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MANAGEMENT UPDATE.

SCHOOL INFRASTRUCTURE SPENDING: “WHAT WORKS AND FOR WHOM”

A huge amount of money is spent on the nation’s school buildings. According to 2022 audit data compiled by Merritt Research Services, an Investortools Company, there’s $450 billion in bonded debt owed by the nation’s school districts, which is the second biggest pile of debt in the municipal bond sector, lagging only the total outstanding for states. In fact, in the 2019-2020 academic year alone, the US spent $90 billion -- $1,760 per student – on school facility construction or renovation. 

But what are the true benefits of spending money on school infrastructure? That’s a critical question, and some of the answers are revealed by a new working paper, posted this month through the National Bureau of Economic Research, which demonstrates that “Not all capital projects are the same.”


The paper, “What Works and For Whom? Effectiveness and Efficiency of School Capital Investments Across the U.S”, uses new data and evidence, based on 14,000 bond elections in 29 states, to uncover highly useful findings. It shows that spending on basic infrastructure – like repairing roofs or heating and air-conditioning equipment and renovating classrooms – ultimately raised student test scores. But spending on athletic facilities, land purchases or buses, did not.

The opposite was true when researchers examined the effect on housing prices. Basic school-based improvements did not generate a rise in home prices. Putting money into athletic facilities, land purchases or buses, did.




The working paper, authored by Barbara Biasl at the Yale School of Management, Julien M. Lafortune at the Public Policy Institute of California, and David Schonholzer at the Institute for International Studies at Stockholm University, also found that the effects of infrastructure investments were greater in places with a high percentage of low-income or Black and Hispanic students. “Taken together, our results indicate that both the types of projects funded by capital outlays and their beneficiaries shape the impact of increased spending on school facilities,” according to the working paper. 


These new findings should be in the hands of every decision-maker involved in school infrastructure-related projects. “Understanding what types of projects matter and for whom is crucial for policymakers to decide what projects to prioritize,” the authors write.  “Our findings can be used by state and district officials to understand how to best target school capital investments, with the ultimate goal of maximizing the returns for students and taxpayers.”


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