[jltsiren]

Who pays for all that? Usually it's not the students or even private funders / donors. Most of the money comes from one level of the government or another, and it comes with all kinds of regulations and requirements. Complying with that requires a lot of specialized administrative staff.

Most of the time, when you hear a politician saying that universities should / should not do X, they are effectively saying that universities should spend more on administration.

Universities with a residential campus have a lot of staff in functions unrelated to the academic mission, such as student housing, food services, healthcare, or sports facilities. If they have to compete for students instead of most people just automatically choosing the nearest university, focusing on these tends to make them more competitive. And while student amenities are not particularly important to PhD students, they are important to the university if it also educates undergraduates.

Then there is the organization chart. In a traditional university, the faculty senate (or another similar body) is in charge and all administrators are subordinate to it. But the modern world prefers centralized organizations, with administrators at the top. And whoever is in charge also determines the priorities of the organization.