Dr. Matt Hendricks’s talk on Wednesday criticized TU’s financial policy while proposing a way to fix the issues.
On Wednesday, Oct. 23, Professor of Economics Dr. Matt Hendricks gave a lecture on the University of Tulsa’s financial standing entitled, “Where Has The Money Gone?: Disturbing Trends in TU Financial Data.” This talk took place during the final days of the 30-day window during which the Faculty Senate was required to formulate a plan that would lower instructional costs at TU. Beyond being an Associate Professor of Economics. Hendricks is an expert on education financial policy.
Beginning with a general overview of TU’s finances, Hendricks introduced the presentation by providing a breakdown regarding how TU spends its money. Hendricks based his work on data from the Delta Cost Project, a branch of the American Institutes for Research. The data draws from the federal Integrated Postsecondary Education Data System, which aggregates required data from institutions that receive federal funding.
The data on this website only spans 2007-2015; however, the same information is publicly available from other sources through 2017. This was later added manually by Hendricks using TU’s reported numbers and Delta Cost Project’s guidelines and featured throughout the lecture.
According to Hendricks, the most category of most significance is instructional expenses. Instructional expenses primarily include faculty salaries, as well as the overall costs to keep programs open and running. TU spends approximately 29 percent of its budget on instructional expenses. Hendricks contextualized this spending with three other major areas of spending: “auxiliary enterprises” (18 percent), “academic support” (14 percent) and “institutional support” (10 percent).
Hendricks then elaborated on some of the major findings produced by his research. The earliest conclusion presented is that, “TU is amongst the worst universities in the country in terms of the percent of expenditures allocated to instruction.” TU ranked 422 out of 467 schools for instructional spending, in the bottom ten percent among the 467 comparable schools considered.
The next topic involved another trend that is reinforced by the data: “From 2007-2017, TU has continually siphoned funds away from instruction and student services and into other areas.’” This decrease translates into a 3.2 percent drop in overall instruction costs, as well as a 2.5 percent drop in Student Services spending that amounted to a decrease of $3.5 million.
According to Hendricks, the problematic budgetary areas are “academic support” — which notably includes administrative bodies such as the Provost and Deans’ offices — and “auxiliary expenses,” which account for dependents such as the Gilcrease museum and athletics. The former category, academic support, is accountable for a problem that was dubbed “administrative inefficiency” by Hendricks.
The concept of administrative efficiency is based upon the amount of money that should theoretically be allocated to instruction at a university, specifically considering factors such as its size, research status and revenue. The difference between this hypothetical number and the actual amount spent constituted an institution’s “administrative efficiency.”
In terms of administrative efficiency rate, TU has a -5.15 rate according to Hendricks, which puts it a ranking of 338 in the country. For reference, the top-five schools in administrative efficiency have rates that all exceed +13.00, or 49 percent of their spending.
The last section of Hendricks’s lecture focused on a possible solution to the financial predicament that has intensified in the last decade. He proposes that instead of cutting instruction costs, this area should receive a $3.5 million boost in spending. Additionally, cuts should be implemented to the areas of academic support and institutional costs, to such an extent that any balancing of the budget should come at their expense.
Immediately after the lecture, The Collegian reached out to Kevan Buck, who has been the Executive VP of Finance since 2000, for comment. When asked about whether there were any problems with Hendrick’s data or conclusions, Buck replied:
“Professor Hendricks’s research was very thorough – although incomplete. The biggest concern with his presentation and the strong reaction from some faculty is that the data is old and reflects spending decisions under previous university administrations. It also fails to include the most recent financial information which we think will serve to enhance his reports.
Buck continued, “We hope to work with him over the next month to share the necessary data. We appreciate Professor Hendricks’s work, will review his findings and are eager to continue our work on making improvements in critical areas such as instructional spending that will make a difference in our students’ experience.”
When presented with Buck’s concerns regarding which administration is responsible for these issues, Hendricks replied, “The fact is the Levit/Clancy administration is attempting to do exactly the opposite of what they should do. They need to increase instructional spending — not decrease it. I don’t care if it’s a problem created by an old administrator. They need to fix it. And they need to fix it now.”
This claim made by Hendricks is based on the repeated insistence of the administration to cut instructional costs; True Commitment was a massive cut to instruction, and the Faculty Senate was allowed to provide an alternative to TC under the stipulation that all cuts must come from instruction.
In another instance, Hendricks also responded to Kevan Buck’s appreciation of his work: “They haven’t worked with me at all. In fact they turned down my offer to help back in August 2018. Instead, they decided to again make the problem worse by hiring an expensive consultant that clearly didn’t give them the correct information.”
Hendricks is referring to EAB, a consultant group that has previously been contracted by TU as an advisor on academic programs and organization structures.
After offering his help in August 2018, Hendricks says, “I wasn’t interviewed for the PPRC,” but that “Provost Levit responded to my email by setting a meeting between me and John Bury,” wherein Hendricks was “basically told thanks but no thanks.”
Hendricks says he didn’t think much of this until he “realized the administration was making serious mistakes that could severely damage TU’s ability to attract students and donors in the future.”
The most recent data is currently unavailable, but when taken at face value, Hendricks’s conclusions paint a picture of misplaced priorities, especially when contrasted with comparable universities. Although it may be true that the numbers communicate the priorities of previous administrations, the same austerity-like approach to instructional costs has been communicated by the current one. This is evident in both the original True Commitment plan as well as the offer made to the Faculty Senate by the Board a little less than a month ago.