Fueled by aging and inadequate facilities, the "baby boom echo," immigration and relocation, the K-12 construction market is providing a steady stream of work for contractors and design firms. In the first half of this year, construction started on $15.6 billion worth of school facilities in the U.S., a 4% increase over same period last year.

If the economy continues in its pre-Katrina trajectory, the growth should continue for the next few years, due to improving state and local government conditions and an increase in property values, which are closely tied to funds for school construction, according to McGraw-Hill Construction Research & Analytics. Like ENR, it also is a division of the McGraw-Hill Cos.

Activity should peak in 2007 if Federal Reserve officials continue to raise interest rates. "Past bond money will dry up…as higher rates make proposing new bonds less appealing," says Richard Branch, an MHCR&A economist.

The need for new facilities should persist, however, especially in parts of the country with rapidly expanding populations, such as the South, Southwest and South Central regions. The Clark County School District, which includes Las Vegas, anticipates a 58% increase to its current enrollment of 295,650 students over the next decade (see related story). In Texas, K-12 enrollment is growing by 70,000 to 80,000 students each year, "the equivalent of Fort Worth Independent School District," says Wayne Pierce, executive director of the Equity Center, Austin, an advocacy group for low and mid-wealth Texas school districts.

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Even districts with declining enrollment have huge needs. Between the past two academic years, Los Angeles Unified School District enrollment dropped by almost 6,000 students. Even so, LAUSD estimates a deficit of nearly 200,000 seats. "Half of our 750,000 students are on an abbreviated school year...just because of overcrowding," says Jim McConnell, chief facilities executive.

To address the problem, LAUSD is in the midst of a construction push that will add 165,000 seats by 2012. In November, voters will face a $3.8-billion local bond measure for school construction, on top of $9.5 billion approved since 1997.

Statewide, California voters have signaled support for new schools by approving more than $15 billion in bond measures since 2002. Surprisingly, Cal- ifornia’s K-12 construction activity was down 39% for the first six months of this year, versus the same period last year. The drop is "just a temporary pause," says Branch. He attributes the lull to projects delayed in response to higher materials prices. The state is more price sensitive due to stricter seismic codes.

Escalation is a problem hardly limited to California. Virginia K-12 projects saw an 18% escalation from fall 2004 through spring 2005, says Jim Copeland, vice president at Moseley Architects, Richmond, Va. "Projects are planned and budgeted long before they are bid," he says. "Our job is to explain why the budget is not adequate on bid day."

To squeeze the most from school construction dollars, contractors and designers advocate dual-use facilities, such as athletic fields, libraries and medical clinics, shared between the community and the district. The approach can cut capital and operational costs, they say.

Districts also are turning to larger schools broken down into smaller "learning communities," says Steve Turckes, head of the K-12 market sector for Perkins & Will, Chicago. The approach supports current teaching methods and also provides an economy of scale.

Florida is another hub of K-12 activity. Districts in Miami-Dade, Broward and Palm Beach counties together are spending about $1.5 billion annually, says Nick Makes, portfolio director for Turner Construction Co., New York City.

One huge driver for K-12 construction in Florida is an amendment passed by voters in 2002 that requires class sizes be reduced by 2010. Conservative estimates put the cost of compliance at $10 billion.

Court decisions are increasingly shaping construction programs. Observers are watching New Jersey, where a 1990 state Supreme Court decision required that the state boost school construction in its poorest districts. Earlier this summer, the Schools Construction Corp. announced that its $8.6-billion construction fund was nearly tapped out, leaving more than 200 planned projects in limbo (ENR 8/8 p.14).

In New York City, the School Construction Authority’s $13.1-billion five-year capital plan, to be completed by 2009, anticipates $6.5 billion from New York state in response to a 2003 state Court of Appeals decision. The court found New York City schools have the highest local costs but receive the lowest per-student funding. But the legislature has not yet complied with the decision.

Sources also say districts are paying more attention to sustainability, finding that high-performance features that save resources and enhance the learning environment make educational and economic sense. Most expect the trend to gain momentum. In Florida, first costs are still the primary driver, says David Torbert, principal of SchenkelShultz in Orlando. "But as the population of the state grows and energy costs go up, we will get to the point where the payback justifies the expense."