Saturday, July 10, 2010

For the Record

It was announced at yesterday's Board of Trustees meeting that Penn State had collected $203 million in donations during fiscal year 2009-2010, an amount which was claimed to be a record.  The amount is in nominal dollars and, as we learned last year when it was announced that Penn State had collected the second highest amount ever in fiscal year 2008-2009, the record is not going to hold when all monies are converted to constant dollars.

Last year when the giving time-series was converted to constant dollars using the Consumer Price Index (CPI) the amount collected turned in to be the sixth highest amount collected in the ten year time span,not the second highest amount.

As you can see in the graphs below, this years nominal record amount is only the fifth greatest amount collected since fiscal year 1997-1998 when the CPI is used to convert nominal dollars to 1998 dollars.

The CPI underestimates the rate of inflation for universities. Therefore the Commonfund has developed the Higher Education Price Index (HEPI) to track the rising cost of running colleges. The HEPI rises faster than the CPI. Hence when nominal dollars are converted to 1998 dollars with the HEPI the record turns into the seventh highest amount collected.

In this light, Graham doesn't seem so much like a high horse-power money raising machine  so much as a worn out plow horse ready for the glue factory. 

Remind me again why Graham received a  12.9% raise.

(The data for fiscal years 1999-2000 through 2008-2009 comes from the 2008-2009 President's Report on Philanthropy. The data for fiscal years 1997-1998 and 1998-1999 comes from the 2006-2007 President's Report on Philanthropy. The number of this year comes from yesterdays press release. The CPI conversion was done with this Bureau of Labor Statistics calculator. The HEPI conversion was done using the HEPI data  found here.)

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