Financial Support of Schools

Construction of facilities, including major renovation, additions, and upgrades for technology, is a major expenditure for public schools. Historically these expenses were borne primarily by local school districts, through the issuance of municipal bonds. In the last decade of the twentieth century, states took on a greater role in paying for capital and debt service costs of school districts. The federal government, in a departure from its traditional role, has begun to consider providing a significant amount of support for facilities. This change is stimulated by growing enrollment, the deteriorating condition of buildings, litigation over state funding for facilities, and a desire by lawmakers to equalize funding for facilities as they have done for operating expenditures. States use a variety of approaches to distribute aid for capital, with some states providing a fixed amount per student, some reimbursing districts for a portion of their costs, and some providing support based on a review of the districts' needs. Few components of the school finance system are changing as rapidly as the one focused on facilities.

The Magnitude of Capital Costs

Public elementary and secondary education is provided in more than 91,000 schools nationwide. The majority are elementary schools with enrollments of less than 500 pupils. With the median cost of building a school between $12,500 and $17,000 per student, or $11 million to $26 million per building depending on the school's grade-span, the cost of constructing facilities is a significant component of public school expenditures. In 1997–1998, school districts spent nearly $36.2 billion in capital outlay and debt service, about 9 percent of all expenditures.

Growth in Student Population

Although enrollment in public schools declined in the 1970s and 1980s, from 45.6 million in 1969 to 40.5 million in 1989, enrollment rose in the 1990s and was expected to continue to rise for long into the future. By 1999, enrollment was 46.8 million and projected enrollment for 2009 is 47.1 million. This growth varies from state to state and, more importantly, within states, placing a dramatically different burden on different school districts.

The buildings constructed to accommodate the last wave of enrollment growth have reached the end of their useful lives. Because of the location of population growth and the cost of renovating existing facilities, many new buildings are needed while older buildings are likely to be torn down or used for other purposes.

The Condition of Buildings

Nationally, 76 percent of all public schools require work to bring all school features into good overall condition. Fifty percent have at least one building feature rated less than adequate, and 43 percent of the buildings rate at least one environmental feature less than adequate. Between 1999 and 2001, 51 percent of all U.S. public schools had at least one major repair, renovation or replacement planned. In 1999, 20 percent of public schools had life safety features that rated less than adequate.

More than $5.8 billion in renovations and an additional $5.5 billion in school building additions were scheduled to be completed in 2001. New projects started in 2001 decreased slightly, with $4.6 billion in renovations planned and $5.4 billion in additions. More than 50 percent of all building upgrades planned for 2001 involved electrical overhaul, accommodating new demands for educational technology needs. Of the new middle and high schools constructed in 2001, 100 percent included security equipment. Of all renovations undertaken, more than 89 percent were changes designed to put buildings in compliance with the Americans with Disabilities Act of 1990.

Many studies have been conducted regarding how the atmosphere and environment of buildings affect student learning. These studies examined furniture arrangement, classroom density, noise, and effect of renovation. Furniture arrangement and floor plan reportedly influences student behavior and attitudes toward school. Studies demonstrate that students in high-density classrooms tend to be more aggressive and less socially integrated. Continued exposure to high noise from external sources, such as airports or traffic, correlates with lower reading scores. Children in classrooms with external noise also exhibit greater distractibility, lack of task persistence, and have significantly higher blood pressure than children in quieter settings. Another study showed that elementary school children exposed to noise had lower reading scores and poorer language acquisition. A study comparing performance of children in newly remodeled facilities to those in facilities that had not been renovated reported a positive correlation between parental involvement and condition of school building, and between upgraded school facilities and math achievement.

Litigation

In some states, lawsuits have led to an increase in state funding for capital. A case in Colorado, Giardino v. State Board of Education, resulted in a settlement whereby the state agreed to increase assistance to local districts. This case argued that requiring students to attend less than adequate facilities violated their right to due process, and that the funding system in place created too much variation among public schools, denying a thorough and uniform educational opportunity required by the Colorado Constitution. Roosevelt v. Bishop, an Arizona case, led the state supreme court to require state funding of all facilities to a minimum standard. The court there determined that the state school facilities board must set "minimum adequacy requirements," which every school facility must meet. In response to this decision, three funds were established, providing approximately $1.3 billion in capital funding. The court also set a date by which facilities must achieve the standard. A 2001 Wyoming state supreme court decision, State of Wyoming v. Campbell County School District, found the entire school finance system unconstitutional, but spoke specifically of capital construction, stating that "all facilities must be safe and efficient." It went on to provide a specific definition of safe and efficient, and provided that "the legislature must fund the facilities deemed required by the state" for all students in Wyoming.

State Aid for Capital Purposes

Historically, states played a limited role in paying for school construction. Until the 1980s, the primary role of the state was facilitating the use of bonds by school districts to incur debt for construction; states placed limits on the extent of debt districts could have, typically a proportion of their property value, and required that a supermajority of voters approve the issuance of debt. Some states provide an amount per pupil for capital purposes, others provide loans to school districts, reimburse a fixed percentage of annual debt service, or attempt to pay all capital costs. Some states provide no state aid for school facilities. However, an increasing number of states have implemented new forms of state assistance to supplement local funds. In at least four states, lottery ticket sales are put toward capital expenditures. Florida school districts receive funds from a tax on automobile licensing. California taxes new development to help pay for school construction. Other states have loan, reimbursement, or grant programs that allow local districts to supplement or replace money from local budgets with funds from the state. The state of Arizona, in response to the court ruling, pays for nearly all capital construction in order to ensure a uniform, minimal standard of quality.

The Federal Role

The federal government has provided little support for the capital needs of school districts. During World War II the government provided support to school districts with military installations. This program has continued into the twenty-first century and expanded to include other districts impacted by federal interests. As federal aid for pupils with disabilities expanded after 1965, the government restricted most of its funds to assure that resources were focused on the instructional needs of students. Since the closing years of the twentieth century, attention has been devoted to developing new ways federal aid might be distributed to assist school districts in meeting facilities needs. These include the use of the tax system, through tax credits and tax waivers, to stimulate investment while avoiding direct expenditures. While the federal government is concerned about the condition of buildings and the need for new facilities, it may need to recognize that some of the other policies it promotes, from expanded use of technology to smaller class size, have implications for facilities.

Other Capital Issues

A variety of other issues have implications for capital funding in the future. One issue is class size. Many states are considering requiring smaller class sizes, particularly in early grades, in light of the literature that supports such a policy. If states do require smaller classes, not only would more teachers be needed but more classrooms would be required as well, creating a major impact on elementary schools. Another issue is the expanding use of schools for preschool as well as for learning opportunities for parents. As more states consider moving to full-day kindergarten or providing preschool activities, the demand for space will increase. Schools may respond to this demand in the same way that some have dealt with playgrounds, athletic facilities, and libraries: by sharing their use with municipalities, which allows costs to be shared.

Another issue is technology. As more schools invest in hardware and software, several issues emerge:(1) the capacity to handle the telecommunications wiring and space needs for technology; (2) sufficient equipment to assure access to technology for all students; and (3) the frequency of upgrading technology. This last issue raises the distinction between current operating expenditures–costs consumed in one year–and capital expenditures, which typically have a period of use over which costs may be depreciated. Many technological supplies and materials might be expected to last three to five years, creating a new category of expenditures.

A final issue is emerging from both the states' use of new accountability systems, and the expanding use of technology. As more students can fulfill graduation requirements without actually attending school, and more students use technology to take courses and do homework, the concept of a school may change. If schools serve as a place where students meet with teachers periodically, rather than a place they spend a specific amount of time each day, school buildings, particularly high schools, could take on a new look and become smaller than they are now. The cost of these buildings could decrease substantially. At a minimum, the internal organization of schools might change, reducing the need for libraries, laboratories, and auditoriums, which would lower their cost in communities that had those facilities available in other buildings.