KfW Research: German municipalities require significant investment in school infrastructure

• Investing in school buildings and equipment is important for success in education, career opportunities and economic growth
• Municipalities report need for additional investment of approx. EUR 34 billion
• Buildings accounted for around 25% of municipal spending on schools in 2015 (1995: 45%)

Adequate infrastructure is an important component of an effective education system. The condition and equipment of the buildings promote state-of-the-art learning. Empirical studies have shown that the indoor climate, lighting and acoustics influence pupils' learning success. A special analysis carried out by the current 2016 KfW Municipal Panel, however, has revealed a backlog in investment for school buildings of around EUR 34 billion, which means that success in education is being hampered in Germany.

Schools have faced a series of new challenges for some years. The implementation of the G8/G9 systems (changes to the length of secondary school education), the introduction of modern teaching and learning methods, and the implementation of all-day schools and inclusion are increasing the demands placed on existing school buildings. Growing integration-related demands are another factor. “Schools are so important because this is where the foundation is laid for the entire subsequent educational attainment of the younger generation. The investment backlog shows how far removed we are from an ideal school infrastructure. We have to try to close this gap as much as we can. Education is the key to the labour market in an increasingly digital and automated economy. It boosts potential incomes and reinforces Germany as a place to do business,” says Dr Jörg Zeuner, Chief Economist of KfW Group.

Germany's municipalities invested EUR 2.9 billion in school buildings in 2015, which represented a slight increase of around EUR 115 million in comparison to the preceding year. The figure was EUR 1.3 billion lower than in 1995 however. While investment in buildings accounted for more than 45% of total municipal spending on general and vocational schools back then, by 2015 that figure had fallen to 25%. There are big regional differences.

One major reason for differences in the level of investment in school infrastructure between municipalities is a lack of financial leeway. Municipalities with tight budgets often have no way of pushing forward with urgently needed investment. “All levels of federal government are responsible for the sustainable planning of German municipalities' budgets. Professional facility management and considering alternative forms of procurement and financing could also help promote the construction of better school buildings in municipalities,” mentions Dr Zeuner. He also urges against complacency: “Germany invests less than the international average in its education system. This is particularly concerning in light of the fact that well-educated people help secure the competitiveness and future of our country which is low on natural resources.”

Note:

The findings are taken from the focus report “Backlog in municipal investment in school buildings hampering success in education”. This article from KfW Research supplements the 2016 KfW Municipal Panel focusing on the subjects of education, schools and inclusion. This is the largest regular survey of treasurers in urban municipalities, districts and towns in Germany. The survey focuses on municipal finances, investments and their financing. The KfW Municipal Panel has been produced annually since 2009 by the German Institute of Urban Affairs (Difu) on behalf of KfW.

The focus report and charts can be downloaded at: www.KfW.de/Fokus.