Education spending held back a year

February 01, 2004 |

Post-recession government belt tightening and reduced donations and several years of investment fund losses on the private side have held the education market at a $71 billion annual pace for a year and no significant change is expected until next summer.

The stagnant spending growth in both public and private sectors has occurred at all levels of education. But the picture should brighten as public managers receive new budgets in a much less constrained fiscal year and private managers can draw on a year of 20-30% gains in their capital funds.

Education construction spending is expected to increase only 0.5% in the current public fiscal year ending June 30, but then increase about 7% the next fiscal year. The first signs that this surge is coming have already appeared, with state and local tax collections substantially exceeding budgets in all parts of the country. In many communities, space needs are documented, sites have been selected and preliminary plans are ready. Only the money is missing.

The projected 2005 fiscal year gain is barely half of the over 12% annual growth from 1984-2002. Spending growth in the 2006-07 fiscal years may approach the strong growth in the 1990s, but demographic trends will not prompt the same doubling of spending that occurred over the recent span of eight years.

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