ABSTRACT
Traditionally, most states have placed most, if not all, of the fiscal responsibility to purchase public school capital facilities and to retire any debt incurred for acquisition of facilities onto the local school districts. The costs incurred to purchase school facilities are not insignificant and place a financial burden on many school districts, particularly those districts with meager fiscal capacities. Nationally, from 1990 to 2012, capital outlay increased from $19.5 billion to $36.6 billion and capital outlay per pupil increased from $481 to $773. Concurrently, interest on school debt increased from $5.3 billion to $16.1 billion and interest on debt per pupil increased from $131 to $339. The aggregate expenditures for capital facilities and interest on debt increased from $24.8 billion in 1990 to $52.7 billion in 2012. As a percent of total expenditures, capital outlay and interest expenditures combined increased from 8.3 to 11.0 percent. 1 Displayed below in Box 16.1 are definitions for capital outlay and debt service. 2 Definitions for Capital Outlay and Debt Service
Capital Outlay: An expenditure that results in the acquisition of fixed assets or additions to fixed assets which are presumed to have benefits for more than one year. It is an expenditure for land or existing buildings, improvements of grounds, construction of buildings, additions to buildings, remodeling of buildings, or initial, additional, and replacement equipment.
Debt Service: An expenditure for the purpose of retirement of debt and includes bond or loan principal, interest, and service charges. In order to analyze overtime the costs of school facilities and to avoid double-counting, it is necessary to remove bond or loan principal from the analysis. Most agencies, including the National Education Association, only report bond or loan interest expenditures.
