If state legislatures are stingy, where can public universities go to get the income that pays their administrators very well, while paying their lower-ranked faculty  less than well?
University CEO’s don’t make the huge bucks of industry chiefs. But to those of us who think of public universities as citadels of learning rather than profitable businesses, university presidents do well. It’s difficult to get current numbers unless you subscribe to the right sources , but in 2007-08 the median university CEO  was paid about $436,000, and the highest-paid received $1.5 million, the only one exceeding one million dollars. In contrast, at least 23 private-college presidents received more than one million annually . This may be why some students currently protest increases in tuition, although simply cutting the presidents’ salaries wouldn’t help the universities’ total budgets much.
The average (not median) compensation (not salary) for presidents of public research universities increased to $544,500 by 2012, while presidents at the highest-paying universities received compensation close to $974,000 .
I haven’t investigated why the overall costs of education are rising, although the rate of increase in administrative expenditures at state schools is more than double the rate increase in scholarship spending. Furthermore, the state schools with the highest-paid presidents increased their part-time faculty faster than the national average .
It’s that increase in administrative spending that catches my attention, although if you read to the bottom of  you will find disputes about the facts. Is it possible that, under its well-paid president, each research university maintains a growing matrix of administrators—vice-presidents, deans, section heads, department chairs, and clerks—all needing pay and offices and perks?
Subtle source of income.
I point out a subtle source of university income, a source of which the public may be unaware, a source that must be dear to the deans and clerks of the administrative networks. Many research grants and contracts, particularly in the sciences, are funded by agencies of the U.S. government. About 50% of each incoming fund, usually granted in response to some professor’s proposal, are almost always taxed by the university administrations as “F & A,” meaning Facilities and Administration. I saw this when I was a technical monitor on research and development contracts for a few years. Research funds supply 15%  to 24%  of some universities’ total income. The professors’ pay and activities get half of that; the other half can fix the roof and pay the dean.
To be sure, universities want scholars for faculty (except when they assign much of the teaching to part-time adjunct or contingent faculty.) But, for new faculty, the universities also want those scholars to be income-producers, that is, profitable. In scientific news journals, I see the ads for new faculty. Here are the stated qualifications required of applicants, excerpted from advertisements in Earth & Space Science News, 1 February 2015.
Geochemistry (temporary post-doc position)
“…desire to train students …develop successful research proposals…conduct contracted analyses …”
Ocean Sciences (at a Chinese university)
“…teach undergraduate and graduate courses … obtain university and outside funding …”
Oceanography (assistant professor)
“…teach core … develop a vigorous externally-funded research program …”
Interdisciplinary (assistant professor)
” … teaching courses in the successful candidate’s area of expertise, such as neotectonics … established record of publications; and ability to attract funding are essential.”
Geothermal Specialist (research associate professor)
“…demonstrated record of funded research, … ability to attract funding …”
So what’s the point?
Our universities are indeed operating as businesses, sometimes more so than as educational institutions. Perhaps, as a society, we are losing sight of the mission amidst the accounting. How many presidents, vice-presidents, deans, chairmen, and clerks must a professor satisfy to get hired? And then to stay employed? Well, one way to satisfy the many is to feed them the money.