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Georgia has become for the multi-billion dollar, A.I.-fueled data center industry. This year, construction activity in the metro Atlanta area has , which has the highest concentration of data centers in the world. 

But the state鈥檚 schools are helping to pay the price for all that development.

Because of sales tax breaks to , and other tech giants now building 鈥渉yperscale鈥� warehouses in communities across the state, districts this year will give up roughly $300 million, according to a from Good Jobs First, a nonprofit watchdog group that focuses on the impact of public subsidies.

The organization estimates that the losses in some of the state鈥檚 school districts would range from $3.6 million in Newton County to $35.5 million in Gwinnett County, the state鈥檚 largest district.

鈥淭he development that has taken off from about 2015 to now has had real implications for schools,鈥� said Anthony Elmo, who focuses on education issues at the organization. 鈥淲e’re not talking about a paltry amount of money.鈥� 

The Georgia Department of Education declined to comment on the report, and the Gwinnett district didn鈥檛 respond to calls or emails. A spokesperson for the Cobb County district, which stands to lose about $18 million, said, 鈥淲e have not seen impacts on our schools from data centers.鈥� 

Maybe the county doesn鈥檛 have a lot of data centers ( puts the count at nine), but Heather Tolley-Bauer, a Cobb parent who co-founded a watchdog group focused on school funding, said the new analysis still shows they can hurt schools.

“We hear a lot about energy, water and economic development. We hear a lot less about what the tax breaks they get mean for our schools,鈥� she said. 鈥淐obb is already dealing with declining enrollment, growing senior tax exemptions and other economic development abatements, while state lawmakers continue to pass education mandates that aren鈥檛 always fully funded.鈥�

The state this year also that caps how much local governments and school districts can collect in property taxes, which makes tax relief for data centers 鈥渁n even bigger issue in many districts,鈥� said Daniel Kanso, vice president of public policy at the Georgia Budget and Policy Institute, a left-leaning think tank.

鈥淚 think these things compound onto each other when the property taxes are the largest source of school funding in Georgia,鈥� he said. 鈥淣ow districts are feeling the most severe kind of mandatory constraint coming down from the state level.鈥�

鈥楢 gold rush鈥�

Good Jobs First鈥檚 Georgia report follows earlier analyses it conducted on the use of similar incentives in other states. Last year, it calculated that the 24 had lost a combined $380 million over eight years to economic development tax abatements. In April, it released showing that of the more than $1 billion Virginia lost in sales collections in fiscal 2024 from data centers, about $267 million would have been spent on schools.

Data centers can , which results in more revenue for schools, but聽the Georgia analysis notes that the structures are also exempt from local sales taxes, including those that districts collect to pay for school construction projects. Such sales tax losses could amount to a combined $645 million in the current fiscal year, according to their calculations. Elmo added that the revenue loss is likely an 鈥渦ndercount鈥� because local development authorities sometimes to attract data centers.聽

鈥淭he counties think this is a gold rush and they have to take advantage of it while it lasts,鈥� said Jessica Owens, the director of data at Science for Georgia, a nonprofit that tracks data center growth across the state.

The debate over data center campuses, which can be larger than , has become a major focus of the midterm elections. President Donald Trump says anyone opposed to further expansion wants to be 鈥�,鈥� and that as artificial intelligence rapidly advances, more data centers are needed to . But with AI agents going rogue and trying to , even leaders of the industry argue that it鈥檚 time for .

In some states, such as Texas, Republicans like Gov.  have in calling to repeal sales tax exemptions and place new restrictions on development. To counteract negative public opinion, Microsoft is attempting to it鈥檚 saved in taxes to two metro Atlanta counties, and tech companies are working to by highlighting ways data centers benefit local schools. 

Meta data centers, for example, have helped fund the construction of an in DeKalb, Illinois, and teacher in Louisiana鈥檚 Richland Parish.

In Frederick County, Maryland, Rowan Digital Infrastructure, which builds data centers for major tech companies, has what Tim Alborg, director of government and community affairs, called a 鈥渟ymbiotic鈥� relationship with the local school system. Opening STEM labs in elementary schools is one example, he said.

鈥淎 lot of public school classrooms are getting this pressure on their budgets. We’re trying to identify those places where school districts need support,鈥� he said, 鈥渁nd trying to help them build their pipeline of educated workers that can one day potentially work on our projects.鈥� 

The company may also be an outlier when it comes to negotiating local tax breaks. While local deals can leave districts with less revenue, Rowan is 鈥渁lways paying full taxes the whole time to school districts,鈥� said spokesman Nathaniel Brown.

The Frederick County school board, however, is still concerned about possible environmental impacts on Carroll Manor. Members voted in September to authorize a that would include issues like air quality, noise and vibration. 

In some cases, district leaders are joining with city and county officials to welcome developers to their community. , a $20 billion OpenAI project that takes its name from the colorful plant that grows throughout Georgia, will result in more resources and salary increases for school staff and greater opportunities for students, Yancy Ford, superintendent of the coastal Effingham County district, said on the . 

鈥淭he Industrial Development Authority brought the school district leaders and board members into these conversations because everyone recognized that a project of this magnitude would impact school district funding,鈥� said spokeswoman Tiffany Altman. 鈥� allowed district leadership and board members to ensure it would positively impact the district.鈥�

Like the 鈥楳anhattan Project鈥�

According to the , 38 states offer tax incentives to attract data centers. In heated community meetings, opposition often focuses on how close developers are building data centers to residential neighborhoods and schools. Others have criticized the financial impact. 

鈥淚’m very much annoyed with the Kansas government for passing these ,鈥� Lux Claridge, an Emporia High School physics teacher, said about 2025 legislation that gives data centers a 20-year exemption from sales taxes. He made news in July when he was arrested at a city commission meeting for disorderly conduct and interfering with law enforcement after for speakers objecting to a proposed data center, despite a warning from the commissioners. 

The commission took initial steps to accommodate the Flint Hills Digital Campus, in the form of favorable . But voters in Lyon County, which includes Emporia, will have their say about the project鈥檚 future in November. In August, a ordered the county to place a referendum on the ballot that would put a moratorium on building large-scale data centers.

With declining enrollment, the Emporia district, Claridge said, doesn鈥檛 need to . 

鈥淲e鈥檙e trimming the budget, trying to minimize things,鈥� he said. The annual back-to-school gathering for teachers, he said, didn鈥檛 include breakfast this year. But that鈥檚 just a small example of where the district is cutting back. While it was able to , the district is closing an elementary school.

One challenge in estimating the long-term impact of tax breaks for data centers is that there is no precedent for the current pace of development, said Elmo, with Good Jobs First. He described it as 鈥渁kin to the speed and the breadth of the Manhattan Project,鈥� the government鈥檚 to develop nuclear weapons during World War II.

Virginia鈥檚 Loudoun County, the world鈥檚 with more than 250 massive structures, is held up as the example of how accommodating growth can pay off. The county spends than neighboring districts even though it has lowered property taxes by about 30% over the past decade, and plans to further cut personal property . 

But Elmo noted that those benefits are a result of the county not only collecting real estate taxes from tech companies but also taxing them on the rows and rows of computer servers inside.  

鈥淟oudoun, in a smart way, basically offset the state sales and use tax exemption, by creating a county tax on business equipment,鈥� he said.

鈥楶ay their fair share鈥�

But in other states, school districts have yet to see an influx of data center revenue.

In West Virginia, where multiple schools are because of declining enrollment, allows 70% of additional property tax revenue from data centers to flow into a special state fund, while 30% stays in the county. But whether school districts will share that income, said Kelly Allen, executive director of the West Virginia Center on Budget and Policy.

The group鈥檚 analysis shows that for every $20 billion in data center development, the state 鈥�  and local schools 鈥� lose $1 billion.

鈥淚f data centers were going to locate in West Virginia, they could be a source of funding for schools at a time when it’s desperately needed,鈥� she said. 鈥淏ut all these tax breaks are really standing in the way of making sure local communities and schools benefit from their development.鈥�

A similar scenario is playing out in the west Texas city of Abilene. Local officials gave OpenAI鈥檚 Stargate data center a 10-year, 85% cut on local property taxes . Even with those tax breaks, the $3.5 billion project has already substantially boosted revenue, but the state, , is capturing those extra dollars. 

鈥淭his was a huge windfall of property tax revenue for the school district,鈥� said Carrie Collier-Brown, an energy regulatory attorney in Texas who focuses on data centers. 鈥淏ut under the state formula, most of that goes back to the state where they just dump it into a piggy bank to do whatever they want with it.鈥�

The Texas Education Agency didn鈥檛 respond to a request for comment.

Allen, in West Virginia, thinks any examples of data centers giving back to local schools 鈥減ale in comparison鈥� to what they would pay in taxes. Tax revenue, she said, 鈥渂enefits everybody,鈥� while philanthropic donations or sponsorships allow corporations to 鈥減ick and choose the things that they want to fund.鈥� 

that for data centers, generous tax breaks, while helpful, are actually less important to developers than finding affordable land and connecting to the power grid. The Georgia report, citing research from the University of Georgia, notes that about 70% of the data center construction in the state would have happened even without the exemptions.

鈥淭hose tax breaks do them no good unless they can power the computers,鈥� Collier-Brown said. 

With all of the money in the industry 鈥� now valued at in the U.S. 鈥�  there鈥檚 no reason why governments can鈥檛 structure deals that are attractive to developers while still getting 鈥渓ife-changing revenue for schools,鈥� she said. 鈥淭hese are the richest companies that have ever been on the planet.鈥�

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