Ohio Education Update; Levy Options

    View Authors January 2005
    New Permanent Improvement Levy Options

    House Bill 362, signed by the Governor on December 30, 2004, permits school district permanent improvement tax levies to be renewed or replaced with levies for the purpose of "general permanent improvements" that run for a fixed term not to exceed five years or for a continuing period of time regardless of the stated purpose or term of the prior levy.

    Before the enactment of this legislation, school district permanent improvement levies imposed under Ohio Revised Code Section 5705.21 to provide for the construction or acquisition of any specific permanent improvement or class of improvements could only be renewed or replaced for the same purpose and for a fixed term not to exceed five years. If a board of education wanted to extend such a permanent improvement levy, it was forced to continue to renew or replace it with a levy for the same purpose at least once every five years. Only taxes for "general ongoing permanent improvements" could be levied for a continuing period of time.

    With the passage of House Bill 362, boards now have the option of (i) broadening the purpose of their current permanent improvement levies when renewing or replacing them by making the purpose of the renewal or replacement levy "general permanent improvements" (as opposed to the specific permanent improvement or class of permanent improvements specified for the prior levy) and (ii) having those renewal or replacement levies run for a continuing period of time to avoid the requirement of returning to the voters periodically with another renewal or replacement ballot question. Additional levies for general permanent improvements can also run for a continuing period of time.

    In addition to these benefits, boards which choose to renew or replace their permanent improvement levies with general permanent improvement levies that run for a continuing period of time may issue tax anticipation notes in a principal amount not to exceed 50% of the total estimated proceeds of the levy to be collected over a specified number of years not exceeding 10 years after the issuance of the notes. The Bill also eliminates authority for levies for the purpose of "general ongoing permanent improvements," and provides that renewing or replacing existing levies of that purpose will be for the purpose of "general permanent improvements."

    House Bill 362 will go into effect in late March. Please feel free to contact the lawyer with whom you work if you have any questions about this bill and its effects on your current permanent improvement levies.