Elementary and secondary school construction — referred to here as capital school construction — is the nation's second-largest capital investment for state and local governments. It is surpassed only by road construction. This funding's main objective is to ensure students have access to modern, updated facilities that facilitate learning and development. While local governments are responsible for most school construction costs, state governments have played a significant role in financing the construction of school buildings.
State governments provide financial support for school capital construction through direct appropriations and financing support. Securing adequate funding for school infrastructure is crucial for schools to maintain and enhance their facilities. However, during periods of budgetary constraints, school construction funding may face challenges and not be prioritized. So, funding may be reduced or delayed, adversely affecting schools' capacity to provide safe and modern learning environments for students.
In this review, capital school construction is defined as major facility projects that involve the construction of new structures or major renovations. This may involve planning, design, site acquisition or the retrofit and replacement of buildings. These expenses are typically funded through the capital budget and often financed with bonds. Not discussed here is funding for maintenance and operations projects that involve regular, routine facility work, such as cleaning, grounds keeping, minor repairs, utilities and building security.
Financial Assistance
- 90% of states (45 states and the District of Columbia) offer financial assistance to school districts for school construction costs.
- 28 states provide both appropriations and financing options, while 10 states solely offer appropriations, and 7 states along with the District of Columbia provide financing options.
Revenue
- At least 19 states have established dedicated revenue sources for school construction funding. This includes sales and use taxes, excise taxes, lottery revenue, and proceeds from the sale and use of state lands.
Appropriations
- 38 states provide aid to school districts for upfront planning or construction costs through appropriations. Five states have programs established in law that are not currently active.
- 28 states incorporate an equity component within their appropriation policy. This means they prioritize or provide more funding for projects for school districts with lower levels of property wealth.
- Payments take the form of direct grant aid to defray the costs incurred by projects or to reimburse locally issued debt, without requiring school districts to repay the state.
Financing
- 35 states and the District of Columbia employ various financing mechanisms, such as bond issuance, to fund school construction costs. One state has a program established in law that is not currently active.
- This support includes state issued bonds, support for locally issued bonds and state funded loan programs, allowing schools to obtain loans for their construction needs.
Oversight and Prioritization
- School districts seeking state appropriations or financing support typically require approval from the state or designated authority. The resource highlights the entity overseeing school construction funding requests in each state.
- In many cases, voter approval is necessary at the state and/or local level to issue debt for financing school construction projects. Our research shows that 35 states require some level of voter approval for such debt issuance.
Explore the 50-state comparisons below to see how states provide funding through appropriations and financing support, while exercising authority through oversight and prioritization. View a specific state’s approach by going to the state profiles page.
50-State Comparisons
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