Education construction spending picks up

Construction spending on education projects picked up at the end of 2006 after an inflation-adjusted mid-year decline. This turnabout is forecast to continue into 2007-08.

The added spending will come from state and local government budget reserves that rose to about 7.5% of annual expenditures, after declining to less than 3% a few years earlier. Tax receipt growth has slowed significantly but will remain above average for another year, keeping budget reserves strong enough to afford more school construction.

Spending is forecast to increase 10% this year and 8% in 2008 after growing only 6% during the last two years. The job site spending outlook follows trends in the value of education project starts reported by Reed Construction Data. Starts increased 8% in 2005 and 10.8% in 2006, with the usual surge at the beginning of the new fiscal year.

The improvement is across all segments with the exception of K-8 schools, where enrollment is falling slightly. Overall, K-12 spending rose 9.4% during the last year. High schools led the way, rising 13.8%.

Higher education construction spending increased 7.8%, which included a 13.5% increase for instructional facilities and a 4.5% increase for residence halls.