Abandoned School × Welfare Facility Revenue Model — Estimating Type B Employment Support Fees and Facility Costs [2026 Edition]

What Changes When You Use a Closed School

How the building and land were handled in all three cases, how to work out the facility cost difference, renovation costs and construction subsidies

The assumptions in the estimates that follow (number of users, operating days and facility cost amounts) are the article's own, not published statistics. Unit counts and calculation rules are copied from MHLW documents. For your own case, replace them with your expected users and quotes.

Among the monthly costs of a disability welfare facility, the facility cost varies most with how the building is obtained. Fee rates and the rules on user wages are the same wherever the facility opens. This section covers the facility and renovation costs that a closed school changes, and the next covers fees.

Free Buildings, Paid Land

In the Nishiwaga case the town lends the school building free of charge and the land for a fee to the corporation. In the Nagaoka case the city transferred the building free of charge and the land for a fee.[4] In the Yuni case the corporation bought the site of the former Kawabata Elementary School and received the school and other buildings from the town free of charge.[5]

In all three cases the building cost nothing and the land did. Neither the case collection nor the corporation's history gives the land rent or sale price.

Compare the monthly facility costs of the current premises and a reused school using the following items.

For example, a facility now renting for ¥250,000 a month that moves to a closed school usable for ¥30,000 a month would save ¥220,000 a month, or ¥2,640,000 a year (the amounts are the article's assumptions). Using more floor area also changes utility and repair costs, so subtract those from the difference. In Nishiwaga, only the ground floor of the two-storey school was renovated into an office, rooms and a dining area, and nothing other than the old school building is lent to the corporation.[4]

Renovation Costs Depend on the State of the Building

When the former Nozomi Elementary School in Yubari, Hokkaido (completed 1986, closed 2011) became the Yubari Momijien home for the elderly, surveys found the structural frame, exterior walls and roof in usable condition, so only light renovation was needed. The final contract price for the part converted from the old school building (2,145.20 m² of floor area, excluding the extension) was ¥158.53 million, or ¥73,900 per m², and the article says this came to about one-third of the average cost of building new.[6]

If the main structure has deteriorated, costs rise. When the former Shimada Elementary School in Nagaoka became an employment support facility for people with disabilities, columns deformed by age had to be repaired, foundations that had sunk in earthquakes had to be adjusted, and work was needed to meet the current Building Standards Act and Fire Service Act, which cost a considerable amount. Total renovation cost was about ¥235 million.[4]

How to think about each cost item, and the renovation costs of welfare and childcare facilities in the case collection, are covered in "Closed School Renovation Costs: Breakdown by Cost Item and Case Examples."

Construction Subsidies

The social welfare facility construction subsidy covers disability welfare service facilities under Article 5 of the Comprehensive Support for Persons with Disabilities Act, among others. When a social welfare corporation or similar body builds a facility, the national government in principle subsidizes half of the construction cost and the prefecture (including designated and core cities) subsidizes a quarter.[7] The corporation's share is a quarter only when all construction costs are eligible.

In the Nagaoka case, of the total renovation cost of about ¥235 million, the MHLW social welfare facility construction subsidy provided about ¥55 million and the operator bore about ¥180 million.[4]

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How Disability Welfare Reimbursement Works

Units and regional grades, what the FY2024 and FY2026 revisions changed for Type B employment support, and the tier for new facilities

Units and Regional Grades

Each disability welfare service has a set number of units per day, and the fee in yen is the units multiplied by the unit price. The unit price depends on the regional grade and the service type. For employment continuation support (Types A and B) it is ¥11.14 in Grade 1 areas and ¥10 in areas graded Other.[8]

The regional grade applied to each municipality for FY2024 to FY2026 is listed in Attachment 3 of the FY2024 revision overview.[9] Check the grade of the municipality where the facility will be located first.

What the FY2024 Revision Changed for Type B

The overall FY2024 revision rate was +1.12%, a level said to exceed +1.5% when combined with effects such as consolidating the pay improvement add-ons. For Type B, base fee rates were raised for high average wage tiers and lowered for low tiers, a new fee structure for 6:1 staffing was created, and a formula dividing wages by the average number of daily users was introduced for the average monthly wage. For life care, base fees were set by service hours.[10]

The Review from June 2026

Because the FY2024 change in the calculation method raised average monthly wages by about ¥6,000 and more facilities than expected landed in high tiers, each tier threshold was raised by ¥3,000 from June 2026. Facilities whose tier did not rise with the FY2024 revision are excluded, intermediate tiers were added so that facilities moving down lose about 3% or less, and the threshold between tiers 7 and 8 (¥10,000) was left unchanged.[1]

Facilities newly designated on or after June 1, 2026 face a temporary reduction. Base reimbursement for Type B continuous employment support is 984/1000 of the standard unit count, about 1.6 percent lower. The measure covers services that account for at least 1 percent of total annual expenditure, ran a FY2024 surplus ratio of 5 percent or more, and grew by more than 5 percent in facility numbers for three straight years. Previous rates apply to the base fees of facilities on remote islands and in mountainous areas (areas eligible for the special regional add-on) and of facilities a municipality establishes because it judges them objectively necessary (facilities set up in areas short of services through public solicitation, or with subsidies or other financial support from the municipality).[1] Existing facilities keep the previous rates, and the measure runs until the FY2027 revision.

The same document lists ten types of area eligible for the special regional add-on, including remote island promotion areas, special heavy snowfall areas, remote areas (henchi), mountain village promotion areas and depopulated areas. Ask the designating authority before applying for designation whether the closed school's location qualifies.

Base Fees for Type B

For 7.5:1 staffing (Type B service fee II) and capacity of 20 or fewer, the tiers and daily units from June 2026 are as follows.

The units in the table are copied from the revised column for Type B service fee II, capacity of 20 or fewer. Service fee I, for 6:1 staffing, pays more in the same tiers: 837 units at ¥48,000 or more and 590 units below ¥10,000.[1] In the table after the FY2024 revision, the same service fee II for capacity of 20 or fewer had eight tiers, from 748 units at ¥45,000 or more to 537 units below ¥10,000.[11]

Calculating the Average Monthly Wage, and the Tier for a New Facility

The previous year's average monthly wage is total annual wages paid ÷ (total annual user days ÷ annual operating days) ÷ 12 months. This formula was introduced in the FY2024 revision.[1] Because it divides by the average number of users per day, the average monthly wage does not fall simply because many users attend only a few days.

In the diagrams in MHLW's review document, a newly designated facility is placed in tier 8 during an initial transition period, and then moves to a tier based on average wages over six months from the start of support, or to a tier based on the previous year's average monthly wage.[12] Planning first-year cash flow on tier 8 units (under ¥10,000) keeps the plan on the safe side.

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Revenue Simulation for Type B Employment Support

Monthly base fees by tier and the wage total needed to reach each tier, using only published units and formulas

Assumptions

The monthly base fee is daily units × ¥10 × 22 days × 18 users, which is units × ¥3,960.

Monthly Base Fee by Tier

The right-hand column multiplies the monthly base fee by 984/1000 and rounds to the nearest ¥10,000 (calculated by this article). The FY2024 national average monthly wage of ¥24,141 falls in tier (D/5). The difference from tier 8 is 100 units a day, or ¥396,000 a month.

Wages Are Paid from Productive Activity Profit

A designated Type B operator must pay users, as wages, an amount equal to the revenue of its productive activities minus the costs necessary for those activities. The average monthly wage paid to each user must not fall below ¥3,000.[13]

Wages are also the figure that sets the fee tier. Using the average monthly wage formula, the monthly wage total needed to reach the lower bound of each tier with 18 users a day on average is as follows (calculated by this article).

Reaching tier (1) takes ¥864,000 a month of profit from productive activities after costs. Moving up from (D/5) to (1) raises the base fee by ¥439,560 a month, while the wage total rises by ¥450,000 a month.

Adding the Facility Cost Difference

If the fee tier and wages are the same, what changes when you move into a closed school is the facility cost row and the renovation repayment row. Add the facility cost difference worked out in the earlier table to the monthly budget. Staff costs, add-ons and transport vary greatly with staffing and users, so this article does not put numbers on them.

A Table to Fill in for Your Own Case

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School Buildings and Disability Welfare Services

Treatment under the Building Standards Act and Fire Service Act, using part of a school, and what the agriculture-welfare grant covers

The Enforcement Order includes facilities used for life care, independence training, transition support for employment or continuous employment support among child welfare facilities and similar, and treats child welfare facilities and similar as a use similar to item (2) of column (i) of Appended Table 1 of the Building Standards Act.[14] Changing the use of a school so that it becomes a special building whose floor area used for the new purpose totals more than 200 m² requires the confirmation procedure.[15] The procedure and renovation requirements are covered in "Abandoned School Use Change and the Building Standards Act."

In Appended Table 1 of the Fire Service Act Enforcement Order, facilities providing life care, continuous employment support and similar services fall under item (6)(c)(5). Automatic fire alarm systems are required regardless of floor area where users live or stay overnight, and otherwise at a total floor area of 300 m² or more.[16] For a school (item (7)) the threshold is 500 m², so the same building can need equipment once its use changes. Conditions for sprinklers and exit signs are in the tables of the renovation cost article.

The facility at the former Kawabata Elementary School in Yuni is a multi-function facility with Type B continuous employment support (capacity 10) and life care (capacity 10).[17] One building can host two services.

If you are considering work in the schoolyard or fields, check what MAFF's grant covers first. For FY2026 MAFF invited applications for the Rural Promotion Grant (agriculture-welfare type, within the measures for creating value from regional resources). The Q&A on the same page says construction of welfare facilities is not eligible, and neither are the wages paid to users.[18]

Three Cases in Detail

A care facility in Nishiwaga, an employment support facility for people with disabilities in Nagaoka, and a multi-function facility in Yuni

Nishiwaga Town, Iwate (former Etchuhata Elementary School)

A care facility. Resident representatives formed an NPO before the school closed and rent the building free and the land for a fee from the town. The ground floor was renovated for a total of about ¥41.5 million (about ¥33 million in subsidies).

Nagaoka City, Niigata (former Shimada Elementary School)

An employment support facility for people with disabilities. The city chose a social welfare corporation through a simplified proposal process and transferred the building free and the land for a fee. Renovation totaled about ¥235 million (about ¥55 million in subsidies).

Yuni Town, Hokkaido (former Kawabata Elementary School)

A multi-function facility (Type B employment support and life care). The school closed in March 2012, the transfer contract was signed in December 2013, and the facility opened in May 2016.

Case 1: Yukitsubaki no Sato Small-Scale Multifunctional Home (Nishiwaga Town, Iwate)

This is an elderly care case rather than disability welfare, but it shows using only part of a school and residents forming the operating corporation.

The former Etchuhata Elementary School (built in FY1980), closed at the end of FY2010, is run by an NPO set up by residents as the small-scale multifunctional home Yukitsubaki no Sato. After more than ten deliberations by representatives of the four districts of the former school area, residents decided to use the school for community welfare, and their representatives set up the NPO in February 2011, before the school closed. Operations began in June 2012. The facility covers 489.78 m², and renovation cost a total of about ¥41.5 million (about ¥8.5 million borne by the operator and about ¥33 million in subsidies). The subsidies were MHLW's special temporary subsidy for developing care service facilities and its special subsidy for facility opening preparation costs.[4] The building already met seismic standards before reuse and subsidies were available, so opening costs could be covered by borrowing alone. Most staff are local residents, 15 people work there full- or part-time, and the facility recorded 7,395 user-days in FY2021. It cleared its accumulated deficit a little over eight years after opening.[4]

Case 2: Washima tout le monde (Nagaoka City, Niigata)

The former Shimada Elementary School, built in FY1904 (Meiji 37), was merged in 2009 and closed at the end of March that year. Responding to residents who wanted the building preserved, the city decided to use it for welfare and chose a social welfare corporation through a simplified evaluation proposal. Since FY2012 it has been an employment support facility for people with disabilities running businesses such as the restaurant Bague and the bakery Harmonie. The land was transferred for a fee and the building free of charge; the facility covers 2,973.68 m², and renovation cost a total of about ¥235 million (about ¥180 million borne by the operator and about ¥55 million in subsidies).[4] Because the merger and reuse of the school concerned the whole area, the city asked a local university to coordinate, held twelve meetings in each of four working groups made up of residents and education stakeholders, and also gathered views through a resident survey and the website. The city writes that many visitors and inspection tours come from inside and outside the prefecture and that the facility is sometimes covered by the media.[4]

Case 3: KAKA’s FACTORY (Yuni Town, Hokkaido)

According to the town chronology, Kawabata Elementary School closed on March 31, 2012; the town signed a contract to transfer the former school to the social welfare corporation Aitoku Welfare Society on December 17, 2013; and the corporation opened KAKA’s FACTORY on the former school site on May 16, 2016.[19] The corporation is based in Iwaki, Fukushima. After the Great East Japan Earthquake and the nuclear power plant accident, its board approved a project to set up its own evacuation site in Hokkaido for people with disabilities and their families. As that site it bought the grounds of the former Kawabata Elementary School, received the school and other buildings from the town free of charge, and carried out renovation work in 2015.[5]

Neither the town chronology nor the corporation's history names a subsidy used.

What the Three Cases Show

The percentages are calculated by this article from the amounts in the case collection. Nagaoka's three years are counted from closure at the end of March 2009 to the start of use in FY2012.

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Prerequisites and Cautions

Explaining the plan to residents and operators, seismic diagnosis, property disposal, fees from June 2026, and the pay improvement add-on

Explaining the Plan to Residents and Operators

In the Nishiwaga case, the town had relatively many elderly welfare facilities for its population and high long-term care premiums were a local issue, so competing operators objected that a new care business would push premiums up further. Many briefing sessions on topics such as the projected number of older residents were held to win their understanding.[4] Objections come not only from residents but also from operators already in the same business. For how to design explanation meetings, see also "Abandoned School Welfare Facility Conversion and Community Meetings."

The Building's Condition and Seismic Diagnosis

Seismic safety is not decided by construction year alone. The Nishiwaga school was built in FY1980 yet already met seismic standards before reuse (case collection). Ask the municipality whether a seismic diagnosis was done, what it found and whether reinforcement was carried out. As in Nagaoka, damage to columns and foundations can push renovation costs up sharply.

Property Disposal Procedures

Using a school building built with national subsidies for non-school purposes within the restricted disposal period requires MEXT approval (a report suffices if requirements are met). Procedures differ depending on whether the building is lent free, transferred or sold, so check "Property Disposal of Closed Schools" before deciding the form of the contract.

Fees from June 2026

A facility applying for new designation should plan its finances on both the 12 tiers with raised thresholds and the 984/1000 special rule. Before applying, ask the designating authority whether a relief measure applies (whether the area qualifies for the special regional add-on, or whether the facility is established through municipal solicitation or subsidies).

Staffing and the Pay Improvement Add-on

From June 2026 the pay improvement add-on was extended from welfare and care workers to all disability welfare workers, and its rates were raised. For Type B continuous employment support the rates are 10.5% for add-on I-a, 10.9% for I-b, 10.3% for II-a, 10.7% for II-b, 8.8% for III and 7.4% for IV, applied to the total fee units after additions and deductions other than this add-on.[1] It is an add-on for raising staff pay, not a subsidy for recruitment costs. If you need to attract staff in a depopulated area, build this add-on into your expected wages.

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What It Means for Municipalities

The benefits Nagaoka City listed in the case collection, and the number of school buildings where residents have not been consulted

In the case collection, Nagaoka City writes that, as a city aiming for an environment where everyone including people with disabilities and older people can live comfortably, the use of the closed school as an employment support facility contributed to that goal, and it also lists as a benefit that having a corporation make effective use of the school reduced the costs of maintaining and demolishing the facility.[4]

Of the 7,211 school buildings at existing closed schools, 3,580 (49.6%) report that no resident opinion survey was conducted.[20] When an operator approaches a municipality, the first question should be whether residents' views on that school have ever been sought.

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Next Steps

Find a candidate, ask the municipality, estimate fees and wages

Identify the school and planned service. Ask the licensing authority about service requirements, and the municipal property team about the building and the terms of a lease or transfer.

For the overall reuse process see "How to Repurpose an Abandoned School," and for national subsidy programs see "Subsidies for Closed School Reuse: All 6 Ministries Covered."

Closed School Renovation Costs: Breakdown by Cost Item and Case Examples

How to think about renovation costs by structure, interiors, building services, fire safety equipment and accessibility, with amounts from MEXT's case collection.

Subsidies for Closed School Reuse: All 6 Ministries Covered

Program names, subsidy rates, caps and eligible applicants, checked against MEXT's April 2026 list and each ministry's guidelines.

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References

Structure of Fee Calculation for Disability Welfare Services — MHLW Department of Health and Welfare for Persons with Disabilities; Children and Families Agency (2024)

Overview of the FY2024 Revision of Disability Welfare Service Fees — Disability Welfare Service Fee Revision Review Team (2024)

Items in the FY2026 Revision of Disability Welfare Service Fees — Disability Welfare Service Fee Revision Review Team (2026)

Review of the Criteria for Type B Base Fee Tiers — MHLW (2026)

Results for FY2024 Wages — MHLW (2026)

Unit Prices Used in Fee Calculation — MHLW (2021)

Standards on Staffing, Facilities and Operation of Designated Disability Welfare Services (MHLW Ordinance No. 171 of 2006) — e-Gov Legal Database (e-Gov)

Development and Operation of Social Welfare Facilities — MHLW (2026)

Survey on the Utilization Status of Closed School Facilities (FY2024) — MEXT (2025)

Closed School Reuse Case Collection — MEXT (2023)

Realizing the Reuse of a School Loved by Its Community through Cooperation with the City — Construction Research Institute (Kensetsu Bukka, October 2018) (2018)

Are kara Ayunda 30-nen: Yuni Town Chronology — Yuni Town (2026)

History — Aitoku Welfare Society (2026)

Support Programs for Agriculture-Welfare Collaboration — MAFF (2026)