Background:

• While the school construction has generally been considered a state and local responsibility the needs are not be met. According to the National Center for Education and Statistics (NCES) the unmet need for school construction and renovation is estimated to be $127 billion or $2.2 million per school. The average age of a public school building is estimated to be over 40 years old, the same age that schools have documented to deteriorate.

AGC Message:

• Expand Federal Tax Credits to Support Increased Use of School Construction Bonds. The federal government provides indirect financial support for school construction by exempting the interest on state and local government bonds from federal income taxation. The exemption allows bonds to be issued at lower interest rates that still provide competitive returns.
• Continue and Increase Federal Grants for High-Poverty, High-Need School Districts. Increase “qualified zone academy bonds” for schools based in high-poverty areas.
  Encourage School Districts to Explore Alternative Financing, Including Lease Financing, and
• Financing/Ownership/Use Arrangements to Facilitate Construction. In some regions of the country the reliance on tax-exempt bonds backed by local property taxes is not working to fund school construction. Examples of new alternatives for school construction include school infrastructure banks.
• Consider Direct Federal Funding for School Construction. The federal government began direct federal funding for school construction in 1950, but since that time direct funding has seen dramatic funding reductions. Additionally, federal grant programs have been approved, but have not been funded by Congress.

AGC Supported Legislation:

• H.R. 3221 - Student Aid and Fiscal Responsibility Act of 2009.
  • Authorizes more than $4 billion for K-12 school and community college facility construction projects over the next two fiscal years. Read AGC factsheet.
  • Passed House September 17, 2009 (253 - 171)