Building for Fewer Students

Overview

As K-12 public school enrollment continues to decline, district leaders across the United States will increasingly face a difficult balancing act: needing to modernize their aging facilities while considering whether to close some of them.¹ Earlier this year, the School District of Philadelphia announced that it is both closing 17 schools and investing $3 billion in school capital projects as part of a 10-year facilities master plan.² Houston Independent School District has faced similar pressures, moving to close a dozen campuses in response to demographic shifts and to prioritize capital improvements in its remaining facilities.³ Aging infrastructure and declining enrollment are creating a complex set of challenges for district and state leaders. How leaders respond within districts, across districts, and at the state level will shape students’ learning environments for decades to come.

Even as enrollment declines and districts need fewer classrooms, they still need safe, high-quality facilities for students. However, declining enrollment can make it more challenging for districts to build and maintain these facilities. As enrollment falls, districts face higher per-pupil facilities costs because borrowing and maintenance costs remain fixed. Districts facing declining enrollment must also make difficult decisions about pursuing major capital investments while weighing staffing reductions, school closures, and, in some cases, district consolidations. At the same time, those districts may have less access to state support because most state facilities funding systems are better designed to address overcrowding than declining enrollment.

As more districts serve fewer students and operate underused buildings, state policymakers will need to consider whether existing facilities funding systems can support safe, high-quality learning environments. State leaders can help districts navigate these challenges by:

• Improving monitoring of facility needs, quality, and usage.
• Aligning state facilities funding systems with enrollment realities.
• Helping districts adapt their facilities portfolios to changing enrollment levels.

State funding systems have long faced challenges in adequately and equitably supporting public school facilities. In 2020, the U.S. Government Accountability Office estimated that more than half of public school districts need to update or replace multiple building systems or features in their schools.⁴ Declining enrollment has not eliminated this need, but it is reshaping the challenge districts face in maintaining and modernizing their school facilities. In response, state leaders must similarly reshape how they support districts in maintaining and modernizing the schools they need while consolidating or repurposing facilities they no longer require.

Why Should States Invest in High-Quality School Facilities?

Access to safe, high-quality learning environments can contribute to better student academic and health outcomes. From the air students breathe to the equipment they can use, school facilities set the foundation for productive classrooms in which all students have an opportunity to thrive. Amid rising school construction costs and evolving needs for school facilities, state policymakers can play a key role in ensuring all students have access to effective, healthy learning environments.

High-quality school facilities can improve student outcomes.

Some researchers investigating school capital investments have found that spending improves student outcomes,⁵ with others finding limited or no discernible effects.⁶ In 2025, a comprehensive study spanning 29 states found that increased capital spending improves student achievement on average, with larger effects in lower-income districts and for investments in core building infrastructure, such as HVAC systems and classroom space.⁷ These findings align with a broader body of research connecting the quality of learning environments to student outcomes.⁸ Given the importance of high-quality learning environments to students, state governments have a consequential role to play in supporting school infrastructure to fulfill their constitutional obligations to provide all students access to a public education.⁹

Widespread school infrastructure needs limit access to high-quality facilities.

U.S. public schools require substantial investment to ensure all students have access to safe and effective learning environments.¹⁰ A recent national survey of U.S. public schools estimated that the average school building is 49 years old — meaning that most buildings date back to an era before federal accessibility requirements and a time when asbestos and lead were standard construction materials.¹¹ Another national survey estimated that a majority of districts need to update or replace major building systems, including 41% of districts that require HVAC updates in more than half their schools.¹²Districts with larger populations of students from low-income households frequently have greater facility needs.¹³ Collectively, these facility needs contribute to an estimated $85 billion annual gap between what districts spend and what is needed to adequately maintain and modernize existing school facilities.¹⁴

Unmet facility needs are compounded by new demands on school buildings.

As school buildings have aged, they have also had to respond to evolving student needs, school safety concerns, and climate change. Between 2013 and 2021, public school enrollment for students with disabilities and English learner students increased — even as overall enrollment declined.¹⁵These shifts have increased the need for accessible facilities equipped with adequate spaces for small-group and one-on-one instruction.¹⁶ At the same time, growing school safety concerns have created new demands for school facilities. The prevalence of mass shootings in U.S. public schools has spurred the need for districts to improve campus security systems and access points.¹⁷ Climate-related risks are creating another set of facility safety demands. In recent years, climate change has increased the frequency of dangerous heat waves, wildfires, floods, and cold snaps. These events have made it imperative that public schools be climate-resilient and equipped with modern HVAC systems.¹⁸

Rising school construction costs intensify growing facility challenges.

The cost of school construction has increased substantially since 2021 (Figure 1). Each month, the U.S. Bureau of Labor Statistics monitors changes in output prices for new K-12 school construction using a measure known as the Producer Price Index (PPI) for New School Building Construction.¹⁹ Between 2012 and 2020, this measure largely trended with general U.S. inflation via the Consumer Price Index (CPI) for All Items. However, the cost of new school construction grew by approximately 29% between January 2021 and January 2024, far outpacing general inflation (18%) over the same period. Labor shortages, supply chain disruptions, tariffs, rising energy costs, and elevated interest rates have made school construction more costly for districts.²⁰

FIGURE 1: COST OF NEW SCHOOL BUILDING CONSTRUCTION COMPARED WITH GENERAL INFLATION OVER TIME

These rapid, unanticipated increases in school construction costs have posed challenges for district and state leaders seeking to modernize their facilities. In 2022, voters in Warwick, Rhode Island, approved $350 million in borrowing to rebuild two high schools. However, unexpected costs and delays forced district leaders to seek an additional $50 million in borrowing for the projects, which voters rejected in 2026.²¹ At the state level, legislators in California, Idaho, Massachusetts, Ohio, and Washington have responded by securing additional funds for new and ongoing school facility projects.²²

As public school enrollment declines, these existing and compounding facility challenges will persist. State policymakers must work to ensure that all students experience the benefits of safe, healthy, and effective learning environments, and they must justify investments in school facilities to taxpayers, even as districts serve fewer students and have fewer buildings. In some communities, doing so will require concentrating modernization investments in fewer schools while consolidating, closing, or repurposing underused buildings. In other communities, district-level consolidations may offer a way to reduce costs and achieve economies of scale while preserving or expanding the learning opportunities available to students.

How Do Governments Fund School Facilities?

Local and state governments provide support for public school facilities through capital investments and routine maintenance, while the federal government plays a more limited role (Table 1). Local governments cover the vast majority of public school capital expenditures (80% between school year [SY] 2013-14 and SY22-23), relying heavily on property taxes and borrowing to finance projects.²³ Through grant appropriations and financing support, state governments provided 17% of public school capital expenditures over the same period.²⁴ The federal government plays a limited role by providing tax relief that makes it easier for local and state governments to finance capital projects.²⁵ Overall, the heavy reliance on local funding means districts bear much of the responsibility for navigating facility challenges as enrollment declines.

Across these funding sources, U.S. public school districts reported spending $104 billion on capital projects and $77 billion on facilities operations and maintenance in SY23-24, together accounting for 20% of all education spending (Figure 2).²⁶

TABLE 1: KEY K-12 FACILITIES EXPENDITURE CATEGORIES

Sources: Institute of Education Sciences, “Documentation for the NCES Common Core of Data School District Finance Survey,” 2025; National Center on School Infrastructure, “Interactive Data Dashboard on Public School Facilities Funding,” 2025; Oak Park and River Forest High School, “Project 2 Dashboard,” 2026; Topeka Public Schools, “District Budget 2025-2026,” 2025.

FIGURE 2: CAPITAL OUTLAY, OPERATIONS, AND MAINTENANCE EXPENDITURES, SCHOOL YEAR 2023-24

Sources: National Center on School Infrastructure, “Interactive Data Dashboard on Public School Facilities Funding,” 2025; U.S. Census Bureau, “2024 Public Elementary-Secondary Education Finance Data,” 2026.

FIGURE 3: TOTAL PUBLIC SCHOOL DISTRICT CAPITAL OUTLAY EXPENDITURES OVER TIME, NATIONALLY AND BY STATE

Notes: Figure 3 displays total inflation-adjusted district capital outlay expenditures based on the National Center on School Infrastructure’s analysis of the National Center for Education Statistics (NCES) Common Core of Data School District Finance Survey (F-33). Due to state and federal reporting inconsistencies, these data may not fully capture districts’ capital outlay expenditures. The Great Recession took place from December 2007 to June 2009. The COVID-19 Recession took place from February 2020 to April 2020. Sources: National Center on School Infrastructure, “Interactive Data Dashboard on Public School Facilities Funding,” 2025; National Bureau of Economic Research, “US Business Cycle Expansions and Contractions,” last updated March 14, 2023.

Local taxpayers provide the majority of funding for school facilities.

In the U.S., local education agencies (LEAs) have the primary responsibility for modernizing and maintaining their school facilities and rely heavily on property taxes to do so.²⁸ Local governments provide more than three-quarters of public school capital outlays on average, though this share varies depending on state and district context.²⁹ This predominant reliance on local funding contributes to inequities among districts in school facility investment and quality based on differences in local wealth.³⁰ When LEAs need to raise additional revenue for capital projects, they frequently borrow money by issuing bonds to investors or obtaining a loan from a financing institution.³¹ Charter schools face a different facilities financing landscape (Sidebar).

Typically, LEAs must raise taxes to repay this borrowing over time. For example, Des Moines Public Schools in Iowa recently raised property taxes through a temporary levy to support the issuance of $265 million in municipal bonds to fund its “Reimagining Education” facilities plan.³⁴Additionally, a large majority of states require that voters approve local bonds before issuing debt.³⁵ In fall 2025, 74% of Des Moines voters approved the borrowing in support of their district’s Reimagining Education plan.³⁶

Each year, local school districts will pay off this borrowing by retiring the principal value of long-term debt and paying additional interest to lenders (Table 2). U.S. school districts collectively held $570 billion ($12,330 per pupil) in long-term debt at the end of SY23-24.³⁷ As enrollment declines and these debt obligations remain fixed, per-pupil interest and debt retirement expenditures will rise.

TABLE 2: KEY SCHOOL DEBT EXPENDITURE CATEGORIES

State funding for school facility investments varies widely.

There is large variation in how, and to what extent, state governments provide funding for public school facilities.³⁸ In SY23-24, state governments reported providing $219 in per-pupil revenue to support districts in making capital outlay expenditures. Wyoming spent the most per pupil of any state government, while 15 states reported providing no dedicated revenue for school construction and building aid in SY23-24 (Figure 4).

FIGURE 4: PER-PUPIL STATE REVENUE FOR K-12 CAPITAL OUTLAY EXPENDITURES, SCHOOL YEAR 2023-24

Typically, state governments will support school facilities capital projects by appropriating funds or providing financing assistance (Table 3). The state entities that oversee the allocation of these resources must prioritize which projects to support and frequently provide technical assistance to districts undergoing modernization projects. For example, the Massachusetts School Building Authority reviews project applications, reimburses districts for a share of project costs, and provides tailored guidance throughout a nine-step timeline.³⁹ These entities may consider facility quality, local wealth, enrollment trends, and other factors when determining which projects to prioritize for state funding support.⁴⁰ In Kansas, the State Board of Education lists supporting districts with “enrollment growth and imminent overcrowding” as its second-highest priority when evaluating project applications.⁴¹ These state priorities can shape whether declining-enrollment districts receive funding for needed facility modernization projects, even without experiencing overcrowding or enrollment growth.

TABLE 3: STATE FACILITIES FUNDING APPROACHES FOR LEAs

The federal government provides limited funding for school facilities.

The federal government plays a limited role in funding public school facilities. Between SY13-14 and SY22-23, the federal government covered just 3% of capital construction and equipment expenditures, largely through a number of smaller, targeted grant programs.⁴² The federal government also provides emergency funds to repair schools damaged by natural disasters and has included school infrastructure as a small component of broader economic recovery efforts.⁴³

The federal government provides relief to state and local governments financing school facilities projects through a different vehicle: the U.S. tax code. The federal government exempts interest generated on state and local school construction bonds from the federal income tax.⁴⁴ This exemption allows local and state governments to issue bonds with lower interest rates while still providing competitive returns to investors.⁴⁵

How Does Enrollment Decline Affect State Facilities Funding?

Across the country, public K-12 school enrollment has declined in recent years and is expected to continue declining through at least fall 2031.⁴⁶ These shifts are changing the facilities challenges districts face and the types of support they may need from state governments. As more districts serve fewer students and operate underused buildings, state policymakers will need to consider how existing facilities funding systems can continue to support safe, high-quality learning environments.

Public school enrollment is declining across most of the country.

Between fall 2019 and fall 2024, U.S. public school enrollment decreased by 1.4 million students (2.8%) to its lowest level in 15 years (Figure 5).⁴⁷ NCES estimates that 40 states and the District of Columbia will experience enrollment declines between 2022 and 2031.⁴⁸ Although many factors shape enrollment trends in individual districts, the national decline in public school enrollment is primarily driven by a reduction in the U.S. birth rate. Between 2012 and 2024, the national birth rate decreased by 15%, reducing the size of the school-age population.⁴⁹ Additionally, the expansion of school choice options, trends in interstate migration, and federal immigration policies have affected public school enrollment patterns.⁵⁰ As public school enrollment declines, school districts will face mounting budgetary pressures to reduce staffing, cut programming, merge with neighboring districts, or consolidate under-enrolled campuses.⁵¹

Although data on facilities utilization rates are limited, districts experiencing enrollment decline have more empty desks and classrooms. Earlier this year, a report found that the Ithaca City School District in New York is operating its elementary schools at 50%-60% capacity due to enrollment decline, reflecting “significant underutilization across most buildings.” ⁵² This facilities underutilization creates financial, political, and operational obstacles for districts seeking to maintain and improve their facilities portfolios.

FIGURE 5: TOTAL U.S. PUBLIC SCHOOL ENROLLMENT AND PROJECTED ENROLLMENT OVER TIME

Enrollment decline poses challenges for school facilities funding systems.

Declining enrollment poses three fundamental challenges for districts seeking to maintain or modernize their school campuses. First, many facility costs remain fixed even as enrollment falls, increasing per-pupil costs and placing additional pressure on district budgets. Second, excess building capacity, budget pressures, and potential school closures can weaken support for major capital projects and make local funding more difficult to secure. Third, many state funding systems are designed to prioritize capital projects in districts with increasing enrollment, which warrants the attention of state policymakers as a growing number of districts experience enrollment losses.

Per-pupil facilities costs can increase as enrollment declines.

Regardless of student enrollment levels, each year school districts must cover the fixed costs of maintaining their facilities and paying off borrowing used to finance capital projects. Even with fewer students, districts still need to provide security, maintain their cafeterias, and otherwise sustain their facilities assets. Likewise, districts that borrow to finance a capital project are locked into annual debt payments for decades as enrollment fluctuates.

As enrollment declines and these fixed costs persist, the per-pupil costs of facilities maintenance and debt interest will rise (Figure 6). These elevated per-pupil costs place strain on local budgets, making it difficult to adequately maintain existing facilities, modernize outdated spaces, and cover the annual operating budget. In SY22-23, districts across the country that experienced enrollment declines of 5% or more over the prior decade spent $1,770 per pupil on facilities operations and maintenance, as compared with $1,300 in districts that experienced enrollment growth of at least 5%.⁵³

FIGURE 6: PER-PUPIL DEBT INTEREST EXPENDITURES IN AUSTIN INDEPENDENT SCHOOL DISTRICT, TEXAS

As enrollment declines and borrowing costs remain constant, per-pupil spending on debt interest rises.

Source: Bellwether, edfinr tool.

Declining enrollment can weaken support for school capital projects.

With enrollment declining, school districts are less likely to have overcrowded facilities, which reduces the urgency for school capital projects. Throughout the 2000s and 2010s, many school districts needed to expand their facility capacity to accommodate a growing student population.⁵⁴ In 2015, Clark County School District in Nevada undertook a $4 billion effort to build 37 new schools and renovate additional facilities after its enrollment grew by 11% between fall 2005 and fall 2015.⁵⁵

However, as enrollment has declined in recent years, school districts no longer have the same pressure to expand and remodel their facilities. Today, Clark County is exploring school closures and consolidations after its enrollment decreased by 11% between fall 2015 and fall 2025.⁵⁶

Enrollment declines may also make it more challenging for districts to garner political support for school capital projects. If enrollment-driven budget pressures have forced districts to close schools and reduce staffing, district leaders and voters may refrain from approving necessary but expensive school capital projects. In 2025, Orange County Public Schools in Florida announced it would pause new construction due to enrollment decline and amid cuts to the district’s operating budget.⁵⁷ With enrollment declining and construction costs rising, voter approval of school construction projects has waned in some areas in recent years.⁵⁸ At the same time, some districts are trying to persuade stakeholders to support joint modernization and consolidation efforts. Greater Albany Public Schools in Oregon has convened a community-based Long Range Facility Advisory Committee to simultaneously develop bond proposals and consolidation options in response to enrollment decline.⁵⁹

Many state funding systems are better equipped to support growing districts.

State facilities funding systems are often designed to prioritize supporting projects in districts with overcrowding and enrollment growth, meaning that districts experiencing enrollment decline may have less access to state funding. For example, the Rhode Island Council on Elementary and Secondary Education lists “elimination of existing or prevention of severe overcrowding” as a top evaluation criterion for its project application review process.⁶⁰ Likewise, Maryland has a capital grant program dedicated to supporting districts experiencing “significant enrollment growth” or districts with a “significant number of relocatable classrooms.”⁶¹ These mechanisms prioritize state funds where they will help the most students, but can leave districts experiencing enrollment decline with less support to modernize their facilities.

States can better align facilities funding with declining enrollment by incentivizing districts to combine individual schools into fewer buildings or by supporting mergers among neighboring districts. As of 2023, 18 states provided financial incentives for district consolidation, although many of these incentives are relatively modest.⁶²Through temporary funding protections, formula adjustments, or priority within existing facility programs, states can help districts with fewer students merge and offer economies of scale.⁶³ For example, as part of its project review process, the Ohio School Facilities Construction Commission gives first priority to districts that have recently consolidated.⁶⁴

Far fewer states provide incentives tied specifically to the consolidation of individual schools or school buildings. These incentives can be particularly helpful for districts experiencing declining enrollment seeking to modernize their facilities. As of 2023, just four states — Georgia, Maine, North Carolina, and Vermont — provide financial incentives for school consolidation.⁶⁵ For example, Georgia provides state capital funding “to consolidate educational facilities which have fewer pupils than required for the minimum school population […] or which are too expensive to renovate or modernize,” including for new construction, additions, and renovations.⁶⁶ These types of policies can ensure that school districts modernize their facilities in financially sustainable ways and help consolidated schools accommodate new configurations of students.

How Should State Leaders Respond to School Facility Challenges Amid Declining Enrollment?

Although declining enrollment creates significant fiscal and facilities challenges, state leaders have several options for better supporting districts. Depending on their unique context and available resources, state leaders can pursue changes ranging from modest adjustments to substantial reforms to their facilities planning, implementation, and funding systems.

APPROACH 1

Improve Monitoring of Facility Needs, Quality, and Usage

To holistically oversee districts’ K-12 facilities, state leaders need comprehensive information on the quality, capacity, and utilization of school buildings. Equipped with this facility usage and quality data, state leaders can help appropriately prioritize modernization projects, better support district and school consolidations, and assist districts in repurposing underutilized spaces. Having a deeper understanding of districts’ facilities assets and projected enrollment trends will grow increasingly important as public school enrollment continues to decline. Specifically, state policymakers should consider:

• Routinely monitoring statewide facility conditions to more methodically identify maintenance needs, environmental risks, and modernization opportunities in districts experiencing enrollment growth, stability, and decline. Oregon’s Department of Education conducts facility conditions assessments for all school buildings in the state to catalog deferred maintenance and provide districts with cost estimates.⁶⁷
• Assisting districts in developing long-term enrollment projections to track facility utilization rates and understand the excess capacity created by enrollment decline. Florida’s Office of Economic and Demographic Research meets twice annually to develop five-year district-level enrollment forecasts that equip LEAs to plan ahead.⁶⁸
• Making facility condition, enrollment, and utilization data publicly accessible to improve transparency and establish a common factual basis for the size and design of state facility investments. Vermont’s Agency of Education maintains a School Facilities Dashboard Explorer that provides two decades of projected facilities condition data for all of the state’s public schools.⁶⁹
• Developing statewide or regional facilities master plans to holistically assess a region’s facilities needs and surface potential opportunities for district consolidations. Maine’s Governor’s Commission on School Construction recently recommended that state officials conduct rolling in-person assessments of school conditions to inform the development of a statewide facilities master plan.⁷⁰

APPROACH 2

Align State Facilities Funding Systems With Enrollment Realities 

Many state facility funding systems were designed to support enrollment growth, making it challenging for districts experiencing enrollment decline to maintain or modernize their facilities. As public school enrollment continues to decline, state school finance systems must adapt to support improvements to existing facilities, not just the construction of new ones. To support modernization across enrollment contexts, state leaders may consider:

• Increasing state funding for K-12 school facility modernization to help districts overcome rising per-pupil construction, debt service, and maintenance costs as schools continue to deteriorate in condition, evolve in function, and serve fewer students. Michigan’s Department of Education awarded $75 million in “consolidation grants” to three districts to help them renovate consolidated schools and improve programming.⁷¹
• Appropriating funding based on districtwide and regional facility capacity, rather than assessing the utilization of an individual school in isolation. Washington’s School Construction Assistance Program provides facilities funding based on a formula that considers overall district capacity and projected enrollment, among other factors.⁷² 
• Requiring districts to develop multiyear facilities master plans to be eligible for state funding for school facilities projects — ensuring schools are prepared for future enrollment levels. California requires school districts to submit a five-year facilities master plan that examines existing classroom capacity, projected enrollment growth, and financing needs as a condition of participation in the state’s School Facility Program.⁷³ 
• Providing financial incentives for capital projects related to school or district consolidation to assist local leaders in transitioning to lower enrollment realities by consolidating underutilized schools. New York will provide an estimated $5.6 million in “reorganization incentive building aid” to support approved building projects undergoing consolidations in SY26-27.⁷⁴

APPROACH 3

Help Districts Adapt Their Facilities Portfolios to Changing Enrollment Levels

As school districts adjust their facilities portfolios to match new enrollment realities, state leaders should consider providing technical assistance to aid districts in navigating difficult choices. Specifically, state leaders can assist districts in redistricting, consolidating, or repurposing their schools to position them for long-term sustainability. State leaders should consider:

• Assisting districts in redrawing attendance boundaries to respond to shifting population trends and optimize student distribution across campuses. Ohio’s Facilities Construction Commission offers geographic information system mapping and demographic research as part of its district-level enrollment projections to help districts optimize school zones.⁷⁵
• Encouraging districts to design adaptable facilities so that buildings can expand, contract, or accommodate different uses as enrollment changes over their long lifespans. Arkansas’ Department of Education has published guidance encouraging districts to design “flexible and adaptable” facilities that can add or close off building wings in response to changing enrollment levels.⁷⁶
• Requiring districts to refine their academic and programmatic offerings as their facilities footprint shrinks to build smaller, stronger, and safer schools. New Mexico’s Public School Facilities Authority requires districts to outline their educational program and structure when developing their facilities master plans — helping districts sharpen their academic offerings.⁷⁷
• Supporting districts in repurposing, leasing, or selling underutilized property by providing technical assistance and removing regulatory barriers to adaptive reuse and community development.⁷⁸ California state lawmakers have made it easier for LEAs to build educator workforce housing on closed campuses and vacant parcels.⁷⁹

Conclusion

As public school enrollment continues to decline across the country, districts will need to make difficult choices about which school buildings to maintain, modernize, consolidate, repurpose, or close while ensuring that declining enrollment does not reduce students’ access to high-quality learning environments. State leaders can play a central role in helping districts navigate these facilities pressures and the trade-offs they create.

States will approach this challenge from different starting points. Some states already play a major role in funding, planning, and overseeing school facilities investments, while others provide much more limited support. The varying roles states play in school facilities should shape how leaders respond, with options ranging from modest policy adjustments to more substantial reforms to facilities funding and technical assistance. By supporting districts through the facilities challenges posed by declining enrollment, state leaders can ensure that generations of students will learn in healthy, vibrant environments.