By JAN LARSON McLAUGHLIN
BG Independent News
The Bowling Green City School bonds for a new high school have come under fire for adding up to more than the $70 million estimated price tag for the new building.
However, the levy language is all above board – though the tax revenue raised will be far more than $70 million, according to Wood County Auditor Matt Oestreich.
“It’s got to raise $70 million plus the interest,” Oestreich said. This is how every school district in Ohio finances buildings, he added.
“There’s nothing fishy about it,” he said. “There’s nothing suspect about it.”
The ballot issue is unusual in that it splits the building cost between property taxes and income taxes – likely in an effort to placate owners of large agricultural acreage in the rural areas and large rental landowners in the city of Bowling Green, Oestreich said.
School districts can only increase income taxes by 0.25% increments. It’s this income tax that has stirred up criticism since it will raise an estimated $3.8 million a year – or $26.6 million over seven years. That puts the $49 million in property revenue combined with the income tax revenue at closer to $75.6 million rather than the $70 million cited by the district.
With property taxes, the addition of new residents and new businesses in the district help bring down the amount collected from the original property owners. The district’s tax base is about 30% businesses.
With income taxes, if the community grows, the revenue will grow. But only residents of the district pay income taxes – not businesses. Social Security income is not taxed by either property or income taxes.
The county auditor broke down the 3.9 mills property tax portion of the bond issue.
- The property tax will bring in a total of $99.5 million over 30 years.
- $49 million will be used to pay off the principal of the building bonds.
- $50.5 million will be used to pay off the interest.
David Conley, the school district’s financial consultant, said it’s easy to see how the financing is misunderstood.
The amount the school district will borrow remains at $70 million – with $49 million in property taxes over 30 years, and $21 million in income taxes over seven years.
But just like with building a house, the owner has to plan for the interest on the project, Conley said. At a 5.25% interest rate, the interest payments will be quite high. He offered the following numbers:
- The property tax bond principal and interest payments will cost $2.96 million a year – adding up to a total of $88 million over 30 years.
- The income tax bond principal and interest payments will cost $3.66 million per year – adding up to a total of $25.6 million over seven years.
- From the income tax, the district plans to put aside $321,038 a year for maintenance of the new high school. That will add up to $2.25 million over seven years.
“The board wanted to make sure the district would have money for maintenance,” Conley said.
“That’s been a sticking point in the community with the maintenance,” Board of Education Vice President Ryan Myers said.
The questioning of the building bond issue totals are an “honest misunderstanding,” Conley said.
“Every district does this. The ballot language, by state law, never references interest,” he said.
Before going on the ballot, the county auditor and state department of taxation must approve of the ballot language, Conley said.
“The board does not have the ability to put something on the ballot that’s a lie,” he said. “It’s the same as every school district in Ohio – there’s no misrepresentation.”
Bowling Green City Schools is also getting some heat for not seeking funding through the Ohio Facilities Construction Commission.
In March, BG City Schools was ranked 495 out of 609 districts, with a possible 18% of the high school construction costs funded by the state, according to district Treasurer Cathy Schuller. As of this week, the district had been pushed further down the list, ranking 505 in the state, with the state share now at 17%.
That could result in the district getting $12 million back for the building project.
The board applied for funding and the facilities committee started out working with OFCC officials. But early this year, the committee agreed by an 87% vote to not seek state support. That decision was based on the fact that the building projects would have to follow strict OFCC guidelines, would have potentially higher costs, less money would be available from the state than originally expected, and funding would be several years away.
“It adds another layer to the decision making,” Schuller said. “The committee recommended we not pursue that. Keep in mind that there’s no guarantee of when or if that would happen, because of being so far down the list and the reliance on the state to continue funding to the program.”
Myers stressed that the decision was made by the facilities committee, made up of community members.
“This is exactly what was voted on and recommended to us,” Myers said. “We’ve been accused several times of not listening to the community.”
The Expedited Local Partnership Program (ELPP) is designed to give districts the opportunity to move ahead with portions of their project. The program allows school districts to pass a resolution requesting to enter ELPP. The commission then performs an assessment of the district’s facilities and enters into an agreement with the district on a facility master plan that covers the entire needs of the district. The district then chooses a “distinct portion” of their master plan to fund through local efforts. When the district’s turn later arises, the money spent by the district on the distinct portion is credited against the local share of the entire project.
But the facilities committee, made up of approximately 80 people representing different interests, was reluctant to commit to a project that would have to follow OFCC rules.
“They don’t take into account any type of growth,” Myers said. “We lost about 300 students during COVID. We think our district will grow with this new building.”
The OFCC funding would dictate size and building supplies used.
“You basically have two bosses on the build” – the district’s contractor and the OFCC, Myers said.
Bill Prenosil, the senior planning manager with the OFCC, agreed the program could be confusing at times. And he said Bowling Green would have to wait at least 10 years before any funding would be available.
Prenosil said the district applied for the ELPP funding earlier this year, and started working with OFCC officials, going through all the standard planning steps. The assessments of the district’s buildings were updated.
OFCC staff worked with the facility committee on master plan options. But then the committee decided the program wasn’t right for BG City Schools.
“The district decided none of the options were what they were looking for,” Prenosil said.
School officials were reluctant to go with the square footage that the OFCC said was needed – out of concern that the district would soon outgrow the new high school.
Even if the district went for the ELPP funding, it would get less than 17% since only those portions that met OFCC guidelines would qualify for partial funding, Prenosil said. But some districts file, knowing they will be reimbursed for just 10% – which in Bowling Green’s case would be $7 million.
“They just weren’t getting enough to make it worth their while,” he said. “They are just trying to do what they think is right for their community.”
Prenosil acknowledged that the OFCC funding comes with strings.
“Is there red tape? Of course there is,” he said.
But he disputed the criticism about the money coming with too many constraints.
“That is absolutely not true,” he said. “Rumors build upon rumors, upon rumors.”
Frustrating for Prenosil was the lack of communication from the board that they were no longer interested in working with the OFCC. He received word from the architects of the high school project – but received no response from the board.
The district can still resubmit its application – with the point of no return being when design is nearing completion, he said.
“We certainly would be willing to try and sit down with them again,” Prenosil said.
