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by Ryan Callender, with contributions from Mike Sharb, partners at Squire Patton Boggs. 

July brings thoughts of vacations, beaches, and perhaps working on a summer tan. For Ohio school district treasurers, however, “TAN” means something quite different. In fact, it may mean several different things. Tax Anticipation Notes (TANs) for current revenue expenses, TANs for permanent improvements, and Current Tax Revenue Notes (CTRNs) are frequently discussed together, and sometimes interchangeably, yet they serve distinct purposes under Ohio law.
This article provides a practical overview of these financing tools, explains the differences among them, and offers guidance as to when each may be appropriate. Although they share similar names and each involves borrowing in anticipation of future tax revenues, their purposes, repayment structures, and statutory authorities differ in important ways.  It is worth noting that there are other types of TANs authorized in the Ohio Revised Code, but we have found that these three are the most commonly used.

Why the Confusion?

The term “Tax Anticipation Note” is used to describe more than one type of borrowing in Ohio. Some TANs are issued as an advance of taxes to be collected from a current expense levy. Others finance permanent improvements and are repaid over time from a permanent improvement tax levy. CTRNs represent a separate statutory borrowing authority designed to address cash flow deficits within a single fiscal year.

I. Tax Anticipation Notes for Current Expenses

• Purpose: An advance on a recently approved (or renewed) current expense tax levy. 
• Typical uses: Any purpose for which the associated levy proceeds may be used.
• Repayment: From a recently approved (or renewed) current expense levy.

The current expense TAN is authorized by R.C. 5705.21(D)(1). This financing authority is designed to address the period between voter approval of a new (or renewed) current expense levy and the school district's first receipt of the tax collections from that levy and offers a way of “advancing” those funds.

Key statutory parameters:

• The anticipated levy must be approved by the voters (first approval or renewal).
  The notes must be issued before the first collections from the tax levy are received.
  Principal may not exceed 50% of the estimated proceeds to be collected during the first year of the levy.
  The notes must mature before the authorization of the tax levy expires.

Example:  Bronze City School District voters approve a 1-mill tax levy for current expenses for five years in November 2026, which is expected to generate $2,000,000 per year, with a first collection year of 2027 and last collection year of 2031.  Prior to the first collection of such levy in 2027, the School District issues $1,000,000 of TANs (50% of one year’s collection), with a final maturity of December 1, 2031.

II. Tax Anticipation Notes for Permanent Improvements

Permanent Improvement TANs allow a school district to accelerate the construction or acquisition of permanent improvements before sufficient levy proceeds have accumulated on a pay-as-you-go basis.

• Common projects include roofs, HVAC systems, athletic facilities, buses, security improvements, technology, and facility renovations.
• Repayment comes from future collections of a permanent improvement levy.
• These notes can help school districts avoid construction inflation and deliver projects when students need them rather than years later.

Fixed-Term PI Levy – R.C. 5705.21(D)(2)
For a fixed-term permanent improvement levy, the school district may borrow against a portion of the estimated proceeds expected over the life of the levy.

• • Available only after voter approval of the levy.
  • Principal may not exceed 50% of the estimated proceeds of the levy over its stated life, not to exceed five years.
  • Debt charges are paid from future permanent improvement levy collections.

Example: Ecru Local School District voters approve a 1-mill tax levy for permanent improvements for five years in November 2026, which is expected to generate $2,000,000 per year, with a first collection year of 2027 and last collection year of 2031.  In early 2027, the School District issues $5,000,000 of TANs (50% of anticipated collection over the life of the levy), with a final maturity of December 1, 2031.

Continuing PI Levy – R.C. 5705.21(D)(3) 

For continuing period of time permanent improvement levies, R.C. 5705.21(D)(3) provides a separate borrowing authority. Because the levy has no stated expiration, the statute provides a different framework for determining the amount that may be anticipated.

• • Available only after voter approval of the levy.
    Principal may not exceed 50% of the estimated proceeds of the levy over a period of up to 10 years.
    Debt charges are paid from future permanent improvement levy collections.

Example:  Khaki Exempted Village School District voters approve a 1-mill levy for permanent improvements for a continuing period of time in November 2026, which is expected to generate $2,000,000 per year, with a first collection year of 2027.  In early 2027, the School District issues $10,000,000 of TANs (50% of anticipated collection over a 10 year period), with a final maturity of December 1, 2036.

III. Current Tax Revenue Notes (CTRNs)

CTRNs (we pronounce “sea-trans”) are a separate borrowing authority to resolve cash flow issues within a fiscal year. CTRNs are secured more broadly than TANs in that they are a cash-flow tool for school districts with repayment tied to current-year property tax revenues rather than a single anticipated tax levy.  CTRNs, however, must be issued and mature within the same fiscal year.

• Authorized under R.C. 133.10(C).
• Issued in anticipation of current-year property tax revenues.
• Principal may not exceed 50% of the estimated proceeds from all property taxes for the remainder of that fiscal year, other than taxes to be received for the payment of debt charges, and less all advances.
• Must mature no later than the last day of the fiscal year in which issued.

Example:  Coppertone Municipal School District is concerned that it will have a cash flow issue before receipt of the first property tax settlements in the beginning of 2027.  As of December 15, 2026, the School District is estimated by the County Auditor to receive $10,000,000 for the remainder of the fiscal year.  On December 16, 2026, the School District issues $5,000,000 of CTRNs (50% of anticipated collection of property taxes for the remainder of the fiscal year), with a final maturity of June 30, 2027 (the last day of the fiscal year).

Side by Side Comparison

Federal Tax Matters

Beyond the considerations of statutory authority for TANs and CTRNs as discussed above, there is the question as to whether particular TANs or CTRNs may be issued such that interest on the TANs or CTRNs is excluded from income for federal and State of Ohio income tax purposes.  Although it is necessary to “peel” back the facts in making such a determination, such matters are beyond the scope of this article and should be addressed in consultation with preferred bond counsel.

Conclusion

While you are lying on a beach this summer thinking about a TAN (NB: the American Academy of Dermatology recommends sunscreen with an SPF of 30 or higher), you can reflect on this article to ensure you recall the differences among the various types of tax anticipation notes – so that you don’t end up getting “burned” (thankfully, with the end of this article, comes the end of the really bad “Dad jokes”!).