Finland has a higher education system where they rely on government funding, not student tuition, to maintain fiscal solvency, but rising costs have placed the University of Helsinki in a tough spot.
Their solution isn’t to introduce student fees, but to cut administrators and faculty, according to Forbes.
“All you really need for a great college/university is great faculty, great students, and minimally sufficient everything else,” Ethan Siegel writes.
Given that two-thirds of university annual expenditures were for employee salaries, the University of Helsinki cut 980 positions. Support and administration staff were the bulk of the cuts at 65 percent, and 14 percent of the reductions were full-time faculty.
The staff reduction illustrates a problem in higher education called Baumol’s cost disease. Aside from PowerPoint presentations and videos in the class, teaching hasn’t had many innovations for centuries. The productivity of a teacher or administrator hasn’t changed much, but salary and employee costs have continued to rise. In that sense, university employee costs should be expected to grow relative to other university costs.
Copying the Finnish approach to control costs, however, will be tricky. Politicians are loathe to cut university funding and get attacked in the media. It’s easy to focus on administrative bloat when it’s so statistically notable. Students and parents, though, hold responsibility for their growth, along with the federal government.
The demand for support services, student services, college amenities, federal rules for information reporting and mandated services, and faculty who want to research and teach, not complete paperwork, have all led to the necessity of administrators employed by the university to keep it running. That “minimally sufficient” bottom line has crept upward every year. Paring it back will require some group in the university to lose something of value.
Universities could restrain costs by returning to basics, but it’s not clear that American students would find that acceptable. American higher education is luxurious compared with the sparse offerings of most European systems. University costs don’t have one culprit; it’s spread among presidential salaries, administrative bloat, sports expenditures, and federal subsidies, and more.
Given that the University of Helsinki didn’t have the option to raise tuition and student fees, they faced economic reality and reduced spending. American higher education is opposed to even considering that less spending and fewer services in college could make a university more viable. One European example isn’t going to spearhead cost restraint at American colleges.
