If Real Inflation Rates Are Not High Enough, Invent Your Own

Comments on page 46 in the new Kentucky Progress Report from the Southern Regional Education Board (SREB) caught my attention. The SREB says of Kentucky, “Total funding per full-time-equivalent student increased by $2,894 (25 percent), from $11,731 to $14,625. When adjusted for inflation at 4 percent per year, Kentucky’s per full-time-equivalent student funding fell by $377 (3 percent). Kentucky’s funding increases for four-year institutions lost ground to enrollment growth and inflation from 2001 to 2007.”

The claim just didn’t look right. Using the really neat Consumer Price Index Inflation Calculator from the US Census Bureau’s Web site, it turns out that $11,731 in 2001 dollars would be worth only $13,734.21 in 2007, not $14,625. Thus, if per FTE student funding in 2007 was actually $14,625, then there was a real funding increase of $891 in 2007 dollars, an increase of 6.5%.

So, how did the SREB turn a positive number into a negative one? They used a specially concocted inflation index from a crowd called the Common Fund Institute. That index only looks at changes in college costs; thus, a real increase in spending based on the universally accepted Consumer Price Index is turned into a drop in spending. At least, that is what the education crowd wants you to think.

Were we to fall for this sort of logic, the rapid rise in college costs would never be stemmed. I’m sure the college crowd loves to hide their bloated cost structure behind their own idea of an inflation calculation, but the facts are that Kentucky’s spending in real dollars have gone up, not down despite real inflation. Anyone who says otherwise is just trying to manipulate the poor taxpayer.