$90 Billion Funding Gap Underscores Need For U.S. School Building Updates

The 2025 State of Our Schools report, released by the 21st Century School Fund, International WELL Building Institute (IWBI), and the National Council on School Facilities (NCSF), shows that the U.S. now faces a $90 billion shortfall in school facility funding every single year, despite significant progress local school districts have made to ramp up their investments.

Since its earlier releases in 2016 and 2021, the report has tracked a steep and alarming rise in the nation’s school facilities funding deficit. What was a $46 billion gap in 2016 grew to $85 billion in 2021 and has continued to widen as school construction costs climb, building inventories expand, and aging facilities require more extensive maintenance, modernization, or replacement.

“Even as local districts have stepped up by increasing their annual spending on school facilities from $95 billion in 2016 to more than $150 billion now, they are still falling behind,” said Mary Filardo, Executive Director, 21st Century School Fund and lead author of the report. “As the funding gap for our critical school infrastructure grows, it becomes even harder to climb out of this hole unless we begin to better share the load across levels of government and embrace a dynamic solution set that ensures every public dollar delivers a stronger return on investment.”

In the United States, PK-12 school facilities represent the second largest sector of public infrastructure investment, surpassed only by highways. These buildings are where nearly 60 million students, teachers, and staff spend their days, making them among the most essential pieces of community infrastructure we have. Yet unlike transportation infrastructure, where federal and state governments shoulder most of the costs, school facilities are primarily left to local districts. The report finds that local districts bear 80% of school facility funding, with states contributing 17% and the federal government just 3%.

“With a $90 billion annual shortfall, the magnitude of this crisis is undeniable and utterly unacceptable. It’s simply impossible for local districts to continue to shoulder this burden disproportionately,” said Rachel Hodgdon, President and CEO, International WELL Building Institute. “Without greater responsibility across all levels of government, particularly the federal government, our country will continue to underfund the very infrastructure that determines the health, safety, and educational outcomes of millions of children. Where our children learn matters, and access to safe, healthy, and modern learning environments should be a right, not a privilege.”

The report also underscores how deeply uneven and unequal school facility investment remains across the country, with the most significant burdens falling on disadvantaged and rural districts. High-poverty districts had 30% less capital invested in their school buildings than low-poverty districts, and rural districts received less than half the per-student capital investment of their suburban and city counterparts. The findings point to persistent gaps that continue to leave rural and high-poverty communities bearing a disproportionate share of the burden and facing far greater challenges in achieving safe, healthy, and modern school facilities.

Furthermore, according to the report, as school districts struggle to fill this widening gap, they are also sinking deeper into debt. By the end of fiscal year 2023, local districts carried more than half a trillion dollars in long-term debt and paid $22 billion in interest alone.

What Schools Need Moving Forward

As stated in the report, the $90 billion annual investment gap reflects what is required for responsible stewardship and modern school facilities and grounds, covering both capital needs and operations and maintenance. Each year, the U.S. spends an average of $82 billion on capital improvements, leaving a $56 billion shortfall. Similarly, the total outlay for facility operations and maintenance is $70 billion, $34 billion less than needed. Together, these deficiencies in capital investment and ongoing maintenance constitute the total gap of $90 billion.

After diagnosing the scale and severity of the crisis, the report lays out a path to achieve modern schools by 2050. It calls for new approaches and more shared investment across all levels of government, alongside a stronger focus on building the capacity needed to deliver improvements. Central to its recommendations is securing a stable, reliable federal incentive funding program of $25 billion per year, which the report finds would reduce annual requirements by $75 billion—a 34% return on investment.

The report also urges expanding federal support for state capacity grants for facility data, planning, technical assistance, and training to all states to ensure that states and districts are equipped for the modernization work ahead.

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