COSTS AND ENDOWMENT
How does Purdue measure inflation?
HEPI (Higher Education Price Index) is an inflation index designed specifically for use by institutions of higher education. Compiled from data reported by government agencies and industry sources, HEPI measures the average relative level in the price of a fixed market basket of goods and services purchased by colleges and universities each year through current educational fund and general expenditures.
The Commonfund Institute calculates this figure on an annual basis for higher education. The calculation for college and university operations for fiscal year 2008 was 4.6%. For the West Lafayette campus the 4.6% applied to the state operating appropriation of $260 million is $11.96 million. System-wide applied to $340.7 million, 4.6% is $15.67 million.
For fiscal year 2009, the HEPI index is 2.3%.
How does Purdue use its endowment?
Purdue’s endowment totals approximately $1.46 billion (6/30/09). The fiscal year return for the endowment from June 30, 2008, to June 30, 2009, was a negative 20.4% (compared to Harvard’s which was down 27% and Yale’s which was down 30%). By policy of the Board of Trustees, the endowment pays out 4.5% annually, based on a 12-quarter rolling average, to support programs. This policy allows for a stable revenue stream without the sharp ups and downs that would otherwise be caused by short-term market fluctuations.
Eighty-six percent of the endowment is restricted by the donor. In other words, this money can only be used for the purpose specified by the donors. In general categories:
- 28% of the endowment revenue pays for scholarships and fellowships;
- 50% pays for instruction and research, including named professorships, faculty support, and specific research programs etc.;
- 15% is for student awards;
- 7% supports construction
The remaining 14% is not restricted by the donor but has been designated to a specific purpose and is included in these percentage totals. Only this 14% could be used to support general operations of the university, if so designated.