Despite local educational agency efforts to ramp up investments in school facilities, the U.S. now faces an annual $90 billion shortfall in school facility funding after years of massive, chronic underinvestment, according to a recent report from the 21st Century School Fund, International WELL Building Institute (IWBI) and the National Council on School Facilities.
The 2025 State of Our Schools report, released Dec. 23, highlights how what was a $46 billion gap in 2016 grew to $85 billion in 2021 and has continued to widen as school construction costs climb and aging facilities require more extensive maintenance, modernization or replacement.
“With a $90 billion annual shortfall, the magnitude of this crisis is undeniable and utterly unacceptable. It’s simply impossible for local districts to continue to shoulder this burden disproportionately,” Rachel Hodgdon, IWBI president and CEO, said in a statement. “Without greater responsibility across all levels of government, particularly the federal government, our country will continue to underfund the very infrastructure that determines the health, safety, and educational outcomes of millions of children. Where our children learn matters, and access to safe, healthy, and modern learning environments should be a right, not a privilege.”
PK-12 school facilities represent the second largest sector of public infrastructure investment in the U.S., surpassed only by highways. Yet, according to the report, unlike transportation infrastructure where federal and state governments shoulder the majority of the cost, school facilities are primarily left to LEAs. Researchers found that LEAs bear 80 percent of school facility funding, with states contributing 17 percent and the federal government just 3 percent.
Findings show that:
- High-poverty districts had 30 percent less capital invested in their school buildings than low-poverty districts
- Rural districts received less than half the per-student capital investment of their suburban and city counterparts
- By the end of fiscal year 2023, LEAs carried more than half a trillion dollars in long-term debt and paid $22 billion in interest alone as they attempt to fill the widening gap in facilities funding
As a best practice, schools should be spending 4 percent of their annual budgets on capital investments and another 3 percent on maintenance and operations, but are currently nowhere near that, the report states.
However, Mary Filardo, executive director of 21st Century School Fund and lead author of the report, noted that, “Even as local districts have stepped up by increasing their annual spending on school facilities from $95 billion in 2016 to more than $150 billion now, they are still falling behind. As the funding gap for our critical school infrastructure grows, it becomes even harder to climb out of this hole unless we begin to better share the load across levels of government and embrace a dynamic solution set that ensures every public dollar delivers a stronger return on investment.”
If the U.S. wants to ensure schools are modernized and healthy environments that promote student success by 2050, researchers found that new approaches and more shared investment across all levels of government — as well as a stronger focus on building the capacity needed to deliver improvements — is required.
The report includes recommendations to accomplish this, including:
- Securing a stable, reliable federal-incentive funding program of $25 billion per year, which would reduce annual requirements by $75 billion (a 34 percent return on investment)
- Expanding federal support for state capacity grants for facility data, planning, technical assistance and training to all states to ensure that states and LEAs are equipped for necessary modernization work
