[Drbio]

Insurance rates are absurd and depending on where the campus is located (ours is on a river - fllod zones and all) you might experience tremendous rate hikes, especially after 9/11 and most likely Hurricane Katrina (and possibly Rita).

The building expansions are a different animal. I'm no expert in this area by any means, but here is my observation andwhat I've learned by listening to those who know. Right now, money is cheap. Universities can borrow money at amazingly low bond rates. We too just underwent tremendous expansion. When you finance through bonds, you take a financial hit the first several years, reach a break even over time and then begin making profit (provided nothing happens to the facility. Ex. We had a major fire in a 105+ million dollar project that cost us over 3 million in self insurance - we did get some help from subcontractors. During that initial period, it is often the case that tuition increases are mandated to cover the costs involved in the initial payback of these bonds. Ultimately, the school comes out ahead but there are growing pains if you will. Even though inflation may rise at a steady state, building campaigns incur significant costs in that interim period.

Other examples...Construction materials, asbestos abatement, environmental sampling...alll things that universities face daily. These thigns have all increased since 9/11 and again after katrina due to demand. Obviously gas too.

The cost of fuel to run our power plant has risen faster than the inflationary rate. Another example.

All of these things have increased (especially in the last 5 years or so at a rate higher than the traditional salary increase of 3-5%. Sadly, here we experienced such financial shortages in the last three years due to poor decisionmaking in building programs and an untimely change in insurance carriers, that we suspended the traditional 3-5% raise last year. It was very tough.