Let HEPI Help Your Higher Education Financial Planning

Planning for higher education budgets can be challenging without insight into the main cost drivers and funding increases necessary to maintain purchasing power. That’s why we produce the Higher Education Price Index (HEPI), an inflation index designed to track this information and assist educational managers in understanding and planning for the future of their institutions’ finances. HEPI is issued annually by Commonfund Institute, with estimates released quarterly, and is distributed for free to educational institutions.

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. In 2005, Commonfund Institute assumed responsibility for maintaining HEPI and calculating its annual rate of change.

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Benefits of HEPI

HEPI is a more accurate indicator of changes in costs for colleges and universities than the more familiar Consumer Price Index. 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.

HEPI vs.CPI

How is HEPI calculated?

HEPI is compiled from publicly reported data that is published by government and economic agencies.

From 1961-2001, HEPI was based on the price data for 25 budget components organized into eight categories, totaling more than 100 items. Since fiscal year 2002, HEPI has been calculated using a regression formula. The regression-based index values are essentially equal to those resulting from complete data. The R-squared value for the regression is .999997809. Regression-calculated HEPI values are not likely to vary from fully compiled values by more than 0.1 parts out of 200.0 or ± 0.05%.

What are the main components of HEPI?

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The factors that impact HEPI are broken into several categories that cover current operational costs of colleges and universities, including

Salaries for faculty, administrative, clerical and service employees | Fringe benefits | Miscellaneous services | Supplies and materials | Utilities

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Where does HEPI get its data?

Prices for items impacting HEPI are obtained from salary surveys conducted by the:

American Association of University Professors | College and University Professional Association for Human Resources | U.S. Department of Labor’s Bureau of Labor Statistics

Additional price information is gathered from three indices:

Consumer Price Index (CPI) | Employment Cost Index (EPI) | Producer Price Index (PPI)

HEPI and major component values are reported for fiscal years 1961 through the latest completed fiscal year. CPI values are also reported for the same time period for comparison purposes.

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