Recession reaches education construction

August 11, 2010

Education construction spending continued to increase through June 2009, but dropped 5.5% in the first four months of the new fiscal year. State and local governments are experiencing the fastest and deepest declines in their budget reserves in more than 50 years. A further smaller decline in education construction spending is expected by early spring.

BD+C reports that year-to-date education construction starts through October were down 12% from the same period last year. However, the value of education starts in the four months through November was up 5% from the same period a year ago, which reflects the resumption of some projects that were deferred because of the credit freeze. Nonetheless the drop in starts last fall reached job site activity in mid-2009. There is a substantial risk that the drop could be worse if federal money does not supplement shrinking state and local funds.

The recent drop in spending includes both K-12 and higher education. Elementary schools have experienced the largest decline and middle schools the least decline. In higher education, construction spending for residence halls and instructional buildings continues to rise slowly but recreational and infrastructure spending has fallen significantly. Spending for libraries and museums, included in the education category, dropped sharply during the recession but rebounded slightly in the last few months.

States that experienced the recession and also the recovery earliest have the largest gains in year-to-date starts (through November) compared to the same period in 2008. Those states include California, where year-to-date starts are up $1.6 billion (26%), as well as Michigan (+45%), Wisconsin (+34%), Illinois (+33%), and Rhode Island (+25%). States still stuck in a long, deep recession have cut education construction starts substantially. These states include Nevada (-59%), Florida (-34%), Arizona (-17%), Massachusetts (-53%), and Washington (-43%).

         
 

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