It seems the basic laws of economics are lost on some college administrators.

Richard Vedder of See Thru Edu reports.

Gamble: Despite Declining Enrollments, Colleges Resume Spending Spree

Most aging academics worry about global warming (or its recent nonexistence), income inequality, or perhaps even erectile dysfunction, but I fret about the Higher Education Price Index (HEPI). This metric of higher education price inflation concocted by the Commonfund Institute has been used in a self-serving way for decades by higher education apparatchiks to hustle more money out of taxpayers.

The index measures how much costs have risen for colleges, which largely means it chronicles the increases in employee compensation. This encourages university presidents and governing boards to give employees big raises, and then complain to the legislature or big donors that “the cost of educating students is rising faster than the money you are giving us –give us more.” I wouldn’t buy a used car from most of these folks.

That said, the HEPI does have some value. It is a good measure of how much colleges are spending, and big jumps in the index denote that austerity on college campuses is declining and that “happy days are here again.” The Commonfund Institute recently told us that the HEPI index rose 3.0 percent in fiscal year 2014 (July 1, 2013 to June 30, 2014), nearly double the rate of increase in 2013 (1.6 percent) or 2012 (1.7 percent).

A good bit of the increase reflected rising utility and supply expenses, but part reflected soaring fringe benefit (4.8 percent increases) or higher faculty salaries (up 2.2 percent). The rising utility costs suggests to me how little “sustainability” efforts to reduce emissions has had on campuses, and if, anything, they have raised costs.