Comment Administrtors AND research (Score 1) 538
The only activity that brings money into most universities is teaching.
Administration is a money sink. What most people don't realize is the research is also a money sink. Grants from NIH provide for the direct costs of doing research - supplies, travel, salaries. They also provide on top of that indirect costs: that is an additional 70%+ for a place like Harvard Medical School (because that's what HMS demands), but lowly UAB can only command 40-50%. The point is that these numbers can't support the quite necessary support staff (secretaries, grant managers, safety infrastructure, purchasing, etc.), physical plant, utilities that the research enterprise requires.
Keep in mind that the top researchers (faculty) can't possibly carry the teaching load - they're too busy writing for grants, traveling, writing papers, and running labs! So who picks up the slack? Graduate students and adjunct faculty. So very often (and I write from personal experience here) the person getting paid $5k to teach a course is standing in front of a lecture hall of students (10 or 20 or 150 or 350), each of whom may have paid $5k to take the course. We should take into account that many students are receiving financial aid and that many are also receiving many other services from the University. If the instructor is a graduate student, we should take into account that their education is being paid for in some part by their work. What we can't take into account, though, is any benefits for the adjunct faculty doing this teaching.
Bottom line - the difference between the actual cost of teaching students and what students actually pay is quite LARGE. Where is that money going? Administration AND research.