The Anchorage School Board wants the school district to spend $10.5 million of leftover money from previous school building projects on new capital-improvement projects.

That's the direction the board favored Monday night at its meeting.

The money comes from interest earnings and unspent bond proceeds. The district says the money must be used either for paying for unfunded capital projects or paying down the district's $800 million debt.

Legal counsel tells the district it must spend the money by the end of next year to avoid a problem with the IRS, said the district's controller Chad Stiteler.

Until earlier this year, legal advisers told the school district it must wait until a project is complete before spending unused funds for other projects. New legal advice in March said the district must spend the money.

The board Monday came to a consensus to use the money for capital-improvement projects. That would be better for taxpayers than the alternative uses of the money: paying down existing debt or bonding for the projects, according to a memo from board member Jeff Friedman.

First, if the district paid off $10.5 million in existing debt, it would lose out on $6.3 million to $7.4 million in reimbursements the state offers, he said.

If the district sold bonds to pay for the $10.5 million in projects instead, it would have to pay extra costs connected to selling those bonds, he said.

Bonding for the projects right now also might be a dicey alternative, because in April voters turned down the proposed $97 million in new bonds.

The district says it has some $800 million of school repairs on its to-do list. It's unclear which projects would get the $10.5 million in funding.

The board will finalize its decision with a vote at the Dec. 14 board meeting.