Local school districts could forego additional voted bond funding to secure state facilities assistance and instead use lease-purchase agreements to generate their share of the money under language included in the new capital construction budget.
Budget Director Tim Keen recommended including the financing method in SB310 (Oelslager) after the Ohio School Facilities Commission (OSFC) undertook a study of the idea and voted to endorse it last month.
Current law already allows the use of lease-purchase agreements on projects, but does not include explicit authorization for districts to use them to provide their share of OSFC projects. The biennial budget, HB64 (R. Smith), ordered the commission to look into the issue.
According to the Legislative Service Commission (LSC) analysis of SB310, districts would be allowed to use the agreements so long as the financial documents protect the state’s superior interest in the project, and use of the financing method is agreed to by OSFC in consultation with the Ohio Department of Education (ODE).
Per current law on lease-purchase agreements, the deals provide for a series of one-year leases across the useful life of the facility, but not more than 30 years, according to LSC.
Another provision of SB310 expands districts’ ability to split their OSFC projects into segments by lifting a current law requirement that each segment be worth at least 2 percent of a district’s tax valuation.
The proposed capital budget includes $650 million for K-12 school construction projects — $100 million in GRF-backed debt, $100 in GRF cash transfers and $50 million in lottery profits. Legislative leaders have said they do not anticipate any changes to the bill, and expect it to pass by month’s end.