Panel limits use of ‘in lieu’ school payments to construction debt; amendment approved

The Appropriations - Education and Environment Division voted to approve an amendment to bill 11/30 that requires any reduction taken from a school district’s in-lieu-of-tax calculation to be allocated to the district’s sinking and interest fund and used specifically for bonded indebtedness and capital debt.

Senator Shively, who explained the amendment, told the committee the change clarifies long-standing intent that money carved from the in-lieu-of pool go toward school construction debt rather than being transferred into general building funds for non-debt uses. “The reduction must be allocated to school district sinking and interest fund and applied specifically to bond indebtedness and capital debt,” Shively said while moving the amendment.

Adam Tesher, School Finance Officer at the Department of Public Instruction, explained an administrative limitation the amendment creates: districts receive authority for a sinking and interest levy only when voters approve bonded debt. That means a district that has a building-fund levy but no voter-approved bonded indebtedness could receive additional in-lieu funds under the new formula but may have no existing debt for which to apply them. Tesher said many districts with building funds also carry debt, but not all do, which complicates implementation.

A committee member recorded a dissenting vote, citing concern about directing a $10,000,000 appropriation to a limited set of districts rather than broader K‑12 needs. The amendment nonetheless passed on a 4–1 vote. Following the amendment vote, Senator Shively moved—and the committee approved—a “do pass as amended” recommendation on bill 11/30 to carry the measure to the full committee.

Why it matters: The amendment narrows permissible uses of any additional in-lieu-of funding directed at school facilities, tying the funds explicitly to debt service for construction. That limits districts’ flexibility to repurpose the money and aims to prevent local mill-levy increases to cover bond debt.