School Construction Costs Appear Out-of-Step With Construction Industry

A review by the Maryland’s Department of Legislative Services finds that public school construction costs in Maryland are increasing at a faster rate than construction inflation across all sectors and regions.

The Senate Budget and Taxation Committee heard a briefing today from the Department of Legislation Services on the Capital Budget.

Part of the briefing showed the recent cost increases estimated by the Maryland Interagency Committee on School Construction. These cost increases were contrasted with inflation rates in the regional and national construction industry.

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The rate of year-over-year inflation in the building and construction market nationally and regionally has declined since 2011 according to the Department of Legislative Services Capital Budget Briefing.

In response to questions from the Committee on school construction, the Department of Legislative Services budget analyst noted that the increases in school construction cost estimates for Maryland seemed out of place nationally and regionally.

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School construction cost estimates will increase by 29% in July 2016 to accommodate changes observed by the Interagency Committee on School Construction.

The Department of Legislative Services report shows a decline in the rate of year-over-year inflation, and a modest annual average increase of 1.8% in construction industry inflation since 2011. By contrast, Maryland’s school construction cost estimates increased by almost 30% for the coming year.

Additional information will be shared in an upcoming briefing dedicated to the subject of school construction.

For more information about today’s briefing, see the full report, Capital Budget Fiscal Briefing FY 2017, from the Department of Legislative Services.

For background on school construction cost increases from Conduit Street, see our previous post, Lever: School Construction Costs “Booming” For Economic, Policy Reasons.