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Effects of Energy Needs and Expenditures on U.S. Public Schools
NCES: 2003018
June 2003


Since the 1990s, the United States has experienced periods of volatility in energy costs (Joskow 2002). Public schools have not been immune to the increased energy costs associated with these periods. In 2001, there were anecdotal reports of school districts employing various measures to reduce energy expenditures, including closing school early or not conducting classes on some days (Moore 2001).

In light of these experiences, the National Center for Education Statistics (NCES) of the U.S. Department of Education undertook the "Effects of Energy Needs and Expenditures on U.S. Public Schools" survey. The survey examined the effects of energy needs on public school districts and was designed to contribute to a better understanding of how increases in energy expenditures influence school district budgeting and actions. Specifically, the survey asked about sources of energy used to power or operate district facilities and equipment such as utilities (e.g., natural gas, oil, and other sources of heating, cooling, and electrical power) and fuel (e.g., gasoline, diesel, or other sources). The study is the first national data collection focused exclusively on energy expenditures in public school districts and helps address the absence of current financial information on school district spending for such purposes.

Between 1990 and 2000, total U.S. energy usage increased by about 17 percent, with electricity usage growing even more quickly, by some 25 percent over the decade. Prices for fossil fuels declined some 20 percent over this period, and real electricity prices also fell during the decade. With increasing consumption and declining prices, little new capacity, especially for electricity generation or transmission, was added after 1992. By 1999, rising natural gas prices, tight supplies, and delays in the completion of new generating plants led to markedly higher energy prices. Spot shortages of electricity, particularly in the West, appeared in late 2000 (Joskow 2002).

Figure 1 shows the seasonally adjusted Producer Price Index (PPI) for "finished energy goods" from January 1992 to January 2002 (U.S. Department of Labor 2002a, 2000b). The index, calibrated at 100 in 1982, shows that energy prices remained fairly constant from 1992 through 1995. Beginning in 1996, the country began experiencing more volatility in energy prices. This was especially true from 1999 through 2002 (Snyders 2001). The Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) also has an energy expenditure category and reflects very similar changes over time (Klemmer and Kelley 1998).

The volatility of energy prices is important to school districts because of the amount of energy needed for day-to-day operations. Districts often have older facilities that are not especially energy efficient (Lewis et al. 2000), with the average age of the main instructional buildings of public schools being 40 years. In 29 percent of schools, heating, ventilation, and air conditioning systems are in less than adequate condition, and many have large rooms for gymnasiums and auditoriums, some of which are heated and cooled from early morning to late evening. In addition, the Energy Information Administration (EIA) found that at 26,900 square feet per building, school buildings1 were much larger than the average commercial buildings (14,500 square feet per building) (U.S. Department of Energy 1999). School districts transport some 24 million students in some 440,000 school buses (School Bus Information Council 2002). Configured with large unmodernized buildings and temporary structures that are used for most of the day and year, and with extensive daily busing, school districts potentially use vast amounts of electricity for cooling and illumination, gas for heating, and vehicle fuel for transporting students.


School districts also are vulnerable to rapid increases in energy prices. Budgets are often established and approved a full year in advance of actual expenditures (Weston, Harmer, and Guthrie 1989). As a result, any budget item that was based on a trend line of gradual increases will be underfunded if there is a sharp increase between the time the budget is adopted and the year of actual expenditures. Likewise, there may be a surplus if the district anticipates a continuation of sharp increases that do not materialize.

Finally, the unpredictability of energy prices makes their impact much greater than that implied by the percentage of the budget they ordinarily compose. Previous estimates of average school district energy expenditures are about 3 percent of the total budget and 29 percent of the total maintenance and operations budget. The same survey estimated that U.S. public school districts spent more than $7.8 billion annually for energy resources in the 2000–2001 academic year, up from $6.5 billion in the 1999–2000 academic year (Agron 2001). However, the actual impact of those funds is on "opportunity costs," that is, costs encountered when someone must decide to do one task rather than another task. For school districts faced with an underfunded energy budget, the questions become "What activities will be forgone or reduced to meet the energy costs that surged unexpectedly?" or "What surplus funds, borrowed funds, or increased taxes will be necessary to cover the shortfall?"

Conversely, when school districts designate more funds for energy than are needed, they often lose the ability to reallocate the funds for other purposes during the budget year. In some cases, school boards must initiate budget amendment resolutions. In some districts, such amendments must be announced at public meetings or published in local media before they can be adopted (Weston, Harmer, and Guthrie 1989).

The "Effects of Energy Needs and Expenditures on U.S. Public Schools" survey focused on fiscal year 2001 (FY 01) energy budgets and expenditures. Nonetheless, the questionnaire also gathered data on FY 00 energy expenditures and budgeted FY 02 energy expenditures to examine the financial resources available to districts. Data collection began in November 2001, approximately 4 months after the start of FY 02, thereby allowing districts to report total expenditures from FY 01 and budgets allocated for FY 02. Additional questions gathered data on methods districts used to respond to energy needs and expenditures, and measures that the district may have instituted to help decrease energy expenditures. Finally, each respondent was asked to describe how the district was prepared for potential increases in energy costs.

Approximately 1,000 public school districts were included in the study sample. Questionnaires were mailed to the superintendent of each district, with a letter requesting that the questionnaire be completed by the chief financial officer (CFO) or other district staff member who was most knowledgeable about energy needs and expenditures. A total of 851 districts responded to the survey, for a weighted response rate of 84 percent.

The questionnaire responses were weighted to produce national estimates that represent all regular public school districts in the United States in 2001. 2 The weights were designed to adjust for the variable probabilities of selection and differential nonresponse. All comparative statements in this report have been tested for statistical significance using t-tests adjusted for multiple comparisons,3 and are significant at the 0.05 level. Appendix A provides a detailed discussion of the sample and survey methodology.

Most survey estimates presented in this report are shown by selected district characteristics—district enrollment in 1999–2000 (i.e., less than 2,500, 2,500 to 9,999, 10,000 or more), metropolitan status (i.e., urban, suburban, rural), region (i.e., Northeast, Southeast, Central, West), and poverty concentration (i.e., less than 10 percent of students, 10 to 19 percent, 20 percent or more).4 In addition, three derived variables were created, and the results are shown by those three characteristics:

  • Overall FY 01 budget per pupil indicates the total overall district budget per pupil for FY 01 (i.e., less than $6,500, $6,500 to $8,999, $9,000 or more). For ease of discussion, these categories are referred to as low, mid-level, and high budgets per pupil.

  • Energy budget sufficiency status indicates whether the district energy budget for FY 01 was sufficient to cover actual energy expenditures (i.e., sufficient, insufficient).

  • Percent of budget allocated for energy indicates the percentage of the FY 01 overall district budget designated for energy needs (i.e., 1 percent or less, 2 percent, 3 percent or more).

These district characteristics are fully described in appendix A.

1 School buildings include preschools/day care buildings, and elementary, junior, and senior high school buildings.

2 For this survey, regular school districts include those that met the following conditions: not a component of a supervisory union or a local school district component of a supervisory union sharing superintendent and administrative services with other local school districts; not closed since the 1998–99 Common Core of Data (CCD) report; had at least one student enrolled according to the 1999–2000 CCD report; and located within the United States.

3 The Bonferroni adjustment was used to adjust for multiple comparisons.

4 Poverty concentration is based on the district-level Title I funding and the proportion of children aged 5–17 in families below the poverty level.