Engineering Inc - September/October 2017 - 7

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level education district and uses state funds to pay for all capital
improvements. In 2015, only five other states provided more than
half of the funding: Rhode Island (78 percent), Massachusetts
(67 percent), Wyoming (63 percent), and Connecticut and Delaware (57 percent). Twelve states provided no assistance, and in
the remaining states, the state share ranged from 37 percent to 1
percent.
While districts that can count on state funding don't necessarily
spend more on capital outlays, in the states where they have to raise
money locally, the funding is tight.
"We've been working with school districts that have been
trying to pass bond issues for 10 years," says David Kiraly,
senior project manager at ms consultants, Youngstown, Ohio.
"These tend to be rural areas, old farm communities, with not
a lot of students."
How will this tension between the need for modern schools and
lack of funding play out?
Despite all of the challenges, KCI's Morgan actually sees a
steadily rising market. "The K-12 market sector has to move
up," he says. "The population continues to grow, residential
housing markets are rebounding, and we have so much deferred
maintenance."
In its construction forecast, FMI projects an annual growth rate
of about 4.5 percent in the education sector through 2021. The
forecast includes college construction, but most analysts say that
college construction will be slower than K-12 over the next few
years, so overall growth in the public school sector may be closer to
5 percent annually.
TIGHT MARKET FOR ENGINEERING FIRMS

Firms operating in the K-12 segment face a crowded and competitive market.
In the decade before the 2008 financial crash, a number of
school districts invested heavily in modernizing their schools.

Analysts say the growth rate was unsustainable-from 2006 to
2008, for example, construction put-in-place increased by 24 percent-but that activity attracted a lot of engineering firms.
"Not so long ago there were so many schools looking for firms
and there just weren't enough of us," says Kiraly. "Now there are far
fewer schools, and competition has gotten really tight."
The competition is also very
tough. "This is a very specialized
market," says Morgan. "Most of
the firms that we compete with
focus heavily on it."
The combination of a competitive market and financially
strapped clients has inevitably
had a negative impact on bottom lines. "The fee schedule
doesn't leave any room for a
learning curve," says Kiraly.
However, the biggest challenge may be working with
school board members who
have no project experience.
"They are citizen politicians
who have probably never built a
school and probably never will
again," says Kiraly.
The first task for engineering firms is to educate the school
board on how to go about building a new facility or renovating
an old one. "We have decades of experience in K-12 new construction, renovation and systemic improvements," says Morgan.
"We've been down this road before and can help them identify
challenges and strategic solutions." ■

School
districts need
to spend at
least
$145 billion
annually
to bring their
facilities up
to modern
standards

Gerry Donohue is ACEC's senior communications writer. He can be
reached at gdonohue@acec.org.

SEPTEMBER / OCTOBER 2017

ENGINEERING INC.

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