The Olentangy school board on Feb. 23 made a move designed to help the district keep its campaign promise of no new millage on bonds.

The Olentangy school board on Feb. 23 made a move designed to help the district keep its campaign promise of no new millage on bonds.

The district will use bond residuals - principal funds left over when a capital improvement or new construction project is completed under budget, district Treasurer Becky Jenkins has said.

The board agreed to transfer $13 million in bond residuals to its debt retirement fund.

The board also approved using $3.2 million in residuals for an energy improvement project, including lighting and heating and cooling system upgrades, and $1.8 million in residuals for smaller projects, such as roof and paving repairs.

The residuals are from two bond issues: $77 million in bonds the district issued in 2005 to build an elementary school and a high school and to pay for improvements to Shanahan Middle School (which have a residual of $2 million); and $89.9 million in bonds the district issued in 2008 to build three elementary schools and a middle school and to expand Olentangy High School (which have a residual of $16 million).

The projects for the 2008 bonds came in under budget because the economy crashed and construction companies were bidding lower than anticipated, Jenkins said.

The Ohio Revised Code restricts the use of bond residuals to additional capital improvement projects that are "consistent with the description of the original bond purpose" and for transfer to a bond retirement fund, Jenkins said.

The federal government would tax the money were it not reallocated, Brad Sprague, a financial adviser to the district, told ThisWeek.

Putting the residual funds into the debt retirement fund will help the district meet its "no-new-millage" promise to voters.

"We have four to five years of pressure on the debt service fund, based on how the payments are structured," Jenkins told ThisWeek. "The purpose of putting the $13 million into the debt service fund is to lessen that pressure and keep the 8.72 millage rate. Paying off bonds is not as simple as paying off a home mortgage."

She said bonds can be paid off early only if they contain provisions that allow it.

In November, Superintendent Wade Lucas formed an ad hoc committee to look at what to do with the residual funds. The committee recommended the approved transfers.

Jenkins recommended putting the $13 million in the bond retirement fund to avoid an increase in property taxes to pay the district's annual debt service, which is about $28 million.

The district has about $380 million of debt created by building 25 schools to accommodate enrollment growth.

The district's bond revenue is collected at 8.72 mills and is estimated to bring in $27.8 million this year. By law, millage must increase if the debt service cannot be met.

The district has used a no-new-millage approach to bond issues, made possible by factors including the rapid rate of new construction and increases in the district's property valuation. Jenkins said the district doesn't want to increase the debt millage, and wants to hold down property taxes.

The county auditor's office recently performed a sexennial reappraisal, which found property values in the district decreased about 5 percent.

That decrease can affect the district's property tax income, Jenkins said.

"The district will draw down on (the) balance over the next several years in order to avoid the need to raise bond millage rates on the taxpayers, thereby maintaining the no-new-millage pledge. Barring further significant deterioration of the district's assessed valuation - not expected - the district will be able to keep its no-new-millage pledge even though the property values have taken a negative turn that could not have been anticipated at the time the pledge was made," Jenkins and Sprague told ThisWeek in a written statement.

Jenkins has said if the $13 million were not used to cushion the reappraisal effect, the district would have "to increase the millage collection by the highest of 1.43 mills which would cost the average taxpayer, (with) about a $300,000 home, approximately $131 per year. We don't want to do that."