Construction spending for education expanded modestly but steadily through March, while at the same time growth for other institutional construction had stalled earlier in 2009.
Education spending is now at or near the peak for this building cycle. The value of education starts is off 9% year-to-date compared to 2008. April starts fell 14% to the lowest total in more than three years. BD+C projects a 3–4% dip in education construction spending into early 2010, and then a recovery by the end of next year, which will bring spending up to early 2009 peak levels. Public education spending is up 6.4% in the past year but spending in the smaller, private sector dropped 0.4%. Funding for private education projects is very sensitive to current economic conditions, specifically tuition payments from current income and investment earnings.
College construction spending is up 12.2% from a year ago, but K-12 spending is up only 3%. Colleges boosted spending for instructional space 20.6% over the past year. Dormitory spending was up only 5%. These increases are the result of the relatively rapid expansion of community colleges and part-time programs for working adults. The small expansion of K-12 construction spending was entirely for high schools, which is up 7.9% over the last year. Middle school construction spending was steady, while elementary spending fell about 3%. These differences mirror enrollment changes. The peak enrollment is now in the 10th grade, which puts more pressure on high schools.
The reason the education construction recession is relatively modest is largely due to nearly $200 billion in state and local government aid included in the stimulus plan. This money is being paid out quickly because it's not linked to specific projects. These new funds offset the huge negative impact of reduced tax receipts in FY 09–10. Without the stimulus funds, a deep recession in public education construction would occur in 2009–10. Instead, most of the recession will be offset, with the balance deferred to 2011–12.
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