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Pickerington Schools Seeks Bond Issue That Won’t Increase Tax Rates

By District Treasurer/CFO Ryan Jenkins

The Pickerington Schools Board of Education voted 5-0 on Monday, May 23 to place a $89.93 million bond issue on the Nov. 8 ballot. This was after the county auditor certified to the district that a bond issue of this size over a maximum maturity of 37 years would be assessed at 2.8 mills. But forecasted increases in tax year 2022 residential tax values are anticipated to allow the county auditor to collect a lower overall tax rate, even if the bond issue passes.

At the May 9 board meeting, as the District Treasurer/CFO, I spoke about how the increase in taxable values impacts the overall tax rates and the proceeds needed to pay off district debt. The basic calculation to compute residential taxes is to multiply the tax rate times the taxable value of a home. The tax rate is measured via a rate called a mill. A mill is equivalent to $.001, or $1 of taxes for every $1,000 of taxable value. In aggregate, the district will collect a stream of revenue that is equal to the tax rate multiplied by the taxable value of all property in the district.

Our conversations with the county auditor have allowed us to estimate that the value of residential property in the district will increase by nearly 25-30 percent. We are all aware of the dramatic spike in demand for homes in our region, and this has translated into higher home values for all of our residents. The average taxpayer may think that when values increase by 25-30 percent, taxes will increase by the same amount, but that’s not how Ohio law works.

As taxable values increase, Ohio House Bill 920, which was passed back in 1976, dictates that tax rates decrease by an amount that will keep aggregate voted tax collections on existing properties the same year over year. So as values are forecasted to increase by 25-30 percent for existing homes, tax rates for voted levies will be reduced by law so that aggregate tax collections for the district remain the same each year.

This also means that the district’s debt service tax rates will decrease, because the increased values allow a lower tax rate to generate enough tax proceeds to pay back district debt. The county auditor currently assesses 7 mills on existing properties to generate the proceeds to pay existing debt service, including annual principal and interest payments. Seven mills would equate to $7 annually in taxes for every $1,000 in taxable home value or, as most property owners would think about it, $245 an-

nually in taxes for every $100,000 of home market value, as estimated by the county auditor.

If the levy passes, many might assume that the auditor would need to collect 9.8 mills – 7 mills to pay existing debt and 2.8 additional mills due to the new bond issue – but district values have grown by a substantial enough amount to actually allow the county auditor to decrease the millage needed to repay debt from a rate of 7 mills to 6.5 mills – a drop of one half of a mill.

Even with the lower millage of 6.5 mills, the increase in district values will generate more than enough proceeds to pay district debt service.

Assuming the bond issue passes, we will pass another resolution sometime after Nov. 8 instructing the county auditor to collect 6.5 mills to pay debt service. So, rather than the auditor collecting 9.8 mills for debt service, which would mean $343 annually in taxes for every $100,000 in home market value, the auditor will collect 6.5 mills for debt service, which would mean $227.50 annually in taxes for every $100,000 in home value. That’s a reduction of nearly 34 percent.

This will be the third time since November 2020 that the district has sought to approve a bond issue to address the rapidly increasing student population – growth that is straining the district’s ability to find adequate space to educate its students.

The $89.93 million in bond proceeds would be used for the following facility needs: • A new junior high school on the property formerly known as the

McGill property on Lockville Rd. • Renovating the building that is currently Ridgeview Junior High to turn it into a combined K-4 and 5-6 building like the Toll Gate facility. • Adding up to 24 additional classrooms at Pickerington High

School Central and up to 18 additional classrooms onto Pickerington High School North. • Renovating Heritage Elementary

School to become a preschool center, which will serve to cre-

ate space in existing elementary schools. • Other upgrades and improvements to classroom facilities across the district.

The district is again working with the Ohio Facilities Construction Commission (OFCC). Because of this, if the bond issue passes and the district spends the $89.93 million for facility construction and improvements, the OFCC will approve a future Classroom Facilities Assistance Project, meaning the district will receive at least $74.4 million in future state funding. The district will use that funding to address future facility improvements at Tussing Elementary School, Diley Middle School, Harmon Middle School, Lakeview Junior High and Pickerington High School North.

Given this exceptional opportunity to pass a bond issue that we believe won’t increase tax rates, combined with future funding of at least $74.4 million from the state of Ohio, the time to pass this bond issue to address our full or overcrowded buildings sure seems to be Nov. 8.