Schools Warned of Sharp Rises in Energy Costs

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School officials should prepare for escalating energy costs that could double by the end of the decade and increase fivefold by the end of the century, warns a new report from the U.S. Energy Department.

That growth in costs, combined with general inflation and the uncertainty over funding for public education, could result in some"grim years ahead" for the nation's schools, the report suggests.

But it also says: "Action now could stave off some of the energy-associated financial trauma hanging like a cloud over the future of American education."

According to the report, "School Finance and Energy Through the Year 2000," state and local education leaders must begin to take a close look at the energy problems in the schools and follow their research with careful planning, conservation practices, and alternative financing measures to develop improved energy efficiency in schools.

High Energy Costs

The study, which was prepared for doe by Shirley J. Hansen Associates, a research organization based in Lake Jackson, Tex., cited a 1983 survey of school superinten-dents conducted by the American Association of School Administrators that found that energy costs were the most common contributor to schools' financial problems. Of the survey respondents, 88 percent indicated they currently had major budget problems or anticipated such problems in the near future. The major financial problem, cited by 82 percent of respondents, was the "increased costs of fuel for heating/cooling." (See Education Week, Jan. 11, 1984.)

Despite dropping oil prices, schools have seen their energy costs mount in recent years, according to the doe report.

"The drop in oil prices has created little direct benefit to the nation's schools, for only 19 percent of them depend on oil for heating. While much of the country took psychological comfort in the softening of the oil market, over 60 percent of the schools continued to pay higher fuel bills."

During the 1980-82 period, natural-gas prices rose 30 percent and electricity costs climbed 25 percent, according to the report.

Following a temporary "softening" in oil prices through 1985, the cost of oil is expected to climb rapidly.

By the year 2000, the study projected, the cost of No. 2 oil is expected to rise 54 percent and cost of Nos. 4, 5, and 6 oil will rise about 73 percent over the 1982 costs.

Reliance on Natural Gas

Natural gas, the primary heating source of some 60 percent of all schools and 80 percent of urban schools, is expected to rise 80 percent above 1982 costs in real dollars, the study said.

"Since schools have a disproportionate reliance on natural gas, they are apt to incur a disproportionate increase in their energy costs compared to other sectors of the economy," the report said.

It projected that the nation's public schools' fuel bill by the end of the decade will be "more than double the 1982 level." By the year 2000, the study projected that "energy costs to the nation's schools will be more than five times the 1982 price tag."

According to projections in the study, national average per-pupil energy costs will be about $184 in 1985, $268 in 1990, and $677 in 2000. (These calculations assume 15-percent electrical demand, heating/cooling fuel sources proportional to the national percentage of use in public schools, and a 6-percent annual rate of inflation.)

Total energy costs for the public schools are expected to be $11 billion in 1990 and to exceed $31 billion in 2000 at today's consumption rate, according to the study.

The study argues that energy conservation is vital at a time when enrollments are down, school finances are uncertain, and increased operational demands such as deferred maintenance of school buildings (estimated to cost at least $25 billion) and asbestos removal (estimated to cost at least $1.4 billion) are placing further burdens on operational budgets. Yet financing energy conservation is expected to become increasingly more difficult for the schools, the study said.

"Federal energy grants have played an important part in providing technical assistance and augmenting local finances; however, by the end of 1983, they had served only 5 percent of the schools," the study said.

Alternative Financing

Moreover, it argued that state legal barriers, lack of understanding by school officials, and inconsistent procedures have "impeded the effective use of alternative financing" to support efforts to improve the energy efficiency of schools.

Not all states allow alternative financing procedures to be used and in those that do, the procedures are often so complicated that school officials need to hire consultants to guide them. Nonetheless, some financing procedures can make private capital available to improve energy efficiency in public schools, the study said, including tax-exempt bonds, municipal leasing, cost sharing, shared savings, third-party or joint ventures, and general services contracts.

The report made these five recommendations:

Federal, state, and local decisionmakers must be familiarized with the energy costs schools are likely to face in the future, particularly in the 1990's.

State energy and education lead-ers must be made aware of the implications of higher energy costs on future state education funding. The study said that because states, in effect, now pay "more than half" of the utility bills of local districts, their financial status "could be enhanced by exercising leadership in improved school-energy efficiency."

Conservation Measures

School administrators should be encouraged to examine conservation and maintenance opportunities through audits, to initiate economically feasible energy-conservation measures with resources available, to conduct long-range planning on what type of fuel their schools should use, and to consider energy efficiency and appropriate energy sources when undertaking new construction projects.

Studies should be undertaken to determine the ramifications of higher energy costs on the 20 states the Education Department cited in its 1982 report, "Prospect for Financing Elementary and Secondary Education in the States," as having unfavorable funding prospects through the year 2000.

National leadership is needed to guide the alternative funding of energy programs for public schools by identifying state and legal barriers to such financing programs, providing guidelines and model contracts for the alternative funding procedures, and educating state education officials and school administrators about the opportunities, procedures, and dangers related to the funding strategies.

The study is available at no cost from M.L. Payton, Institutional Conservation Program, Conservation and Renewable Energy, Department of Energy, Room 5G-070 Forrestal Building, 1000 Independence Ave., N.W., Washington, D.C. 20585.

Vol. 03, Issue 37

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