University administrators look at higher-education inflation
The Higher Education Price Index measures inflation for university-related goods and services.
Published Oct. 21, 2005
As UM system officials prepare the university's budget for 2006, they rely on data from the Higher Education Price Index to figure out the cost of operating the university.
According to a report from the Commonfund Foundation, a nonprofit financial research group, university costs have risen by a higher percentage than the Consumer Price Index since 1992.
The Higher Education Price Index measures the rate at which education costs increase or decrease based on various components, including salaries for both professional and non-professional staff, fringe benefits, transportation, contracted work and utilities. Both the Higher Education Price Index and the Consumer Price Index base their numbers on information provided by the Department of Labor.
Last year, the UM system recommended a tuition increase of 3.5 percent, which was equal to the increase in the college price index.
Reports from the Commonfund Foundation indicate college tuition inflation has increased at a higher rate than nationwide inflation for more than 10 years.
According to the Commonfund Web site, the nationwide college tuition rates increased by 4.6 percent, and the Consumer Price Index increased by 2.2 percent, in the 2004 fiscal year. In 2005, however, the difference was only 0.5 percent as general inflation rose to 3 percent and university costs decreased.
The Commonfund Foundation claims that because universities use the Higher Education Index instead of the Consumer Price Index, they receive 16.5 percent more funding.
The Consumer Price Index, which measures overall inflation including goods used in higher education, measures the prices of goods and services in 87 urban areas and uses more than 23,000 service and retail establishments, according to the Bureau of Labor Statistics's Web site.
Rising inflation in the price of higher education-related goods could conspire with a legislature averse to raising taxes to fund higher education, said Carol Schmoock, a spokeswoman for the National Missouri Education Association, an advocate group composed of faculty and staff from state institutions.
"Given the sentiment of the governor and the legislators currently in office and the incentives not to raise taxes even when it is necessary, things do not look optimistic for higher-education budgeting," Schmoock said.
Schmoock said that at the rate of state appropriations and growing college costs, the difference would be paid for in higher tuition rates and the possibility of overcrowded classrooms.
The solution requires addressing a systematic deficit, the situations that cause them and reorganization of spending, Schmoock said.
Student fees and independent fundraising could pay for the costs, said Nikki Krawitz, UM system vice president of finance and administration. Krawitz also said results vary from year to year, and she would not comment on trends in price-index activity.
The Higher Education Price Index for the 2006 fiscal year will be released next spring.