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SIGNIFICANT CUTS ON THE WAY IN SCHOOL CONSTRUCTION?

9/26/2012 | Construction Blog

After the economy went south in 2008 and 2009, many parts of the construction industry suffered along with the economy at large. The housing sector – which reports now suggest may be in the process of a slight rebound – was hardest hit at the time. Because of the lack of work, many construction companies shifted their focus to public and institutional work. This sector seemed less impacted, perhaps largely due to money made available through the American Recovery and Reinvestment Act.

In 2009, school construction totaled roughly $16 billion annually. As of 2011, that figure was down to about $12 billion. To put it in perspective, the annual average from roughly 2000 to 2008 was $20 billion. News out of Harrisburg seems to reflect the same reality.

Pennsylvania has traditionally used a process called PlanCon to determine how to allocate funding for school projects. It accomplishes this by providing a portion of the overall construction costs for an approved project using public money.

The budget includes $300 million for such projects in fiscal year 2012-2013. However, a review of this process has been ordered as part of the recently passed Act 82. The new law places a moratorium on applications to PlanCon beginning October 1 and orders a review of the process. The fear of some in the industry is that it could spell the end of the program in these tough budgetary times.

Demand certainly remains high for new and updated schools. Demographic studies show that the number of school aged children continues to grow. The problem is not demand. Rather, it is a lack of funds. It is likely that there will be less funding for school projects moving ahead as public bodies struggle to “make ends meet” economically. The unanswered question is how much less.