Capital costs in municipal school buildings

The purpose of this report is to estimate capital and depreciation for municipal school buildings, and to analyze variation in per capita depreciation for this type of capital asset. A measure of depreciation is already reported in local government accounts. We estimate alternative measures of capital and depreciation based on the perpetual inventory method, which combines different models of depreciation with investment data for the period 1972-2001. The results demonstrate that the figures in local government accounts are too low partly due to the fact that the estimation method does not adjust for inflation, and partly due to missing and incomplete data.

In the analysis of variation of per capita depreciation in school buildings, we find that per capita depreciation tend to increase with per capita municipal incomes and with the share of population in school age, and decrease with population size and density. The short-run effect of population growth is a decrease in per capita depreciation, while higher gross migration tends to increase per capita depreciation.

Acknowledgement: This project was supported by the Ministry of Local Government and Regional Development.