{"id":3603,"date":"2016-01-19T14:05:45","date_gmt":"2016-01-19T20:05:45","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/?p=3603"},"modified":"2016-01-19T14:05:45","modified_gmt":"2016-01-19T20:05:45","slug":"is-state-funding-for-higher-ed-really-not-keeping-pace-with-inflation","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2016\/01\/is-state-funding-for-higher-ed-really-not-keeping-pace-with-inflation.html","title":{"rendered":"Is state funding for higher ed really not keeping pace with inflation?"},"content":{"rendered":"\n<\/head>

That\u2019s the claim of this article<\/a> in Inside Higher Ed, from last Thursday (yeah, I\u2019d been meaning to write about this for a couple days):<\/p>\n

State funding for public higher education has increased in the five years since the recession. However, those increases are not keeping pace with inflation. Just two states \u2014 Utah and Massachusetts \u2014 have had operating-fund support for public higher education that matched or surpassed the rate of inflation in each of those five years, according to a new report from the University of Alabama\u2019s Education Policy Center. Five states failed to hit the inflation rate a single time.<\/p><\/blockquote>\n

But here\u2019s the catch: \u00a0the article is not speaking of \u201cinflation\u201d as the general reader would expect them to mean, the Consumer Price Index. \u00a0No, they\u2019re measuring state spending on higher education against the Higher Education Price Index. \u00a0And what, you ask, is the Higher Education Price Index? \u00a0It is a measure produced by Commonfund, an institutional asset management company specializing in nonprofits, such as university endowment funds.<\/p>\n

See the description here<\/a>; the key paragraph:<\/p>\n

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.<\/p><\/blockquote>\n

What does this mean, exactly? \u00a0It\u2019s not the same thing as a measure of the overall increase in higher education spending. \u00a0It attempts to identify the impact solely of inflation, not university spending decisions that raise or lower costs. \u00a0This means that the installation of a lazy river or a climbing wall doesn\u2019t factor in, nor does the decision to replace a retired tenured professor with an adjunct professor, nor the decision to reduce the teaching load for existing tenure-track professors. \u00a0Productivity gains due to technology, such as automation in administrative tasks, are also not reflected in the index. \u00a0In addition, the impact of student body size, or of staffing levels (e.g., the increases in administrators and support staff) are also excluded.<\/p>\n

So what does the index reflect? \u00a0Salaries, mostly. \u00a0Which means it\u2019s not really an \u201cinflation\u201d index so much as a measure of wage growth. \u00a0According to the 2015 report (which I can\u2019t link to, but is downloadable from the prior link), here\u2019s the breakdown:<\/p>\n

Faculty salaries, 35%<\/p>\n

Admin salaries, 11%<\/p>\n

Clerical, 18%<\/p>\n

Service employees, 8%<\/p>\n

Fringe benefits, 13%<\/p>\n

Utilities, 7%<\/p>\n

Supplies and material, 6%<\/p>\n

Misc services, 2%<\/p>\n

Now, it surprised me that this index is so heavily weighted towards salaries, but I suppose the key here may be\u00a0that these are \u201coperating expenses\u201d and perhaps not just building construction but also major but routine maintenance projects are also classified seprately. \u00a0Perhaps this also excludes room and board as falling under a separate budget? \u00a0In any case, the report stipulates that \u201cresearch\u201d expenses are also excluded. \u00a0But we\u2019re told that the need to constantly keep technology up-to-date, e.g., in computer labs, is partly to blame for growth in tuition, but this seems to be a small sliver only, if this falls under \u201csupplies and material.\u201d<\/p>\n

But in any case, this index is still circular: \u00a0after all, it is the universities themselves which are making the decisions about what level of pay increase to grant their employees or what level of fringe benefits to provide, then turning around and using this data to say that this \u201cproves\u201d that they need more money. \u00a0Now, one might argue that, given that high degree to which operating budgets are tilted towards salaries, it would be more appropriate, on an apples-to-apples basis, to compare university spending changes to the wage index rather than the CPI, but the very reason why wages are expected, in general, to rise ahead of inflation is because of productivity increases, and I suspect there\u2019s a lot more that can be done before\u00a0universities\u00a0can say they\u2019ve exhausted their ability to increase productivity, especially given that faculty salaries account for a mere 35% of budget.<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

That\u2019s the claim of this article in Inside Higher Ed, from last Thursday (yeah, I\u2019d been meaning to write about this for a couple days): State funding for public higher education has increased in the five years since the recession. However, those increases are not keeping pace with inflation. Just two states \u2014 Utah and […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3603","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nIs state funding for higher ed really not keeping pace with inflation?<\/title>\n<meta name=\"description\" content=\"That's the claim of this article in Inside Higher Ed, from last Thursday (yeah, I'd been meaning to write about this for a couple days): State funding for\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2016\/01\/is-state-funding-for-higher-ed-really-not-keeping-pace-with-inflation.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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