Primary and secondary, tertiary and other post-school education in the CPI

This article explains the sources and methods used to compile the primary and secondary education, tertiary and other post-school education, and other education classes of the consumers price index (CPI). Primary and secondary education, tertiary and other post-school education, and other education had a combined expenditure weight of 1.53 percent in the CPI at the June 2008 quarter.

Position in the CPI structure

Primary and secondary education, tertiary and other post-school education, and other education fall within the education group of the New Zealand Household Expenditure Classification used in the CPI. The education group represents spending by private New Zealand households and does not cover spending by students living in university halls of residence or by overseas students who are not usually resident in New Zealand.

 Expenditure weight for education
 Group, subgroup, class Level  June 2008 quarter (%) 
 Education Group  1.78
 Primary and secondary education Subgroup/class 0.66
 Tertiary and other post-school education Subgroup/class 0.83
 Other education Subgroup/class 0.04

Within the education group, there is also a subgroup/class for early childhood education. Early childhood education in the CPI explains the sources and methods used to compile early childhood education.

Coverage

Primary and secondary school education includes the fees and donations for state, integrated, and private schools. Tertiary and other post-school education contains course fees and compulsory costs (such as student association fees) for university, polytechnic, and private tertiary courses. Community education courses, typically run at schools, represent the other education class.

Expenditure weight estimation

This section outlines the estimation of expenditure weights for each of the three education subgroups/classes covered in this article. About 85 percent of the weight for education at the June 2008 quarter was estimated from sources other than the Household Expenditure Survey (HES). This was due to concerns about the quality of education estimates from the 2006/07 HES, which is the primary source of weighting information for the CPI.

For state and integrated schools, parents' contributions were estimated from information supplied by the Ministry of Education (MOE). The weight for private school fees was based on pupil enrolment numbers supplied by the MOE, and on average prices from the CPI survey of private school fees.

Within tertiary education, the weights for university education and polytechnic education were estimated from tuition-fee revenue information supplied by the Tertiary Education Commission (TEC). Spending by students considered out of scope was removed (eg students living in university halls of residence and overseas students who are not usually resident).

Sample selection

Primary and secondary education providers were randomly selected from within each of 30 strata based on school (state, integrated, or private) and school type (primary and non-primary) for each of the five broad regions based on regional council areas: Auckland, Wellington, Rest of North Island, Canterbury, and Rest of South Island. The sample contains about 40 state schools, 60 integrated schools, and 40 private schools.

The sample of tertiary and other post-school education providers covers eight universities, eight polytechnics, and seven other private tertiary education providers from throughout New Zealand. For each provider a range of courses is selected. Up until 2007, all four colleges of education were also surveyed. However, these institutions have since merged with universities and courses previously surveyed at the colleges are now surveyed from these universities.

For the other education class, about 20 providers were selected within the five broad regions: Auckland, Wellington, Rest of North Island, Canterbury, and Rest of South Island. The relative number of providers selected within each of the five broad regions was broadly based on the population of each region. A number of courses was selected at each community education provider and the mix of courses was selected to ensure the sampled mix of courses represented the overall mix of courses, as reported by the TEC.

Price collection

Fees for primary and secondary education, tertiary and other post-school education, and other education are collected annually in the March quarter as education providers usually set fees once at the start of the school year. Up until 2006, private school fees were collected quarterly. However, as fees usually changed only at the start of the school year, survey frequency was reduced to annual to reduce school compliance costs.

Primary and secondary education fees are collected annually in the March quarter via postal questionnaires sent directly to the sample of state schools, integrated schools, and private schools.

For primary and secondary schools, Statistics NZ surveys fees for year 6 students and year 11 students, respectively, for standard curriculum courses. In each case, fees, charges, and donations are requested. Payments for non-standard activities, optional subjects, field trips, etc are not collected.

The survey of integrated schools requests the attendance dues, any voluntary donations, and compulsory payments. The survey of private schools requests tuition fees less any applicable prompt payment discount. The survey for state schools requests voluntary donations only. While state school donations are voluntary, such payments are treated in the CPI as the price paid for state school education.

The majority of fees for tertiary and other post-school education, and other education are collected annually in the March quarter via provider websites, with the remainder collected directly from the education providers.

Tertiary and other post-school education fees are collected for a range of degree, certificate, or diploma courses (eg the suite of courses/papers that comprise the first year of, say, a Bachelor of Arts in Politics) and other compulsory fees are also collected from each educational provider.

For the other education class, community education fees are surveyed for a range of courses, such as courses for arts, music and dance, languages, or computing. A record is kept of the length of courses and hours per session to ensure comparability of courses over time.

Estimation

Regional average prices for the five broad regions are calculated for state schools, integrated schools, and private schools. These regional 'elementary aggregates' combine prices for primary and secondary fees, dues, and donations requested for each school using a 'ratio of arithmetic mean prices', or Dutot, formula. As an intermediate step, education costs for state and integrated schools are combined for each region. The New Zealand item-level index is then calculated by combining the regional elementary aggregates, which are weighted according to regional population shares.

The calculation of tertiary and other post-school education makes use of equivalent full-time students (EFTS) enrolment information, for each provider, from the MOE to ensure that larger providers have greater influence in the overall indicator. For each provider, the overall average of sampled degree, certificate, or diploma courses (including the other compulsory fees) is first calculated. Tertiary education is then calculated as the New Zealand item-level index only.

Regional elementary aggregates are calculated for community education for each of the five broad regions. These regional elementary aggregates combine prices for the range of courses sampled from each community education provider using the Dutot formula. The New Zealand item-level index is then calculated by combining the regional elementary aggregates, which are weighted according to regional population shares.

Quality assurance

Changes in the quality of services provided, such as offering an additional service, are adjusted for in the CPI. For tertiary and other post-school education, and other education, significant changes in course structure, duration, and content would be adjusted for.

External influences on prices

Fees charged by tertiary education organisations for the courses they provide are governed by fee and course costs maxima (FCCM), which applies to non-degree and undergraduate courses. The TEC monitors compliance with the FCCM. The FCCM change annually, reflecting changes in the CPI. The FCCM policy also sets limits on the annual fee movements that can be applied to non-degree and undergraduate courses or to postgraduate courses. Currently, non-degree and undergraduate courses cannot increase by more than 5 percent.

In the March 2010 quarter, fees for the other education class rose 23.4 percent, reflecting a reduction in government subsidies for adult and community education courses at school-based providers. An adjustment was made to reflect lower participation in courses offered by school-based providers (which faced reductions in government subsidies), relative to participation in courses offered at other community providers, which did not face the same subsidy reductions. This adjustment reflected a relative shift away from school-based providers (which recorded, on average, increases of about two-thirds in price) towards other community providers which showed much smaller increases. The overall result of an increase of 23.4 percent was the average of two scenarios: one based on the weights for school-based and community-based providers using estimated participation before the subsidy change, and a second using estimated participation after the subsidy change.

 

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