Capital expenditure on education

definition

Major costs for periodic investments such as Expenditure for assets that yield benefits for a period of more than one year. It includes expenditure for construction, renovation and major repairs of buildings and the purchase of heavy equipment or vehicles.

example of use

Governments often treat large-scale investment in physical facilities and equipment as a capital investment, i.e. a one-off cost, although institutions may need to pay annual interest payments and allow for depreciation. An institution with no, little, or very out-of-date existing technology infrastructure may indeed initially require a heavy one- time investment, but in general, technology infrastructure requires regular ongoing funding, for two reasons. First, the technology changes very rapidly due to technical advances. For instance, the average life of a desktop computer is three years or so, as the power and functionality of computers constantly develops. Secondly, the cost of human support for the infrastructure usually far exceeds the cost of equipment replacement and upgrading. Thus, investment in technological infrastructure within and between institutions should be seen as a recurrent or operational cost. When physical infrastructure is treated as a capital expenditure, it is less likely to compete for funds that impact directly on teaching. However, as an operational cost, the need to fund technology support staff directly competes with funds for teaching and research. Consequently, the human technology support side is often underfunded in many educational institutions (Bates, 2001: 38).

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