Stimulus spending for education

The federal stimulus program implemented during the recession spent a significant portion of the funds on public education. Do we have any information on how schools spent these funds? N.C. State University economist Mike Walden answers.

“Well, when schools received these monies they really had two broad options: They could spend the money on workers, teachers and staff, making sure they didn’t have to fire workers or RIF workers, perhaps helping them with their salary, et cetera, or they could spend the money on construction and maintenance.

“We now have a new study from the Federal Reserve that shows exactly what schools did with that money. And largely — not in every case, but largely — what they did is spend the stimulus money on construction and maintenance in terms of upgrading their facilities, perhaps helping them to build new schools, et cetera. And the rationale for this was that if you spend money on construction or maintenance, whether you are a school (or) whether you are a private business, that’s really going to provide you with long-lasting services.

“The average school building, for example, may last 60 or 70 years, so if you build it you are actually getting the benefits from that over time, whereas if you help an employee, no matter how deserving maintain their salary, that’s going to be a one-time shot.

“So many will say that the schools were actually far sighted in that they chose to go the spending on construction and maintenance route rather than on salaries.”