Escalating 'Bricks-and-Mortar' Cost: The Problem Nobody Wants

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The nation's school districts, faced with decaying buildings and annual construction outlays nearing $7 billion, may need help from policymakers, especially those in state governments, in underwriting the massive costs of building and renovating, experts said last week.

The costly brick-and-mortar problem has been too long ignored by legislatures, dismissed by voters, and delayed by school officials, concede state leaders and educators.

"The magnitude of the problem is enormous and may well be the educational issue of the 1990's," three school-finance experts conclude in the latest edition of the Journal of Education Finance.

Buildings are often unsafe, overcrowded, inaccessible to special populations, and in need of asbestos abatement, new roofs, upgraded electrical systems, and other physical improvements, the researchers write.

And they point to additional pressure on school officials for more space to accommodate state mandates for smaller classes, new preschool programs, instructional programs for at-risk students, improvements in technology, and new developments in science laboratories.

"A sizable proportion of our nation's urban, suburban, and rural school buildings are in need of repair, modernization, or replacement," argue David C. Thompson, assistant professor of educational administration at Kansas State University; David S. Honeyman, assistant professor of educational administration at Lehigh University; and Craig R. Wood, associate professor of educational administration at Purdue University.

But the price of the undertaking may overwhelm local districts' ability to pay, Mr. Thompson said.

For years, school facilities have been neglected as districts focused on instructional priorities, he said.

Still, the amount districts have spent in recent years, and are expected to spend in the years ahead, is staggering.

The magazine American School & University has reported that school-district spending on construction projects in 1987 totaled a record $6.6 billion nationally, up $516 million from the previous year.

Calling it a "boom market" not seen since the 1970's, the magazine reported that the spending total for 1988 through 1990, according to districts' projections, would be $21.9 billion. The actual costs, it said, probably would be higher.

As massive as those figures are, however, they still do not include needs that districts are unable even to plan on meeting, the experts suggested.

A new national survey of rural and small schools enrolling fewer than 800 students revealed, for example, that each building had $300,000 in deferred-maintenance needs alone, said Mr. Thompson.

"We're finding an awfully lot of needs that local districts do not have the ability to [meet]," he said.

Traditionally the domain of local districts, capital construction projects historically have been underwritten by local bond issues approved by voters.

But voters frustrated by local taxation levels have been downing bond issues with increasing frequency in recent years--a pattern that worries many school officials. (See Education Week, Oct. 19, 1988.)

In addition, the limits generally placed on districts' bond indebtedness mean they may not be able to fund all needed capital projects in any event. And many districts simply lack the tax base to generate revenue for construction or repairs.

In Wisconsin, the issue has become a politically hot topic after a series of newspaper articles last year resulted in state safety inspections of school buildings and calls by State Superintendent Herbert Grover for increased state aid to fund repairs.

"Candidly, we can't get the referendums passed," said Mr. Grover. ''We've only built five new buildings in the past five years. We have 2,002 buildings, so at that rate the new buildings will have to last 400 years."

Mr. Grover has proposed that the state pay for 46 percent of districts' maintenance and construction budgets through the school-aid formula. That would amount to an additional $43 million from the state annually.

Gov. Tommy Thompson has proposed a $27-million appropriation, which the state superintendent claims is inadequate.

Mr. Grover views the problem as one of priorities and a moral obligation to children.

"We've spent more money on prisons in the past five years than we have on elementary- and secondary-education facilities, and we only4house 5,500 prisoners," he complained. "Our prisons are in better shape than our elementary and secondary schools."

"It's a gut issue," he added. "We put our children in decrepit, dank, stark buildings. Our highways, zoos, and prisons are in the greatest of shape."

Mr. Grover contended that school buildings "should be bright and warm and nurturing. They ought to be the happiest and most embracing environment children can come to."

In recent months, other state officials also have attempted to tackle the construction problem.

In West Virginia, Gov. Gaston Caperton recently announced a $500-million plan to refinance state bonds to fund repairs and new buildings.

Steve Haid, Mr. Caperton's education aide, said the Governor was struck by the condition of buildings "that are artifacts of the 19th century, nothing more than educational slums."

In Texas, Comptroller Bob Bullock in January announced a plan to use state-backed bonds to finance $750 million in school construction projects.

Mary Jane Wardlow, Mr. Bullock's spokesman, said the 1,062 Texas school districts, which rely solely on local revenue for such projects, have the highest bonded indebtedness in the nation--$6.5 billion. She said districts' payments on principal and interest amount to $900 million a year.

Officials estimate that Texas districts will need to spend another $5 billion by the mid-1990's to keep pace with enrollment growth, Ms. Wardlow said.

In both the West Virginia and Texas plans, school districts would save money because state-backed bonds would have lower interest rates, but both states would require districts to repay the debts.

In Oklahoma, the House education committee also has proposed that the state assist school districts with construction needs.

In Kansas, the school boards' association recently adopted a measure asking the state to provide assistance to schools.

North Carolina's legislature has adopted a measure earmarking tax revenue to aid districts with construction and repairs.

And the New York legislature has created a special bonding authority to assist New York City public schools. The estimated price tag for construction and renovation in the nation's largest district is $15 billion by the year 2000.

All told, 21 states offer some form of capital construction aid to local districts, according to Richard Salmon, associate professor of education at Virginia Tech University, who8has conducted a study of state school-aid formulas.

Only three states--Alaska, California, and Hawaii--are considered to fully fund construction projects, said Mr. Salmon; seven others have loan programs for districts; and 11 have set up independent bonding authorities.

"It's an overlooked area," the researcher said. "Most states don't do a whole lot for school construction."

But he noted that "there's a recognition that states haven't faced up to that responsibility very well and more and more are getting into it."

That interest has been spurred by recent court decisions in school-finance and desegregation cases, according to Mr. Salmon.

In their legal arguments over the equity of state funding formulas, some property-poor districts have contended that wealthy districts can afford new, safe buildings while poor districts cannot. And in the Kansas City desegregation case, the state of Missouri has been ordered to fund a substantial proportion of the district's some $100 million in capital construction needs.

In his current studies of the effects of local fiscal restraints on construction costs, Mr. Thompson of Kansas State said he was "discovering that facilities are increasingly becoming an issue mentioned in court suits." In addition to the Kansas City case, he noted, the issue has been raised in school-finance lawsuits in New Jersey, Tennessee, Texas, and West Virginia.

Late last week, Saul Cooperman, New Jersey's state school chief, issued an administrative ruling overturning a law judge's finding that the state funding system was inequitable. But Mr. Cooperman agreed with the judge's finding that a statewide initiative was needed to help districts rebuild their facilities.

Citing previous litigation and discussions he has had recently with school officials in several states, Mr. Thompson predicted that funding for construction costs would play a more prominent role in future school-finance suits.

Meanwhile, in the vast majority of school districts the search is already on for alternative methods of financing construction projects.

Several districts have used lease-purchase arrangements, under which private investors construct the building, provide the equipment, and lease it back to the district under a long-term contract.

By not having to issue bonds, districts avoid the problem of seeking voter approval for new buildings, eliminate costly debt service, and are able to make the lease payments directly from their general funds.

The practice is used mainly by municipalities, but a growing number of districts, especially in California, are also using the method. North Carolina lawmakers also have given their school districts the authority to enter into such agreements.

Another idea, recommended by the Carnegie Foundation for the Advancement of Teaching, would be federally backed low-interest loans to districts. The foundation, in its report last year on urban schools, suggested a "National Urban Schools Facilities Program" that would offer federal help to replace or repair urban school buildings.

And in Florida, Commissioner of Education Betty Castor has appointed a task force to find alternative revenue sources for school construction because a utility tax earmarked for that purpose can no longer keep pace with the state's enrollment growth of 60,000 students a year.

Spokesman David Voss said officials have predicted that Florida's school-construction needs will outpace revenue by $3.5 billion in the next five years.

"We are facing a situation here where we are shifting a greater burden to local bond issues," said Mr. Voss. "The need here is just enormous."

Without assistance from the state, many school districts may go without the renovations and new equipment needed to make students competive in a world economy, said Ms. Wardlow in Texas. Some 730 of the state's 1,062 districts are considered property-poor, and many, because they lack the financing, have been unable to meet state mandates to shrink class sizes.

"Mr. Bullock just thinks we're not going to have the background to handle the world competition unless we address this issue," Ms. Wardlow said. "He feels this is as much an economic issue as an educational issue."

For its part, the Journal of Education Finance is devoting two of its quarterly issues this year to the school-facilities problem. While they are not promoting a particular solution, the researchers said, they hope decisionmakers at the federal, state, and local levels will begin to "comprehend the magnitude of the problem and begin to address methods which can be utilized to correct these needs."

Vol. 08, Issue 23

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