INFLATION INDEX USED BY COLLEGES AND UNIVERSITIES WILL JUMP 5.0% IN FISCAL 2006
Commonfund Institute’s Higher Education Price Index shows increase in Inflation due to Higher Utility Prices, Materials and Supplies, the largest rise since 2002
WILTON, CT, May 31, 2006 – The official calculation of the Higher Education Price Index (HEPI) shows that inflation for colleges and universities will jump 5.0% in fiscal year 2006 ending June 30 according to Commonfund Institute. This compares with a HEPI increase of 3.5% in 2005, and average annual increases of 3.8% in fiscal years 2002-2005. By comparison, the Consumer Price Index rose an average 2.3% in fiscal years 2002-2005. For the past ten years, annual HEPI inflation increases have been an average 3.6% vs. CPI annual average increases of 2.5%.
HEPI 2006 reports that colleges and universities experienced the steepest price increase in the utilities category – which rose 27.1% over the price increase for 2005, and was nearly triple the average annual increase of the preceding four years. The other sharp increase for 2006 was in materials and supplies, which rose 8.2% compared with a 4.8% rise in 2005.
“HEPI shows that the strong rise in the costs for higher education in 2006 resulted largely from the spike in energy costs” said Verne Sedlacek, President & CEO, Commonfund. “HEPI is an extremely important measure of inflation for colleges and universities for their current operations, for budget hearings, and as a guideline for trends on other areas of expense, such as faculty salaries.”
HEPI is an inflation index designed specifically for higher education and is a more accurate indicator of changes in costs for colleges and universities than the Consumer Price Index as it measures the average relative level of prices in a fixed basket of goods and services purchased by colleges and universities each year through current fund educational and general expenditures, excluding research. It is an essential tool enabling schools to project future budget and funding increases required to maintain real purchasing power and investment.
HEPI is compiled from data reported from eight published government and economic agencies that have different year ending months. The eight categories cover current operational costs of colleges and universities. These include faculty salaries, administrative salaries, clerical, service employees, fringe benefits, miscellaneous services, supplies and materials, and utilities.
HEPI has been calculated every year since 1983 and includes inflation data going back to 1961. Since fiscal year 2002, HEPI has been based on a regression formula. HEPI is now issued annually by Commonfund Institute and is distributed free of charge to educational institutions. In 2005, Commonfund Institute assumed responsibility for maintaining HEPI and calculating its annual rate of change.
About Commonfund Institute
Commonfund Institute was founded to house the education and research activities of Commonfund and to provide the entire nonprofit community with investment information and professional development programs. Commonfund Institute is dedicated to the advancement of investment knowledge and the promotion of best practices in financial management. Commonfund Institute provides a wide variety of resources, including conferences, seminars and roundtables on topics such as endowments and treasury management; proprietary and third-party research and publications including the annual Commonfund Benchmarks Study® and The Higher Education Price Index (HEPI); and events such as the annual Commonfund Endowment Institute and the Commonfund Prize for the best contribution to endowment investment research. Its broad range of programs and services are designed to serve financial practitioners, fiduciaries and scholars.
About Commonfund
Founded in 1971, Commonfund is devoted to enhancing the financial resources of educational and other nonprofit institutions including endowments, foundations, healthcare and service organizations through superior fund management, investment advice, and treasury operations. Directly or through its subsidiaries, Commonfund Capital, Commonfund Realty, and Commonfund Asset Management Company, Commonfund manages approximately $38 billion for more than 1,700 educational institutions, foundations, healthcare and other nonprofit institutions, representing one of the largest pools of educational endowment and operating funds in the world. In response to the growing needs of nonprofit institutions, Commonfund, together with its subsidiary companion organizations, offer more than 45 different endowment investment programs including funds for the management of short- and intermediate-term operating cash reserves. All securities are distributed through Commonfund Securities, Inc. www.commonfund.org.
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