To more accurately plan for future expenses and budgeting needs most colleges and universities look to the Higher Education Price Index (HEPI). The HEPI is an inflation measure for current business operations that was designed specifically for these institutions. Not only is it a guideline for highlighting trends in higher education expense areas, such as faculty salaries and utilities, but it also provides insight into the funding requirements needed to maintain purchasing power over the long term.
A college or university may look at the official HEPI number, released each December for the preceding July 1-June 30 fiscal year, to assist with budgeting forecasts and financial planning. HEPI is also often used by the endowment office to help determine investment objectives for the portfolio, which must achieve returns sufficient to cover annual spending plus inflation to maintain intergenerational equity. Schools may find it helpful to make these assessments using the data in the expanded tables for institution type and geographic region, as it provides a more accurate insight into their specific needs. Analysis of HEPI by Institution Type and by Region are published when relevant data is available from the same sources used to calculate the full index.
The data in these tables provides users of the HEPI with opportunities to more precisely benchmark cost structures with their own institution. For example, when comparing your school’s salaries or fringe benefits, the Index (% change from the previous year) may show higher costs in the New England region than in the South or Southwest region. The same concept applies to Institution Type. If your institution is classified as a Public Master’s Institution, the index percent change for that type may be more accurately compared to Total Public Institutions.
As noted in the full report, the institutional and regional HEPI indices are derived by substituting relevant data for faculty salaries and fringe benefits into the standard HEPI regression equation. These two categories, which together account for 53% of the weighting in the HEPI, are the only ones for which information by institutional type and region is specifically available. Since the other six factors are not adjusted, the institutional type and regional HEPI indices are of necessity approximations and should be used accordingly.
Commonfund Institute strives to make resources available in service to our clients and broader institutional partners and we hope you find these expanded tables helpful.
Commonfund Institute strives to make resources available in service to our clients and broader institutional partners and we hope you find these expanded tables helpful.
