Lever: School Construction Costs “Booming” For Economic, Policy Reasons

School construction costs in Maryland have grown rapidly in recent years, possibly due to a “perfect storm” of multiple factors engaging at once, according to Dr. David Lever, Executive Director of the state’s Public School Construction program. Dr. Lever joined the MACo Legislative Committee as a guest during its September 30 meeting.

Dr. Lever reinforced the impressions held by many county officials that construction bids “have been coming in well higher than estimates,” and related several anecdotes of vast excesses over initial projections. He suggested that despite the data being clear in showing price increases, it is impossible to parse out the effect of each of the various component factors contributing to the cost escalation. He identified market recovery, reduced capacity of available labor, and increasing contractor margins (following a tighter recessionary period) as potential economic factors.

Dr. Lever, however, also reinforced the sense that policy changes are driving costs substantially. A recent study on the effect of prevailing wage suggests a more than 11% cost increase in project costs attributable to that state policy (recently expanded to affect nearly all state-funded projects). He also cited state requirements for environmental site design as a major cost factor in modern school buildings.

He referenced the recent adjustments to state funding formulas, in response to these multi-factor cost increases — totaling more than a 26% increase. For more on that recent state action, see Conduit Street‘s recent coverage: State Adjusts Formulas to Reflect Dramatic Increase in School Construction Costs.

In comments about the presentation, Anne Arundel County Executive Steve Schuh noted recent school facilities built outside the state program, with dramatic cost differentials, and intimated that a Task Force or similar effort to identify cost-effectiveness could be mutually beneficial to the state and counties. Dr. Lever responded, in part, by assuring that the state does not impose rigid guidelines regarding building materials or other components that may meaningfully affect overall facility costs.

 

During the same meeting, the legislative committee reinforced counties’ commitment to school construction by adopting an over-arching legislative initiative for the coming year:

Strong and Smart State Funding for School Construction – The State’s commitment to school construction funding needs to remain strong and smart – to best serve the modern needs of our schoolchildren, educators, and communities. State funding needs to recognize modern cost factors as we achieve new environmental and energy standards, satisfy heightened needs for technology, ensure student safety, fulfill community resource needs, and mesh with evolving teaching methods. County governments share responsibility for financing K-12 school construction with the State, whose funding depends on statutory formulas and regulations. MACo advocates reviewing and updating the State’s school funding formulas and guidelines to promote the smartest and most effective funding for modern schools, and urges State policymakers to retain the State’s strong commitment to this top funding priority.