Appendix A.5. Commonfund Institute

Commonfund Institute took over management of the Higher Education Price Index (HEPI) in September 2004 from Research Associates of Washington, which originated the index in 1961. HEPI measures average changes in prices of goods and services purchased by colleges and universities through educational and general expenditures. Sponsored research and auxiliary enterprises are not priced by HEPI.

HEPI is based on the prices (or salaries) of faculty and of administrators and other professional service personnel; clerical, technical, service, and other nonprofessional personnel; and contracted services, such as data processing, communication, transportation, supplies and materials, equipment, books and periodicals, and utilities. These represent the items purchased for current operations by colleges and universities. Prices for these items are obtained from salary surveys conducted by various national higher education associations, the American Association of University Professors, the Bureau of Labor Statistics, and the National Center for Education Statistics; and from components of the Consumer Price Index (CPI) and the Producer Price Index (PPI) published by the U.S. Department of Labor, Bureau of Labor Statistics.

The quantities of these goods and services have been kept constant based on the 1971–72 buying pattern of colleges and universities. The weights assigned the various items, which represent their relative importance in the current-fund educational and general budget, are estimated national averages. Variance in spending patterns of individual institutions from these national averages reduces only slightly the applicability of HEPI to any given institutional situation. Modest differences in the weights attached to expenditure categories have little effect on overall index values. This is because HEPI is dominated by the trend in faculty salaries and similar salary trends for other personnel hired by institutions, which minimizes the impact of price changes in other items purchased in relatively small quantities.

Further information on HEPI may be obtained from

Commonfund Institute
15 Old Danbury Road
P.O. Box 812
Wilton, CT 06897-0812
http://www.commonfund.org/