Depends on the size of the campus. I went to a school that was about 4 square miles and had upwards of 50,000 people there every day. Lower Manhattan is about the same size, though it does have many, many more residents. 50k is a good sized town. It's a little weird, but not unreasonable.

At least at University of Wisconsin campuses there's a good legal reason for a campus to have its own police: city and county police by default don't have jurisdiction within state agencies like the University.

So, thus they have their ow departments, like police.