As the nation's economy continues to suffer, and school districts and colleges are forced to make significant cuts in programs and staff, one area continues to show surprising strength — education construction spending.

According to American School & University's 29th annual Official Education Construction Report, education institutions spent $40.5 billion on construction in 2002. While shy of the $41.5 billion spent on new facilities, additions and modernization of existing buildings in 2001, the figure represents the second highest amount in history. And over the next three years, education construction spending is projected to remain robust.

Colleges and universities continued to spend record amounts on construction as physical-plant needs escalate and enrollment climbs. Higher-education institutions spent $16.2 billion on new facilities, additions and modernization of existing buildings in 2002. This represents a 10 percent increase over the $14.7 billion spent in 2001.

While overall school construction slowed to $24.3 billion in 2002 from $26.8 billion the year before, spending on new school construction reached an all-time high $11.7 billion. Even so, new construction represents only 48 percent of school district capital expenditures; the remaining 52 percent is spent on additions and modernization.

Primary findings

Table 1 details the amount and type of construction spending by schools and colleges in 2002. The $40.5 billion in construction spending completed last year is just 2 percent shy of the record $41.5 billion spent in 2001, proving the education construction market's strength and resiliency in tough economic times.

Elementary and secondary schools continue to account for the majority of education construction spending (60 percent). Both school districts and colleges put in place record amounts of new construction in 2002, as rapidly rising enrollments fueled the demand for more space.

Table 2 outlines the amount and type of construction projected to be put in place through 2005, as well as a breakout of data by type of institution and type of spending. Geopolitical issues and economic concerns don't seem to be dissuading education administrators — as $148.8 billion worth of construction is projected to be put in place over the next three years.

School districts will continue to account for the majority of the education construction spending through 2005 (63 percent or $93.7 billion). New construction will make up more than half of the spending by elementary and secondary institutions (55 percent).

Colleges and universities will continue their strong spending on construction through 2005. Over the next three years, higher-education institutions expect to put in place $55 billion worth of construction. New facilities will make up the majority of the projects (76 percent).

Table 3 offers a look at education construction by amount and category, as well as by type of institution, over the past 10 years.