaries in any market. Students have to be registered and kept informed. Researchers have to be found, hired, and then their work has to be disseminated. Someone has to look after the buildings and the grounds. The ministry needs to be run. Meetings need to be had. So one needs some intermediaries.

Still, it matters what the answer is. If a high percentage of funding ends up at the ‘coal face’ then clearly things are better than if it is a low percentage. The recent outcry here and in America over the increase in administrivia is all about the notion that too much of the funding goes to the intermediaries and not enough to those actually teaching and researching, meaning that students and the country get a bad deal.

As usual with these questions, you get my best guess answer on Monday. Who is game to give an informed or even uninformed guess? What would you think is reasonable?

5 thoughts on “Intermediaries in the university sector?

  1. There is a fair bit of data around looking at this, so I won’t cheat by looking at the exact figures (which are hard to interpret anyway, since it’s not clear what research or teaching exactly is, and where the boundaries fall).

    So, of the whole pile of money, let’s say 80% of university expenditures are on salaries, of which half goes to administrators that arn’t doing anything that we’ll happen to call research or teaching. This means that 40% of salaries go to teaching and research. Of the remaining 20% of the pool, some will go on big infrastructure, some will go on advertising… If I give that a 50/50 split between teaching+research/Other, then my guess is about 50%.

    Now, you want to know just the amount going in via DEST. This differs a lot across universities, but what we need to really know is if the ratio differs in terms of the funding sources. Given that I doubt most universities could give you an accurate answer for this, I can’t either. So I’ll just assume they are the same.

    Given this, my guess is still around 50%.

  2. You didn’t mention the possibly, fastest growing section of intermediaries that unis need now; the marketing and publicity they need to be able to compete. And, recruitment and maintenance of overseas students would be expensive?

    And what about legal costs? Have these increased as students become increasingly litigious? I was involved in a case where a student claimed that he had been discriminated against and even though it was clear to everyone that it was a scam, the discriminated against person received a payout because it was cheaper to pay him to go away than to take him to court.

  3. In a large professional services organisation, my broad understanding is that the goal is classically to have about 33% overhead, including support staff costs and 33% professional wages and 33% owner profits.

    Extrapolating to a university I would consider it reasonable to aim for 33%overhead, including support staff costs’, 49.5% academic wages and 16.5% reinvestable surplus (essentially splitting owner profit between academics and the actual owners).

    However my guess as to the status quo is that 33% academic wages would be a high proportion.

  4. Pingback: Core Economics | The university coalface gets 28 cents in the dollar!

  5. Pingback: The university coalface gets 28 cents in the dollar! | Club Troppo

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