Posted on September 10, 2009

Higher Education Inflation Rate Slowed in FY2009, Report Finds

The inflation rate for colleges and universities for fiscal year 2009, which ended June 30, was 2.3 percent — less than half the 5 percent rate for fiscal year 2008 but more than the 1.4 percent rise in the Consumer Price Index for the same period, a new report from the Commonfund Institute finds.

Calculated every year since 1983, the Higher Education Price Index is determined by examining eight cost factors: faculty salaries, administrative salaries, clerical salaries, service employee salaries, fringe benefits, miscellaneous services, supplies and materials, and utilities. Since 2002, the index has been calculated using a regression equation that assigns different weight to each factor, with faculty and clerical salaries and fringe benefits weighted the most heavily.

The biggest increase in the index in 2009 came from administrative salaries, which rose 5.4 percent for the year — up from 5 percent in 2008. Fringe benefits costs were next, up 3.6 percent but down from 5.5 percent in 2008, followed by faculty salaries (up 3.4. percent but down from 4.1 percent in 2008), service employee salaries (2.8 percent, down from 3.2 percent), clerical salaries (2.7 percent, down from 3.1 percent), and miscellaneous service costs (2.7 percent, down from 3.4 percent).

Beginning this year, Commonfund also began calculating HEPI rates for U.S. regions. The 2009 results ranged from a high of 3.4 percent in New England to a low of 2 percent in the East South Central and South Atlantic regions. In all regions, the 2009 HEPI showed a significant slowdown in higher education inflation from 2008, although the difference was most marked in the Mountain region, where the rate dropped to 2.5 percent from 7 percent the previous year.