The Higher Education Price Index (HEPI) 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 fund educational and general expenditures, excluding research. A more accurate indicator of cost changes for colleges and universities than the Consumer Price Index (CPI), HEPI is used primarily to project future budget increases required to preserve purchasing power. With compilations dating back to 1961, HEPI offers almost 60 continuous years of higher education inflation data. It is an essential tool enabling schools to determine increases in funding necessary to maintain both real purchasing power and investment. HEPI is compiled using data items from publicly-available sources that are released at different points in the academic fiscal year, which runs from July 1 through the following June 30. For fiscal year 2020, which ended on June 30, the HEPI calculation reveals that inflation for colleges and universities was 1.9 percent, representing a decline from FY2019's 3.0 percent. FY2020 also represented the lowest rate of inflation since 1.5 percent recorded for FY2016. Costs for FY2020 rose in six of the eight components tracked by HEPI and declined in two. For the most part, costs increased at a lower rate in FY2020 compared with FY2019. For example, faculty salaries--most heavily weighted component in the index--increased just one-tenth of a percentage point over FY2019 (2.7 percent versus 2.6 percent) while FY2019 represented a yearly increase of three-tenths of a percentage point over FY2018 (2.6 percent versus 2.3 percent). Cost increases were modest across the board, save a 4.0 percent rise in the costs related to service employees (and that was unchanged from the same rate of increase in FY2019). Costs in two components, utilities and supplies and materials, deflated; costs in the former fell by 15.7 percent and in the latter by 3.5 percent. [For the 2019 Update, see ED603093.]