Is College Construction Keeping Up With Enrollment Increases?

• By Al Zeisler, Paul Abramson
• 10/01/00

Through the last two decades, colleges and universities in the United States have spent a total of $107 billion on construction projects, averaging more than $5 billion per year. The bulk of that money, $67.3 billion (63 percent), has gone into constructing new buildings, the balance toward enlarging and upgrading existing structures.

During most of the decade of the ‘80s, college construction spending was less than $5 billion annually. Then, in 1990, it rose to $5.3 billion. Since then, with one exception, more than $6 billion annually has been spent. The one exception occurred in 1997, when construction totaled $5.8 billion.

Colleges project that they will complete almost $7.2 billion of construction in the current calendar year and start projects totaling another $7.25 billion.

Looking at spending for college construction through the two decades, there is a relatively steady upward trend, moving from $4.2 billion spent in 1980 to the expected $7.2 billion in 2000. Certainly colleges appear to be keeping up with enrollment increases and the need to provide newer facilities. But how much has construction really picked up?

(For any college administrators who are not yet aware of it, larger and larger classes have been moving through the elementary and secondary schools for the last 18 years. The first really large post-Baby Boom senior class graduated in 1999. But that was just the first of the large classes that high schools will graduate through the next two decades.)

The Effect of Inflation

While current construction spending has been trending up, to understand the amount of construction taking place on campuses, inflation must be factored in. And when that is done, then a significant conclusion is that colleges do not appear to be investing in their physical plant at nearly the rate needed to prepare for a new influx of students.

When constant dollars are used (we are using constant 1980 dollars in this analysis), the $4.234 billion spent in 1980 actually represents the high point of college construction through the last two decades. As a matter of fact (see Graph 1), when inflation is considered, spending on all construction has been on a downward trend for the last two decades, reaching as low as $2.825 billion 1980 dollars in 1997 (33 percent below the spending peak) and rebounding only slightly to $3.2 billion in 1999 and an expected $3.3 billion in 2000. That’s a drop of more than 24 percent from the $4.2 billion spent in 1980.

Why this drop? One possible reason is the changing demographics of our nation. In 1980, children who were born in 1962 were graduating from high school. More babies were born in 1962 than ever before in our nations history. In the years that followed, births declined significantly. First elementary schools and then high schools saw their student populations decline, too.

College administrators, with the advantage of 18 years to watch changes in student population, knew that the 1980 high school graduating class would be the largest they would see for some time. And so, with the number of incoming students declining, there was a cutback on construction programs to avoid any chance of overbuilding.

However, college administrators have also had 18 years' warning about the increase in births and, therefore, should have foreseen a student increase. Despite this, construction investment remains below 1980 levels.

Construction and Students

If the lack of students was a reason colleges cut back on spending, it would make sense to expect that, as the number of college students grew, college construction would grow, too. To examine that hypothesis, we looked at the number of FTE students in college each year since 1980 and calculated the construction dollars spent per FTE. The results are instructive.

Graph 2 shows that, in 1980, colleges were spending $480 per FTE student on construction. In current dollars, spending per FTE ranged up to $543 through 1983, then dropped off and did not go above $500 per student until 1990. Since then college construction spending has ranged between $551 and $643 per year. In the year 2000, it is expected to be about $668 per FTE student.

But in constant dollars, the picture is very different. The $480 spent in 1980 was a high point. Since then, college spending for construction per FTE has fallen, in terms of constant dollars, to the point where today it stands at just $300 per FTE, less than two-thirds of what was being spent in 1980.

There is a third line on the graph showing the total number of FTE students in college in a given year. In 1980, colleges enrolled 8.8 million FTE students. Despite the lack of high school graduates, by attracting nontraditional students, colleges maintained their enrollment through the Õ80s, staying close to 8 million FTE until 1987, when enrollment began to climb. By 1990, enrollment had reached 9.9 million and, in 1995, it stood at 10.3 million. It is expected to reach 10.8 million this year.

In looking at spending per FTE student and construction dollars per FTE, there appear to be four time periods of activity.

The first occurred from 1980 to 1986, when enrollment was up but construction was down. Perhaps colleges had built sufficiently to house their populations and, anticipating no immediate increase in students, cut back on construction.

From 1986 to 1992, it appears that enrollment was rising and construction spending appeared to be rising, too. But, in terms of real dollars, the increase in spending was not keeping up with the increase in the number of students.

The third period of activity was 1992 to 1996. At this time, student enrollment was steady but construction dollars - current and constant - were down.

Finally, starting in 1996, there was an increase in students and in construction spending per pupil. It appears, however, in real dollars, that construction growth is falling behind student population growth.

Perhaps most interesting of all, while total constant construction dollars have fallen 24 percent from 1980 to the present ($4.234 billion to $3.217 billion), the drop in per-FTE-student spending has been almost 40 percent, going from $480 to $290. In effect, through the last two decades, colleges have lowered their capital commitment per student by 40 percent. And they have done that just as they enter a two-decade period of predictable growth.

It would appear that colleges are going to face a major capital funding challenge through the next 20 years if they are to have sufficient facilities to house and teach their students and to support the community service and research functions with which they are charged.

Editor’s Note: For actual dollar amounts, see Table 1:_College Construction, 1980-2000 (Current and Real Spending), at cpmmag.com.

Al Zeisler is president of the Integrated Technology Education Group (ITEG) in Short Hills, N.J., and can be reached at [email protected]. He provides planning and consulting services to companies and government agencies in support of educational institutions. Paul Abramson is editorial director of College Planning & Management and president of Stanton Leggett & Associates, educational consultants located in Larchmont, N.Y. He can be reached at [email protected].