GAO

United States General Accounting Office

Report to the Chairman, Committee on

Education and the Workforce, House of

Representatives

March 2000 SCHOOL FACILITIES

Construction

Expenditures Have

Grown Significantly in

Recent Years

GAO/HEHS-00-41

Page 1 GAO/HEHS-00-41 School Construction Expenditures

Contents

Letter 3

Appendixes Appendix I: Scope And Methodology 24

Appendix II: Changes in Annual State School Construction

Expenditures From Fiscal Year 1990 to Fiscal Year 1997 26

Appendix III: Changes in Regional School Construction

Expenditures for Land, Buildings, and Equipment, Fiscal

Years 1992-97 28

Appendix IV: Average Annual State School Construction

Expenditures per Student, Fiscal Years 1990-97 29

Appendix V: Comments From the Department of Education 31

Related GAO Products 33

Tables Table 1: Cumulative Percentage Growth Rates for School

Construction Contract Spending, 1990-98 15

Table 2: Bonds and Their Amounts Approved in Local School

Construction Bond Referendums in 19 States, 1998 19

Table 3: South Carolina School Bond Referendum Results, 1994-98 21

Figures Figure 1: Cumulative Percentage Changes in School Construction

Expenditures and Fall Enrollments, Fiscal Years 1990-97 7

Figure 2: Regional School Construction Growth Rates, Fiscal

Years 1991-97 8

Figure 3: School Facilities Acquisition and Construction

Expenditures, Fiscal Years 1992-97 10

Figure 4: Average State Construction Expenditures per

Student, Fiscal Years 1990-97 12

Figure 5: Construction Contract Spending, 1990-98 14

Figure 6: Contract Expenditures for Additions, Renovations,

and New Schools, 1990-98 16

Abbreviations

CCD Common Core of Data

NCES National Center for Education Statistics
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Page 3 GAO/HEHS-00-41 School Construction Expenditures

United States General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-282314 Letr

March 3, 2000

The Honorable William F. Goodling

Chairman, Committee on Education and the Workforce

House of Representatives

Dear Mr. Chairman:

More than 45 million elementary and secondary students attend

approximately 86,000 public schools in the United States. While

enrollments are growing, the Department of Education has found that the

average public school building in 1998 was 42 years old, and in 1995 we

reported that about a third of the nation’s public schools needed extensive

repair or replacement of one or more buildings.1 Funding for school

construction has generally been the responsibility of local school districts

and, more recently, the states, while only limited federal funding has been

available for this purpose. However, a number of congressional proposals

would expand the federal role in financing school construction. To

determine how states and local school districts have been dealing with the

issues facing their public school facilities, you asked us to determine (1)

the trends since 1990 in elementary and secondary school construction

expenditures and how construction expenditures were divided between

land, buildings, and equipment; (2) the trends since 1990 in the amount of

expenditures for elementary and secondary school construction by type of

school and type of construction; and (3) what is known about the amounts

and mix of state and local funding for elementary and secondary school

construction.

In conducting this study, we obtained and analyzed construction

expenditure and enrollment data from Education’s National Center for

Education Statistics (NCES) and construction contract expenditure data

collected by a private firm.2 We also identified and reviewed research on

the sources of financing school construction and conducted a telephone

1

School Facilities: Condition of America’s Schools (GAO/HEHS-95-61, Feb. 1, 1995).

2

We used data from F.W. Dodge Inc., a division of McGraw-Hill Companies, for our analyses

of expenditures by kind of school and by kind of construction project because Education’s

data do not contain such breakouts. Appendix I explains the two databases we used for our

analyses.
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Page 4 GAO/HEHS-00-41 School Construction Expenditures

inquiry of each of the 50 state education agencies to determine the

availability of data on school construction funding. We conducted our work

between February and December 1999 in accordance with generally

accepted government auditing standards. (Appendix I describes our scope

and methodology in more detail.)

Results in Brief Annual construction expenditures for elementary and secondary schools

across the nation grew by 39 percent from fiscal year 1990 through fiscal

year 1997 to about $25 billion after adjusting for inflation.3 This trend,

according to reports by Education and others, reflects a variety of factors,

including higher enrollments, a strong economy, and an increasing need to

replace old buildings. Most of the increase in expenditures was for the

construction of buildings; expenditures for equipment such as heating and

air conditioning systems increased only slightly during the 8-year period,

and spending on land and for the purchase of buildings such as portable

classrooms showed a net decline. Average annual construction

expenditures per pupil varied widely from state to state, ranging from $934

in Nevada to $37 in Connecticut. States with the largest expenditures per

pupil, such as Nevada, tended to also have the highest enrollment growth

rates, and those with the lowest expenditures per pupil had relatively low

enrollment growth rates.

Most of the growth in construction expenditures during calendar years

1990 through 1998 was for construction at primary schools and high

schools, according to data on construction contracts. Also, most of the

contract spending from 1990 through 1998 was for new facilities and

additions to existing facilities, with significantly less being spent on

renovations.

The largest source of funding for school construction is generally local

construction bonds. However, no current and complete database shows

the sources of funding for school construction. As a result, nationwide

data on how amounts and portions of funds are divided between localities

and states are not available. Studies show a range in the degree to which

the states rely on local and state funding for school construction projects.

While in most states some combination of local and state funding supports

3

We converted all Education data for the fiscal years before 1997 to constant fiscal year 1997

dollars and all F.W. Dodge data for the calendar years before calendar year 1998 to constant

1998 calendar year dollars.
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Page 5 GAO/HEHS-00-41 School Construction Expenditures

school construction, 15 states provided little or no funding in 1998-99.

Hawaii, where the school district and the state are coterminous, provides

all funding.

Background In 1995-97, we issued seven reports on the facilities in American schools in

which we reported that it would cost about $112 billion to bring them into

good overall condition and that about a third (or 25,000) of all public

schools needed extensive repair or replacement of at least one building.4 In

addition, a recent Education report estimated that at least 2,400 new public

schools will be needed by 2003 to accommodate rising enrollments

stemming from the so-called baby boom echo.5

Traditionally, funding for school construction has been a local school

district responsibility, with some states adding financial support. Indirect

federal support for the construction of schools and other capital facilities,

such as roads, hospitals, and parks, is provided through the tax system.

The interest income individuals and businesses earn on state and local debt

is excluded from their taxable income in computing their federal income

tax due. This exclusion lowers the interest rate on state and local debt, a

reduction in effect paid for by the federal tax revenue not collected on the

excluded interest earnings.6

The federal government has provided money to help offset the effect of

federal activities, such as in making federal Impact Aid payments,

improving accessibility for the disabled, and managing hazardous

materials.7 The Education Infrastructure Act of 1994 was enacted to

provide federal assistance in addressing school infrastructure problems,

4

A list of our related products appears at the end of the report.

5

“Baby boom echo” is the term commonly used to describe the children of the baby

boomers, persons born from 1946 to 1964.

6

Dennis Zimmerman, “Tax-exempt Bond Proposals to Increase Public Elementary and

Secondary School Facilities,” statement submitted for the hearing record, Senate Finance

Committee, Congressional Research Service (Washington, D.C.: Mar. 3, 1999), p. 1.

7

Impact Aid provides funds to compensate local school districts affected by federal

activities for revenue lost because of the nontaxable status of federal property within their

jurisdictions and the cost of educating children who live on or whose parents work on

federal property or whose parents are in the military. Some of these funds may be used, for

example, for the construction of urgently needed minimum school facilities in districts

whose numbers of students increase substantially as a result of federal activities.
B-282314

Page 6 GAO/HEHS-00-41 School Construction Expenditures

but the program has not been funded. The Taxpayer Relief Act of 1997

authorized tax credits for holders of qualified zone academy bonds whose

proceeds can be used for school infrastructure, such as public school

rehabilitation and repair. In 1999, the legislation extended the authority to

issue these bonds to 2000 and 2001 and increased the total authorization for

them. In its fiscal year 2000 budget, the administration proposed a school

construction and modernization tax incentive, which if enacted would

support $22 billion in interest-subsidized bonds over a 2-year period to help

build and repair schools.

Several proposals introduced in the 106th Congress would, if enacted,

provide new federal financing for school construction. For example, one

proposal would allow the Federal Home Loan Bank to guarantee $500

million annually in public bonds for school construction. However, by

December 1999, the Congress had passed none of these proposals, and

localities and states continue to provide nearly all school construction

financing.

Expenditures for

Constructing and

Renovating School

Facilities Increased

Significantly in the

1990s

Education’s data indicate that annual school construction expenditures

(including those for acquired and constructed buildings, land, and

equipment) increased nationally by 39 percent from fiscal year 1990

through fiscal year 1997. Overall, the largest increase was in the cost of

constructing new buildings and additions to existing ones rather than

purchasing existing buildings, land, and equipment. Education’s data also

show that the states varied widely in their construction expenditures per

student during this 8-year period.

School Construction

Expenditures Grew

Substantially From Fiscal

Year 1990 Through Fiscal

Year 1997

In fiscal years 1990-97, total school construction expenditures increased

from about $17.8 billion to about $24.7 billion. This 39 percent increase

was more substantial than the rise in enrollment, which grew about 12

percent during the same period. As figure 1 illustrates, a large part of the

growth in construction expenditures came in 1996 and 1997. Whereas the

1990-95 expenditure growth was about 12 percent, it was twice that, or 24

percent, in 1995-97. (See appendix I for a discussion of data limitations.)
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Page 7 GAO/HEHS-00-41 School Construction Expenditures

Figure 1: Cumulative Percentage Changes in School Construction Expenditures and

Fall Enrollments, Fiscal Years 1990-97

Note: The percentages for construction expenditures are based on numbers that were adjusted to

constant 1997 dollars.

Source: U.S. Department of Education.

Regionally, the growth in construction expenditures was highest in the

Midwest, at 63 percent. As figure 2 illustrates, the growth figures in the

Northeast, South, and West were somewhat lower, at 35, 27, and 41 percent,

respectively. (See appendix II for more details.)

0

5

10

15

20

25

30

35

40

45

50

1990 1991 1992 1993 1994 1995 1996 1997

Cumulative Percentage Growth

Fiscal Year

Expenditures

Enrollment
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Page 8 GAO/HEHS-00-41 School Construction Expenditures

Figure 2: Regional School Construction Growth Rates, Fiscal Years 1991-97
B-282314

Page 9 GAO/HEHS-00-41 School Construction Expenditures

Source: U.S. Department of Education.
B-282314

Page 10 GAO/HEHS-00-41 School Construction Expenditures

Spending Increases Are

Largest for the Construction

of School Buildings

From fiscal year 1992 to fiscal year 1997, the largest increase in annual

school construction expenditures was for the construction of buildings.8

Expenditures for such construction increased by 81 percent, from about

$9.2 billion in fiscal year 1992 to about $16.7 billion in fiscal year 1997.

Expenditures for purchasing acquired buildings, such as portable

classrooms, dropped by 42 percent, from about $5.5 billion in fiscal year

1992 to about $3.2 billion in fiscal year 1997. While annual expenditures for

land decreased by about 12 percent, expenditures for equipment increased

by about 29 percent. (See fig. 3.)

Figure 3: School Facilities Acquisition and Construction Expenditures, Fiscal Years

1992-97

Note: In billions of constant 1997 dollars.

Source: U.S. Department of Education.

Some regions were exceptions to these national patterns. For example, the

South had an increase in annual expenditures for acquired buildings from

8

Fiscal year 1992 is the earliest year for which the available data contain the expenditure

components used for this analysis.

0

3

6

9

12

15

18

1992 1993 1994 1995 1996 1997

Dollars (billions) 

Fiscal Year

Constructed Buildings

Equipment

Land

Acquired Buildings
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Page 11 GAO/HEHS-00-41 School Construction Expenditures

fiscal year 1992 to fiscal year 1997 of about 57 percent, while these

expenditures in other regions declined. (Appendix III provides more

details.)

The States’ School

Construction Expenditures

per Student Vary Widely

Average annual school construction expenditures per student from fiscal

year 1990 through fiscal year 1997 varied widely. Per-student expenditures

in the state with the highest expenditures were more than 25 times greater

than in the state with the lowest expenditures. For example, Nevada had

the highest average annual expenditure at $934 per student. In contrast,

Connecticut, the state with the lowest average annual expenditure, spent

$37 per student, or about $900 less than Nevada. As a whole, the nation

spent an average of about $473 per student per year over the 8-year period.

Figure 4 shows how all the states compared with the U.S. average.

(Appendix IV provides more detailed state-by-state data.)
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Page 12 GAO/HEHS-00-41 School Construction Expenditures

Figure 4: Average State Construction Expenditures per Student, Fiscal Years 1990-97

Note: In constant 1997 dollars.

Source: U.S. Department of Education.

0 100 200 300 400 500 600 700 800 900 1,000

Connecticut

Rhode Island

Massachusetts

Kentucky

Louisiana

Kansas

Mississippi

North Dakota

Arkansas

Alabama

Ohio

Montana

Tennessee

West Virginia

Oklahoma

Iowa

South Dakota

Maine

District of Columbia

Illinois

Oregon

New Jersey

Wyoming

New Hampshire

Delaware

Idaho

South Carolina

California

Missouri

Vermont

Michigan

Utah

U.S. Average

Indiana

North Carolina

Maryland

Hawaii

Nebraska

Virginia

Wisconsin

Georgia

New Mexico

Pennsylvania

New York

Texas

Colorado

Alaska

Arizona

Minnesota

Washington

Florida

Nevada

Average Annual Expenditure 
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Page 13 GAO/HEHS-00-41 School Construction Expenditures

In general, the states that had the highest per-student annual expenditures

for school construction also tended to have the highest average enrollment

growth rates, and the states that had the lowest per-student expenditures

had significantly lower enrollment growth rates. For example, the average

enrollment growth rate of the 10 states with the largest per-student

expenditures was about 22 percent from 1990 through 1997. In contrast,

the 10 states with the lowest per-student expenditures had an average

enrollment growth rate of about 6 percent.

Annual Construction

Contract Expenditures

Have Increased

Sharply

According to F.W. Dodge’s data, contract expenditures for the construction

of primary and high school facilities increased substantially in calendar

years 1997 and 1998. F.W. Dodge’s data are somewhat narrower than

Education’s in that they do not include expenditures for land, acquired

buildings, and equipment, but they do provide more detail about the types

of buildings and kinds of schools. F.W. Dodge’s data indicate that most

contract expenditures went for new buildings and additions at primary and

high schools. The renovation of existing buildings received a smaller

portion, as did all kinds of construction projects at middle schools.9

Construction Contract

Expenditures for Primary

and High Schools Grew at

an Accelerated Rate in 1997

and 1998

Annual contract expenditures for constructing primary and high schools

grew at an accelerated pace in 1997 and 1998.10 Expenditures for primary

schools had an average annual decline of 1.2 percent from 1990 to 1996 but

grew at an average annual rate of 17.4 percent in 1997 and 1998. Annual

spending for high schools had a more consistent growth rate during this

period. Expenditures for high schools grew at an average annual rate of 6.5

percent from 1990 to 1996 and then increased at an average annual rate of

10.7 percent in 1997 and 1998. Construction spending for middle schools

grew at an average annual rate of 9.5 percent from 1990 to 1997 but

declined somewhat in 1998. (See fig. 5.)

9

For the purpose of this report, we used the term “middle schools” to also include junior

high schools.

10We converted F.W. Dodge’s data for the years before 1998 to constant 1998 dollars.
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Figure 5: Construction Contract Spending, 1990-98

Note: In billions of constant 1998 dollars.

Source: F.W. Dodge Inc.

The increases for school construction contract spending from 1990 through

1998 were highest in the South for all three types of schools: 55.1 percent

for primary schools, 94.1 percent for middle schools, and 143.1 percent for

high schools. In contrast, the Northeast had a 3.8 percent decline in

spending for primary schools, and the West had a 7.4 percent decline in

spending for middle schools. (See table 1.) In general, the high increases

in the South were influenced by substantial increases in spending in some

states such as Georgia and Texas.

0

1

2

3

4

5

6

7

8

9

10

1990 1991 1992 1993 1994 1995 1996 1997 1998

Dollars (billions)

Calendar Year

Primary

High

Middle
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Table 1: Cumulative Percentage Growth Rates for School Construction Contract

Spending, 1990-98

Source: F.W. Dodge Inc.

Contract Expenditures Are

Greatest for Constructing

New Facilities and

Additions

In calendar years 1990-98, about $58.2 billion was spent for building new

facilities, $45 billion for adding to existing facilities, and $21.3 billion for

renovating existing facilities. The distribution of contract expenditures

changed somewhat from 1990 to 1998. For example, although renovations

were only about 17 percent of total contracted construction spending from

1990 through 1998, this kind of construction project had the greatest

percentage increase—82 percent. Increases were 50 percent for additions

and 42 percent for new facilities during the same period. As figure 6 shows,

whereas contract spending for additions and new facilities grew at a fairly

gradual rate, virtually all the growth in annual spending for renovations

occurred after 1996. According to some industry experts and others, the

substantial growth in renovating schools since 1996 reflects an increased

awareness among the general public and state and local officials of the

need to repair badly deteriorated school buildings.

Kind of school Northeast Midwest South West Total

Primary -3.8% 46.7% 55.1% 7.5% 28.4%

Middle 60.1 84.7 94.1 -7.4 59.4

High 59.9 79.1 143.1 29.0 79.3
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Figure 6: Contract Expenditures for Additions, Renovations, and New Schools,

1990-98

Note: In billions of constant 1998 dollars.

Source: F.W. Dodge Inc.

Comprehensive Data

on Funding for School

Construction Are Not

Available

There are no complete and current national data on how much funding for

school construction is available annually to each local school district.

While many state education agencies keep records of the number and

dollar amount of local school construction bonds that voters approve or

disapprove each year, most states do not. In addition, there is a wide

variance among states in the degree to which they rely on local compared

with state funding for school construction projects. Even within states, the

amount of state or local funding can vary significantly from year to year.

Although a number of states rely on just one of these funding sources, most

states use a combination of state and local funding.

0

1

2

3

4

5

6

7

8

9

10

1990 1991 1992 1993 1994 1995 1996 1997 1998

Dollars (billions)

Calendar Year

New Schools

Renovations

Additions
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National Data Are Limited While we found information on annual school construction expenditures,

we found no national data specifying how these expenditures were

financed. After reviewing the available literature and data sources, we

concluded that the best source of information on how school construction

is funded in each state is a study of public school finance programs in the

United States and Canada that was being readied for publication when we

completed our review in December 1999.11 Preliminary information the

editors provided to us shows that in the 1998-99 school year 32 states

provided $10.3 billion in aid for school facility construction and an

additional $228 million for debt service. Three states (Colorado, Delaware,

and Wisconsin) indicated that state aid is provided for school construction

but that this aid is part of the basic support program and could not be

separately accounted for, so no dollar amounts were given. Fifteen states

indicated either no support for facilities or minimal funding for which no

numbers were given. Those states are Idaho, Louisiana, Michigan,

Mississippi, Missouri, Nebraska, Nevada, North Carolina, North Dakota,

Ohio, Oklahoma, Oregon, South Dakota, Virginia, and Wyoming. The report

does not contain similar data on local funding.

Data on Local Bond

Referendums Are Limited

Local general obligation bonds are an important mechanism for financing

school construction. However, we found no comprehensive database of

the number or dollar amount of local school construction bond

referendums that were voted on or passed in 1998. A financial services

company collected and maintained a national database of school bond

referendums but it is incomplete, and we found that it contained only a

small portion of the bond referendums in most of the 19 states from which

we obtained bond data. Therefore, we chose to rely on the results of our

survey of all 50 states’ education agencies.

11Catherine C. Sielke and others, eds., “Public School Finance Programs of the United States

and Canada 1998-99,” draft report.
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Page 18 GAO/HEHS-00-41 School Construction Expenditures

Although most of the 50 states we contacted in our telephone survey did

not maintain comprehensive records of funds that localities provided for

school construction, 19 states provided us data on the number and dollar

amount of local school bond referendums that passed or failed in 1998.12

Table 2 summarizes for each of the 19 states the number and dollar amount

of measures that passed. It also shows that 455 measures were passed,

totaling more than $9 billion and representing 54 percent of both the

number and the dollar amount of the local school construction bond

referendums that were voted on in these states in 1998.

12Three of these states did not keep data on a portion of bonds. Minnesota did not maintain

data on bonds of less than $400,000, and Michigan did not have data on bonds that were not

submitted to the state for approval before they were voted on. Arkansas did not have data

on bonds that did not pass and were not submitted to the state for approval before they

were voted on. In addition, Iowa was able to provide bond data for only the first 6 months

of 1998.
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Page 19 GAO/HEHS-00-41 School Construction Expenditures

Table 2: Bonds and Their Amounts Approved in Local School Construction Bond

Referendums in 19 States, 1998

a

On March 18, 1997, all school systems in Georgia became eligible to use special purpose local option

sales tax revenue for school construction projects if the voters approved a referendum. Only two

school systems have since proposed bond referendums in which the bonds would be repaid in part or

in whole with property tax revenue. Both were voted on and passed in 1998 and are included in this

table.

b

The sum of the figures in this column exceeds this total because of rounding.

The kinds of information on school construction bonds each state

maintained varied. For example, in Oregon, which finances all school

construction with local bond issues, the state department of education

maintains data on all local school construction bond referendums. These

data include the name of the county or school district sponsoring the bond,

the date of the vote, the dollar amount of the measure, and whether it

passed or failed.

State

Number

approved

Number

approved as a

percent of all

referendums

Dollar

amount

approved

(millions)

Dollars approved as a

percent of the total

dollar amount of all

referendums

Arizona 12 86% $253 95%

Arkansas 36 80 103 81

California 72 58 3,742 64

Colorado 19 73 553 87

Georgiaa 2 100 122 100

Idaho 4 40 28 44

Iowa 14 67 89 72

Michigan 44 41 799 36

Minnesota 46 74 422 77

Mississippi 6 55 77 53

Nebraska 10 45 89 67

North Carolina 3 50 96 53

Ohio 44 39 532 35

Oregon 14 30 389 34

South Carolina 4 29 258 26

Utah 3 100 72 100

Washington 28 51 773 58

Wisconsin 93 56 655 48

Wyoming 1 100 0.5 100

Total 455 54% $9,052b 54%
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The Wisconsin office of public instruction maintains local school

construction bond data similar to Oregon’s. It also records the purpose of

each bond. For example, its database showed that bonds’ proceeds were to

be used for such purposes as a new high school, additions to an elementary

school, a running track, and a pool facility at a middle school. However, the

database does not break out how much of the funds approved in an

individual bond referendum were to be used for each purpose when a bond

was approved for multiple purposes. For example, the $29,695,000 bond

referendum passed for the River Falls School District on December 8, 1998,

was for building a new high school, making additions to an elementary

school, and renovating a middle school and a high school.

The Mix of State and Local

Funding for School

Construction Is Unknown

Data are insufficient to determine on a national basis what portion of

school construction is financed locally and what portion is financed by the

states. The mix of funding between state and local governments varies

considerably from state to state. Even within a given state, the mix can

change dramatically from year to year, especially when localities approve

large bond referendums or when state appropriations or bond referendums

are approved.

School construction in most states is financed with a combination of state

and local funding, although the mix varies considerably from state to state.

A 1998 study by the Education Commission of the States describes school

facilities funding as primarily locally funded in 18 states, shared funding in

20 states, and primarily state funding in 13 states.13 In Hawaii (which has

one school district that includes the entire state) all school facilities

projects are funded entirely by the state. In our survey of all 50 states,

officials in only 9 states informed us that their state did not appropriate any

funds for school construction.

Within states, the amount of state or local bond measures passed or state

appropriations approved to finance school construction can vary

significantly from year to year. For example, as shown in table 3, the bond

referendums local school districts approved in South Carolina rose from

13Education Commission of the States, “Making Better Decisions About Funding School

Facilities” (April 1998). In the study, the states total 51 because South Carolina’s school

facilities are shown as being both primarily locally funded and using shared funding. Much

of the data used in this analysis was from an earlier study entitled “Public School Finance

Programs of the United States and Canada, 1993-94.”
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Page 21 GAO/HEHS-00-41 School Construction Expenditures

$120 million in 1994 to $402 million in 1996 and then declined to $258

million in 1998.

Table 3: South Carolina School Bond Referendum Results, 1994-98

Several states and localities have passed large school construction bond

measures and several state legislatures have approved appropriations in

recent years that have increased their respective roles in financing school

construction. For example, in November 1998, California voters passed

Proposition 1A, a state school bond initiative that provided $6.7 billion for

the construction and repair of K-12 schools over 4 years.14 Proposition 1A

authorized the state to provide funding for 50 percent of the costs

associated with building new schools and 80 percent of the costs

associated with modernizing existing schools. This increased the state’s

portion of funding for modernization projects by 30 percentage points from

the 50 percent level at which the state allocation board funded previous

modernization programs.

Bonds approved Bonds rejected

Year

Number of

districts

Dollar amount

(millions)

Number of

districts

Dollar amount

(millions)

1998 4 $258.2 11 $720.3

1997 13 320.3 1 108.0

1996 11 401.7 0 0

1995 4 176.3 3 178.5

1994 5 119.7 3 116.5

14Joel Cohen, “School Facility Financing: A History of the Role of the State Allocation Board

and Options for the Distribution of Proposition 1A Fund,” California Research Bureau (Feb.

1999), pp. 2-3 and 31.
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Agency Comments In commenting on a draft of this report, the Department of Education

agreed with our finding that school construction expenditures increased in

the 1990s. (The comments are printed in appendix V.) Education noted

that our report did not attempt to determine the effect that increased

school construction expenditures in recent years had on the $112 billion we

had previously estimated was needed to bring schools into good overall

condition.15 Our objective was to report on trends in school construction

funding rather than on how well state and local governments were meeting

their school facilities needs. Additional data beyond those collected for

this report would be needed for such an analysis, including updated data on

school conditions.

Education also suggested that we expand our discussion of the role of

federal tax policy in funding school construction—specifically, the

exemption of interest earned on state and local bonds and qualified zone

academy bonds. We have done so.

Education said that our statement that school construction expenditures

rose 39 percent from 1990 to 1997 while school enrollment rose 12 percent

during the period might be misinterpreted. Its concern was that readers

might conclude that a 12 percent increase in school construction

expenditures could accommodate a 12 percent increase in enrollment. Our

only point is that school construction expenditures increased much faster

than enrollment during the period. We do not know whether the increase

in construction expenditures was sufficient to meet construction needs.

Making a judgment about this would have required collecting much more

data. Education also provided us with a number of technical comments

that we incorporated as appropriate.

We are sending copies of this report to the Ranking Minority Member of the

Committee, the Chairman and Ranking Minority Member of the Committee

on Health, Education, Labor, and Pensions of the U.S. Senate, the Secretary

of Education, other appropriate congressional committees and members,

and others who are interested.

15GAO/HEHS-95-61, Feb. 1, 1995.
Page 23 GAO/HEHS-00-41 School Construction Expenditures

If you have any questions, please call me or Joseph J. Eglin, Jr., Assistant

Director, at (202) 512-7215. Major contributors to this report include

Charles M. Novak and Charles H. Shervey.

Sincerely yours,

Barbara D. Bovbjerg

Associate Director, Education, Workforce,

and Income Security Issues
Page 24 GAO/HEHS-00-41 School Construction Expenditures

Appendix I

Scope And Methodology ApApenednxidexiIs

To determine the total expenditures per state for K-12 construction and

how the expenditures were divided between land, buildings, and

equipment, we analyzed annual state-by-state construction expenditure

data the Department of Education’s National Center for Education

Statistics (NCES) obtained from state education agencies through its

annual Common Core of Data (CCD) surveys. The U.S. Census Bureau

collects these data for NCES. We analyzed these data to identify national

and regional trends in school construction expenditures from fiscal year

1990 through fiscal year 1997.1 We adjusted data for fiscal year 1990

through fiscal year 1996 to constant 1997 dollars, using the gross domestic

product price index . For our regional analyses, we used Census regions.

Appendix II shows which states are in which region.

To identify trends in school construction expenditures for land, buildings,

and equipment, we used fiscal year 1992 through fiscal year 1997 because

the data for previous years did not contain the breakouts needed for this

kind of analysis. That is, the data for 1992-97 contained a breakout

between constructed buildings and acquired buildings such as portable

classrooms, but the data for fiscal years 1990 and 1991 did not.

For our analysis of school construction expenditures per student, we used

enrollment data Education also collects through its CCD surveys. To make

our computations, we matched fall enrollment data with construction

expenditure data from the same starting year. For example, we matched

fall 1989 enrollment data with fiscal year 1990 construction data because

they both began in 1989. We computed the average annual school

construction per capita expenditure for each state by dividing the average

of annual school construction expenditures for fiscal year 1990 through

fiscal year 1997 by the annual average enrollments over the same time

period.

Because some data were missing or incomplete, Education adjusted data

for some states and we did for others to improve comparability among

states or fiscal years. We did not verify the data for accuracy or attempt to

obtain missing data; however, Education reviews and edits each state’s data

for completeness and accuracy. If Education finds potential omissions or

errors, it returns the data to the state for correction or verification of its

1

For purposes of these data, Education uses a fiscal year that begins on July 1 and ends on

the following June 30, and it uses the year of the ending date to designate the fiscal year. For

example, fiscal year 1990 begins on July 1, 1989, and ends on June 30, 1990.
Appendix I

Scope And Methodology

Page 25 GAO/HEHS-00-41 School Construction Expenditures

accuracy. Even though Education took these measures, some data were

still missing for some states.

To determine how school construction expenditures were broken down by

grade or school level (primary school, middle school, and high school) and

by kind of construction (new schools, additions, and renovations), we

obtained data from F. W. Dodge Inc., a division of McGraw-Hill Companies,

because Education data did not contain these breakouts. F. W. Dodge

collects data nationwide for all kinds of private and public construction

projects, including K-12 school facilities. The firm’s data measure the value

of contracts public schools or other public entities awarded to private firms

for the construction or renovation of public K-12 school facilities. Unlike

the Education data we used, F. W. Dodge’s data do not include expenditures

for land, acquired buildings, or architect and engineering design activities.

Additionally, school expenditures for the use of in-house staff or other

resources of the public school entities for the purposes of constructing

school facilities are included in Education’s data but not in F. W. Dodge’s

data.

We used F. W. Dodge’s data to compute national and regional trends for

each kind of school and each kind of construction project for calendar

years 1990-98. We adjusted the data for calendar years 1990-97 to constant

1998 dollars, using the gross domestic product price index. We did not

verify the accuracy of the data we obtained from F. W. Dodge.

To determine how school construction projects are funded, we identified

and reviewed research on school construction financing sources and

conducted a telephone inquiry of each of the 50 state education agencies.

Through the telephone survey, we identified states that collect information

from the local education agencies on voter-approved school construction

bonds that pass and fail and on their 1998 dollar amounts.

We conducted our fieldwork from February through December 1999 in

accordance with generally accepted government auditing standards.
Page 26 GAO/HEHS-00-41 School Construction Expenditures

Appendix II

Changes in Annual State School Construction

Expenditures From Fiscal Year 1990 to Fiscal

Year 1997 ApendxiI

Annual expenditures Change

Region and state 1990 1997 Dollars Percent

Northeast

Connecticut $17,482,435 $33,257,748 $15,775,313 90.2%

Maine 115,688,863 44,225,118 -71,463,745 -61.8

Massachusetts 60,590,794 31,926,031 -28,664,763 -47.3

New Hampshire 117,724,812 110,912,249 -6,812,563 -5.8

New Jersey 137,969,243 735,794,720 597,825,477 433.3

New York 1,425,066,856 1,787,446,267 362,379,411 25.4

Pennsylvania 1,086,908,888 1,200,977,174 114,068,286 10.5

Rhode Island 2,939,711 8,016,709 5,076,998 172.7

Vermont 31,352,439 83,681,866 52,329,427 166.9

Total $2,995,724,042 $4,036,237,882 $1,040,513,840 34.7%

Midwest

Illinois $808,822,550 $1,210,214,932 $401,392,382 49.6%

Indiana 399,266,035 554,053,090 154,787,055 38.8

Iowa 120,186,443 182,617,511 62,431,068 51.9

Kansas 169,822,322 81,461,772 -88,360,550 -52.0

Michigan 518,034,186 1,120,381,516 602,347,330 116.3

Minnesota 493,522,410 854,746,110 361,223,700 73.2

Missouri 311,326,902 362,801,611 51,474,709 16.5

Nebraska 102,635,307 136,915,222 34,279,915 33.4

North Dakota 24,112,630 26,489,593 2,376,963 9.9

Ohio 372,635,053 679,989,223 307,354,170 82.5

South Dakota 31,656,864 36,181,823 4,524,959 14.3

Wisconsin 240,930,021 605,690,863 364,760,842 151.4

Total $3,592,950,722 $5,851,543,266 $2,258,592,544 62.9%

South

Alabama $228,644,407 $287,828,745 $59,184,338 25.9%

Arkansas 92,358,852 125,903,107 33,544,255 36.3

Delaware 25,593,095 60,370,550 34,777,455 135.9

District of Columbia 39,446,634 43,940,239 4,493,605 11.4

Florida 1,716,075,675 1,910,535,292 194,459,617 11.3

Georgia 610,050,658 861,931,564 251,880,906 41.3

Kentucky 62,535,737 70,044,741 7,509,004 12.0

Louisiana 177,560,031 152,737,466 -24,822,565 -14.0
Appendix II

Changes in Annual State School

Construction Expenditures From Fiscal Year

1990 to Fiscal Year 1997

Page 27 GAO/HEHS-00-41 School Construction Expenditures

Note: In 1997 dollars.

Source: U.S. Department of Education.

Maryland 395,093,018 518,801,968 123,708,950 31.3

Mississippi 81,078,879 156,124,935 75,046,056 92.6

North Carolina 518,892,880 714,961,739 196,068,859 37.8

Oklahoma 241,696,773 135,963,740 -105,733,033 -43.7

South Carolina 277,427,184 390,898,295 113,471,111 40.9

Tennessee 185,879,267 380,039,655 194,160,388 104.5

Texas 1,870,901,824 2,446,640,238 575,738,414 30.8

Virginia 512,689,453 623,842,806 111,153,353 21.7

West Virginia 36,442,828 96,761,018 60,318,190 165.5

Total $7,072,367,197 $8,977,326,098 $1,904,958,901 26.9%

West

Alaska $41,211,270 $126,972,418 $85,761,148 208.1%

Arizona 455,654,395 467,662,439 12,008,044 2.6

California 2,000,367,162 2,302,099,441 301,732,279 15.1

Colorado 258,175,973 620,617,810 362,441,837 140.4

Hawaii 61,855,731 123,703,629 61,847,898 100.0

Idaho 42,664,461 145,668,470 103,004,009 241.4

Montana 56,114,601 33,266,541 -22,848,060 -40.7

Nevada 205,398,799 311,600,198 106,201,399 51.7

New Mexico 145,330,637 253,074,817 107,744,180 74.1

Oregon 118,365,788 347,301,016 228,935,228 193.4

Utah 103,394,643 280,989,713 177,595,070 171.8

Washington 634,352,484 761,098,864 126,746,380 20.0

Wyoming 23,689,363 57,150,184 33,460,821 141.2

Total $4,146,575,307 $5,831,205,540 $1,684,630,233 40.6%

U.S. total $17,807,617,268 $24,696,312,786 $6,888,695,518 38.7%

Annual expenditures Change

Region and state 1990 1997 Dollars Percent
Page 28 GAO/HEHS-00-41 School Construction Expenditures

Appendix III

Changes in Regional School Construction

Expenditures for Land, Buildings, and

Equipment, Fiscal Years 1992-97 ApendxiI

Note: In constant 1997 dollars.

Source: U.S. Department of Education.

Northeast Midwest South West Total

Land

1992 $830,851,194 $293,686,114 $1,097,299,352 $463,061,676 $2,684,898,336

1997 684,752,698 592,172,395 435,413,393 656,996,570 2,369,335,056

$ change -$146,098,496 $298,486,281 -$661,885,959 $193,934,894 -$315,563,280

% change -17.6% 101.6% -60.3% 41.9% -11.8%

Acquired buildings

1992 $377,305,846 $1,510,445,138 $1,596,674,555 $2,066,150,709 $5,550,576,248

1997 61,312,426 173,529,065 2,499,989,895 476,101,115 3,210,932,501

$ change -$315,993,420 -$1,336,916,073 $903,315,340 -$1,590,049,594 -$2,339,643,747

% change -83.7% -88.5% 56.6% -77.0% -42.2%

Constructed buildings

1992 $1,578,305,207 $1,702,595,003 $3,910,307,078 $2,048,296,154 $9,239,503,442

1997 3,105,293,185 4,184,360,008 5,268,577,360 4,164,409,859 16,722,640,412

$ change $1,526,987,978 $2,481,765,005 $1,358,270,282 $2,116,113,705 $7,483,136,970

% change 96.7% 145.8% 34.7% 103.3% 81.0%

Equipment

1992 $456,169,378 $422,720,811 $607,243,905 $374,106,895 $1,860,240,990

1997 184,879,573 901,481,798 773,345,450 533,697,996 2,393,404,817

$ change -$271,289,805 $478,760,987 $166,101,545 $159,591,101 $533,163,827

% change -59.5% 113.3% 27.4% 42.7% 28.7%
Page 29 GAO/HEHS-00-41 School Construction Expenditures

Appendix IV

Average Annual State School Construction

Expenditures per Student, Fiscal Years

1990-97 ApendxiIV

State Total

Average

per year

Average

per student

per year

Alabama $1,551,579,473 $193,947,434 $265

Alaska 739,850,611 92,481,326 759

Arizona 4,305,612,605 538,201,576 773

Arkansas 916,681,883 114,585,235 258

California 17,513,021,641 2,189,127,705 417

Colorado 3,294,148,874 411,768,609 667

Connecticut 144,622,543 18,077,818 37

Delaware 333,504,567 41,688,071 399

District of Columbia 226,294,798 28,286,850 352

Florida 14,143,070,060 1,767,883,757 877

Georgia 5,137,812,623 642,226,578 523

Hawaii 703,550,019 87,943,752 491

Idaho 762,889,360 95,361,170 410

Illinois 5,378,199,606 672,274,951 357

Indiana 3,785,099,551 473,137,444 490

Iowa 1,218,014,087 152,251,761 308

Kansas 734,255,420 91,781,927 203

Kentucky 802,972,138 100,371,517 155

Louisiana 1,142,491,267 142,811,408 180

Maine 566,549,318 70,818,665 330

Maryland 2,989,958,884 373,744,861 491

Massachusetts 342,573,635 42,821,704 49

Michigan 5,798,446,152 724,805,769 450

Minnesota 5,263,465,426 657,933,178 825

Mississippi 881,727,371 110,215,921 218

Missouri 2,883,718,330 360,464,791 420

Montana 351,480,150 43,935,019 275

Nebraska 1,115,640,217 139,455,027 493

Nevada 1,734,638,927 216,829,866 934

New Hampshire 585,950,609 73,243,826 399

New Jersey 3,460,640,456 432,580,057 379

New Mexico 1,458,048,463 182,256,058 575

New York 13,297,370,342 1,662,171,293 614
Appendix IV

Average Annual State School Construction

Expenditures per Student, Fiscal Years

1990-97

Page 30 GAO/HEHS-00-41 School Construction Expenditures

Note: In constant 1997 dollars.

Source: U.S. Department of Education.

North Carolina 4,447,661,879 555,957,735 491

North Dakota 212,047,429 26,505,929 223

Ohio 3,955,509,329 494,438,666 274

Oklahoma 1,475,607,506 184,450,938 308

Oregon 1,534,340,325 191,792,541 378

Pennsylvania 8,624,372,007 1,078,046,501 623

Rhode Island 47,892,249 5,986,531 41

South Carolina 2,112,733,556 264,091,695 414

South Dakota 352,063,648 44,007,956 321

Tennessee 1,967,850,022 245,981,253 286

Texas 18,039,309,919 2,254,913,740 631

Utah 1,677,754,867 209,719,358 452

Vermont 361,417,654 45,177,207 449

Virginia 4,104,146,867 513,018,358 494

Washington 6,147,436,619 768,429,577 854

West Virginia 764,308,148 95,538,519 303

Wisconsin 3,315,586,301 414,448,288 496

Wyoming 315,188,234 39,398,529 395

U.S. total and average $163,019,105,967 $20,377,388,246 $473

State Total

Average

per year

Average

per student

per year
Page 31 GAO/HEHS-00-41 School Construction Expenditures

Appendix V

Comments From the Department of

Education ApendxiV
Appendix V

Comments From the Department of

Education

Page 32 GAO/HEHS-00-41 School Construction Expenditures
Page 33 GAO/HEHS-00-41 School Construction Expenditures

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