Recent amendments to NYS Education Law 3602 6.(e)(5)(c) regarding reduction of interest rates for prospective projects and retro bond amortizations

The enacted budget for 2016-17 includes an amendment to NYS Education Law 3602 6.(e)(5)(c) regarding  the reduction of interest rates for prospective projects and retro bond amortizations.  The amendment defers the implementation of this provision from the 2016-17 aid year to the 2017-18 aid year. The provision remains otherwise unchanged. Following is a summary of the provision:

  1. The recalibration will be implemented in the 2017-18 aid year for all retro bond amortizations and for prospective project amortizations that started in 2007-08 or earlier. Amortizations starting after 2007-08 will be reset after ten years (For example, 2008-09 amortizations will be adjusted in 2018-19)
  2. The State Education Department must notify school districts of projects subject to the interest rate adjustment no later than December 1 in the school year preceding the school year of the implementation; e.g., by December 1, 2016 for prospective projects and retro bonds subject to adjustment in 2017-18.
  3. Subsequent reductions will occur at the end of each ten year segment of an assumed amortization.

The new statewide average interest rate to be applied to adjusted amortizations will still be one year behind the start year of the adjusted amortization; e.g., amortizations based on the statewide average rate, for which lowered rates are applied in 2017-18, will be assigned the 2016-17 statewide average when it becomes available in fall 2017. Estimates of 2017-18 aid for these amortizations will temporarily be based on an earlier statewide average rate.

Waivers from Interest Rate Recalibration
Please do not submit any new waiver applications at this time, or any amendments to already submitted applications on the Form FB Interest Rate Reduction Waiver Application form in 2015-16 SAMS.   The process will be the same as last year such that for each  prospective project and/or retro bond subject to the 2017-18 rate reduction, districts  will be required to apply for a waiver on the Form FB Interest Rate Reduction Waiver Application form  included in 2016-17 SAMS, or to indicate to SED on the form that the district will not be seeking a waiver. Updated detailed waiver application guidance will be published in the near future.

Last Updated: April 20, 2018