The Michigan Statewide School Facilities Study Final Report (2025) delivers a sobering but actionable insight into the condition of the state’s K–12 school infrastructure. With $22.8 billion in required improvements identified, this study underscores the vast scale of deferred maintenance and capital need across Michigan’s 552 school districts. Most notably, the report highlights a staggering $7.5 billion in HVAC-related deficiencies and nearly $1 billion in site infrastructure needs—specifically tied to water supply, sanitary sewer, and site lighting. Together, these areas account for over a third of the total repair needs across 2,534 school buildings.
In the face of this funding shortfall, Energy as a Service (EaaS) presents a viable, non-debt-based solution. EaaS enables districts to upgrade mechanical and site infrastructure with no upfront capital expenditure, bundling technology, installation, and ongoing service into a single predictable monthly payment. It’s a model that aligns perfectly with Amory Lovins’ principle that “the cheapest electricity is the electricity never used.” By eliminating waste through smarter, more efficient systems, EaaS helps schools invest in outcomes—not ownership. For the FULL TEXT of the Michigan Report go to ONSITE Utility Services LinkedIn Page and see featured content. Follow us for more comprehensive content.
The Scale of the Crisis: Key Findings
Conducted over an 18-month period from May 2023 through December 2024, this first-of-its-kind study in Michigan surveyed 243 million square feet of educational space. Over 1,500 professionals from 33 architecture and engineering firms conducted detailed Facility Condition Assessments (FCAs), focusing on health, safety, and wellness benchmarks as outlined in Michigan’s Section 11y of the State School Aid Act.
Key metrics:
552 school districts participated (93% statewide coverage)
2,534 buildings assessed
$22.8 billion in total repair and replacement costs identified
99% of buildings are more cost-effective to repair than replace
The study breaks down infrastructure needs into seven key component areas, with three dominating the cost distribution:
- HVAC systems: $7.5 billion (33.1%)
- Roofing: $3.4 billion (15.2%)
- Electrical systems: $2.8 billion (12.5%)
Collectively, these categories account for over 60% of repair needs. HVAC upgrades, in particular, span boilers, chillers, rooftop units, air handlers, unit ventilators, exhaust fans, and digital temperature controls—elements critical not only for air quality but also for energy efficiency.
HVAC: The Heart of the Cost Burden
HVAC issues alone account for more than one-third of the state’s total infrastructure investment need. With many systems more than 30 years old, the energy waste and performance shortfalls are staggering. These aging units do not meet modern ASHRAE standards for ventilation or thermal comfort and often rely on outdated control systems that make energy optimization impossible.
Typical deficiencies included:
Malfunctioning rooftop units
Inoperable or inefficient boilers and chillers Poor zoning and temperature control
Inadequate exhaust and air handling systems
The study’s data confirms that HVAC systems are often the single largest energy-consuming component in a school building, and by far the most frequently flagged in the FCAs. Without timely intervention, these systems will continue to inflate utility costs and compromise indoor air quality, directly impacting student attendance and performance.
Energy as a Service can fund the total lifecycle replacement of HVAC systems, including digital controls, energy recovery systems, and monitoring platforms. By shifting from reactive repairs to proactive system-level transformation, EaaS can help Michigan schools reduce HVAC energy loads by 30–50% in many cases.
Site Improvements: Water, Waste, and Lighting
Another critical but less publicized section of the study focuses on site infrastructure needs. Nearly $1 billion in costs were associated with external elements like water supply, sanitary sewer systems, and lighting—components grouped under the study’s “Site Improvements” category.
Key findings include:
Sanitary Sewer Deficiencies: Aging underground systems leading to backflow risks, capacity issues, and environmental hazards
Water Supply Needs: Outdated or non-code-compliant water lines and backflow preventers
needing full replacement
Exterior Lighting (Light Poles): Poor illumination, safety hazards, and lack of energy-efficient fixtures such as LED conversions
Though these systems are often “out of sight,” their failure poses immediate threats to safety, ADA compliance, and operational resilience. With many districts operating infrastructure from the 1960s and 70s, these components are not only energy ineficient but also noncompliant with modern regulatory and safety standards.
EaaS can support utility-level upgrades in these categories by leveraging performance-based contracting and infrastructure-as-a-service tools. Smart lighting systems, water-saving technologies, and modernized sewer controls can all be deployed using this of-balance-sheet financing model—avoiding millage increases or bond dependency.
Time Horizon and Urgency
The $22.8 billion in repair needs is spread across a nine-year investment window, segmented as follows:
$5.3 billion (23.3%): Critical needs (1–3 years)
$6.9 billion (30.5%): Near-term needs (4–6 years)
$10.5 billion (46.2%): Long-term needs (7–9 years)
Within the HVAC and site improvement categories, a majority of the upgrades were rated as critical or near-term, reinforcing the need for an immediate funding strategy. Delays in addressing these deficiencies will only compound costs due to inflation, system degradation, and increased energy consumption.
Barriers to Traditional Funding Models
The report is also candid about Michigan’s school funding limitations:
Capital improvements are almost entirely locally funded through property tax millages, leading to inequity between districts.
Many districts lack the bonding capacity to fund multi-million-dollar mechanical upgrades, particularly in lower-income or rural areas.
Statewide debt assistance programs exist but are underutilized and insufficiently scaled to address the magnitude of this challenge.
This funding disparity is especially problematic for high-need categories like HVAC and underground utilities, which often get deprioritized in favor of more visible projects like roofing or security systems.
Why Energy as a Service Makes Sense
EaaS bypasses these traditional bottlenecks by offering:
No CapEx requirements: Projects are funded by the EaaS provider
No new debt on district books: Preserves credit and borrowing capacity
Bundled service and maintenance: Ensures long-term performance and cost stability
Energy cost savings as a funding source: Efficiency gains can offset the monthly subscription cost
In practical terms, this means Michigan schools can implement new HVAC systems, upgrade outdated sanitary sewer connections, install LED exterior lighting, and improve water system reliability—all without waiting for a bond to pass.
Conclusion: Funding the Future Without Delay
Michigan’s school infrastructure challenge is clear. From inefficient HVAC systems that strain budgets and endanger student health to deteriorating underground utilities and lighting that compromise safety and sustainability—the need is urgent and systemic.
The good news is that solutions exist today, and Energy as a Service is at the forefront. By removing the traditional barriers of CapEx and debt, EaaS empowers districts to act immediately, delivering clean air, eficient energy use, and safe learning environments for generations to come.
Let’s not wait to invest in what we already know is broken.