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Municipal backlog of school investment decreases but remains on a high level

Press Release from 2019-09-11 / Group, KfW Research

  • Municipalities reported a backlog of EUR 42.8 billion in the KfW Municipal Panel 2019
  • Causes of investment problems vary widely among municipalities
  • Financially sound municipalities mainly deplore staff and capacity shortages, while financially strapped municipalities complain about lack of funds

At the start of the new school year, students, teachers and parents in some municipalities will notice the poor condition of school buildings. That impression will reflect what many municipal treasurers reported under the KfW Municipal Panel 2019. The perceived backlog of investment for school buildings alone is EUR 42.8 billion. This infrastructure area thus accounts for the largest share – 31% – of the municipal backlog of investment of EUR 138.4 billion.

Although the school investment backlog is around EUR 4.9 billion lower than last year, the number of municipalities that regard the backlog as severe has even grown slightly. The increased expenditure planning of EUR 7.3 billion is apparently also insufficient to broadly reduce the backlog that has built up.

A recent special analysis conducted by KfW Research and the German Institute for Urban Affairs shows that the causes of the backlog vary depending on the territorial authorities’ financial situation. They were classified in accordance with their per-capita tax revenues and population size. Municipalities whose per-capita tax revenues were in the top one third of all municipalities of the same size class were classed as financially sound, while those in the lower one third were financially weak. This, financially sound municipalities mainly complain about barriers to the implementation of investments. Chief among them are insufficient capacities in administration and the construction sector, but also complicated planning procedures. By contrast, financially weak municipalities mainly deplore lack of funds in spite of the favourable economic environment and, thus, inadequate scope for investment, as their main problem.

Solutions to the municipal investment problems will therefore require a combination of various approaches that take into account these diverse regional characteristics. Dr Johannes Steinbrecher, Municipal Expert and co-author of the study at KfW Research, commented: “The federal, state and municipal governments need to make further joint efforts to ease the structural burden on municipalities. Strengthening municipal planning and investment capacities for the long term is a key building block for upgrading school buildings and, thus, improving educational infrastructure in Germany.”

Note:
Based on data of the KfW Municipal Panel, KfW Research issues further publications such as the current special analysis “Fokus Volkswirtschaft Nr. 266 - Kommunaler Investitionsrückstand bei Schulen: Was steckt genau dahinter? ”, which can be retrieved (in German) at www.kfw.de/fokus. The KfW Municipal Panel is a survey conducted by the German Institute for Urban Affairs (Difu) on behalf of KfW Group since 2009. It is representative survey of treasuries in cities with district status, regional districts and district towns with more than 2,000 inhabitants all across Germany. The core areas covered by the survey and the extrapolations derived from it are municipal finances, investment and funding. The report and further information can be accessed (in German) at www.kfw.de/kommunalpanel.

Contact

Portrait Christine Volk

Ms.

Christine Volk

Phone

+49 69 74 31 38 67

Fax

+49 69 74 31 32 66

eMail

christine.volk@kfw.de