The question posed last week was how much of the money sent into the university sector at the point of DEEWR\DEST actually reaches the coalface in terms of teaching and research. My best guess answer is about 28 cents in the dollar, with the rest essentially going into admin.
The way to calculate this is more properly explained in this presentation I did for the Australian Conference of Economists in 2011 (Presentation academonomics ACE July 2011), but the simplified version is the use of this formula:
Money to coalface = 100* (1- cut going to DEEWR\DEST) * (1- cut going to uni admin) * (1-%time of acad on admin)
We thus break the calculation into three unknowns: the percentage creamed off by the education ministries itself, the percentage creamed off by university admin, and the percentage academics themselves have to spend on admin.
The first one of these is actually the hardest: how much do the ministries take. In their own yearly accounts, they claim that ‘overhead’ is a pittance in terms of the funds they manage, ie 1.8%. This is not just almost nothing, it is completely unbelievable since it means they count their own activities as directly valuable.
In stead of taking the account numbers on their official overhead as useful, I prefer to simply look at how many people DEEWR\DEST employs. Using the administrative handbook, DEEWR\DEST appears to employ 6000 staff plus consultants and outside agencies. At the going wage of around 68,500 per standard civil servant, plus super, plus the usual 30% on-costs in terms of buildings and a 30% guess as what they pay in terms of non-employees, this means DEST ‘costs’ around a billion dollars. At a total budget of 12 billion going to universities in 2011, this means one should think of DEST overhead as 8%. This does not even count all the state education ministries so is probably an underestimate.
Then the issue of the percentage going to university administrators. As I explained in a previous post, universities cook the books by counting casuals and part-time academics in their academic staff numbers, as well as people who are streight administrators with fancy titles. Instead of using the fanciful figure of 45% that they themselves produce as their estimate for how much of the wage budget goes to administrators, I looked at random staff in the phone books of 5 Australian universities, counted the 50 employed on the basis of what they did, and concluded that at least 56% of university wages gets paid to administrators and not academics. That too was being very generous as it did not count the costs of the consultants and advisers who are off the phone books of universities but definitely belong to the administrators’ camp. I thus take 56% as not just the percentage of the wage bill spent on admin but also as the most reasonable guess for how much of the costs of buildings and grounds is attributed to admin rather than academics.
Then the issue of how much time academics spend on administration. I took around 6 published studies on this issue, all based on time-use surveys. At best guess, around 30% of time of academics is spent on administrative tasks like sitting on committees, writing reports, training for the advent of cyclones, presenting in front of visitation committees, sitting on representative bodies, etc. Since it is usually the more highly paid who are doing administrative work, like being on Faculty Boards, the 30% is again an underestimate of the real percentage spent on administrative activities. By all accounts, this percentage is a lot higher than it used to be simply because of the increase in forms being sent out, compulsory training courses, etc.
What does this mean for the percentage ending up at the coalface? We can now calculate the coalface number as 100*(1-0.08)*(1-0.56)*(1-0.3)=28. So 28 cents in the dollar that comes in in DEEWR\DEST actually gets spent on direct costs of teaching and research, i.e. the people and the buildings doing the work. The other 72 cents is overhead.
I would of course advocate someone to be given the resources to do this more properly, though it must be said that one clearly has to ignore much of the statistics given out by both DEEWR\DEST and the universities themselves on the composition of their staff, the nature of their expenses, and the use of their time for they are not reasonable numbers. So whoever wants to do a better job than the back-of-the-envelope calculation I engaged in will need the resources to gather their own data.
All kudos to those who gave a try, many of whom gave numbers chillingly close to mine. DEEWR\DEST overhead statistics for the rest.