N.I.E. Issues School Price Index To Measure Effects of Inflation

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Washington--The National Institute of Education has created an index to help elementary- and secondary-school educators measure inflation in school budgets.

Formulated by D. Kent Halstead, an nie researcher who created a similar index for higher education in 1975, the School Price Index measures the annual change in the level of a number of public-school costs, such as professional salaries, fringe benefits, library materials, textbooks, and "fixed" costs such as insurance.

Allen Odden, director of policy analysis at the Education Commission of the States, writes in the foreword to Inflation Measures for Schools and Colleges, an nie report that outlines the new index, that it"constitutes a much-needed contribution to K-12 education-finance analysis by enabling accurate comparisons over time on a sound dollar basis.''

Mr. Halstead said last week that the School Price Index will allow educators to gauge more accurately the purchasing power of their funds than they are able to do using the Consumer Price Index, which tracks price changes in many goods and services that are not relevant to school budgets.

He noted, for example, that during fiscal 1979 the inflation rate in the Consumer Price Index was 13.3 percent, while the School Price Index put inflation of school-related costs at 9 percent. "You are talking about differences of millions of dollars in school-system budgets," he said.

In the nie report, Mr. Halstead calculates the rate of change in school costs back to 1975.

81.7 Percent Increase

From 1975 to 1982, the prices paid by elementary and secondary schools for operating expenses (capital expenditures and debt service is not calculated in the index) increased 81.7 percent. In other words, for every $100 spent on the cost of running a school in 1975, $181.70 was needed last year to buy the same goods and services.

The annual rate of inflation during that period, according to the new index, ranged from 6.8 percent to 12.2 percent. The compound annual rate of inflation was 8.9 percent. (See tables on this page.)

The index reveals that expenditures per pupil increased 8 percent between 1975 and 1981, from $2,260 to $2,441, in 1981 dollars. The $181 per-pupil increase in "real" expenditures between 1976 and 1981 equaled, Mr. Halstead writes, an overall increase of $6.8 billion in the amount of money public schools spent, relative to the number of students enrolled in school in each year.

Public-school attendance declined about 10 percent during that period. If attendance in public schools had not dropped between 1975 and 1981, Mr. Halstead notes, there would have been a decline in the inflation-adjusted amount of money spent per pupil.

The nie study also shows that the cost of some goods and services increased far more than that of others.

Salaries for teachers, administrators, and other school employees increased only about 65 to 70 percent between 1975 and 1982, while the overall School Price Index was 81.7 percent.

However, the cost of contracted services, supplies, and equipment increased 94 percent during the same period. The cost of fringe benefits for employees and utilities rose 179.7 percent and 184.6 percent, respectively.

Inflation Measures for Schools and Colleges is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.

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