Interest Rate Recalibration Statute:
NYSEL 3602 6(e)(5)(c)

  • Education law requires the commissioner to revise the assumed amortization schedule for remaining debt service payments for outstanding principal and interest periodically, but at least once for each 10 year  segment of an assumed amortization, if the current interest rate is at least one quarter percent (.25) lower than the original interest rate for the assumed amortization

  • A waiver from the interest rate reduction may be granted by the commissioner if the district can demonstrate that it is precluded by state or federal law, rule or regulation from refinancing

  • If a waiver is approved, the interest rate applied to the retro bond or prospective project assumed amortization will remain at the original rate

  • The law specifies that the adjustment applies to retroactive and prospective assumed amortization projects and to all school districts in the State


Impact on Retroactive Assumed Amortizations

  • The rate on all retroactive assumed amortizations currently at the statewide average rate of 4.5% will be reduced to the 2011-12 statewide average rate of 2.375% and applied to remaining balances as of 7/1/2012

  • The rate on all retroactive assumed amortizations through the Dormitory of the State of New York (DASNY)  will be reduced to a new DASNY rate if  the district (1) refinanced with DASNY or (2) did not refinance at all, or to 2.375% if the district refinanced but not with DASNY

  • The rate on Big 4 district retroactive assumed amortizations will be reduced to reflect each district’s average rate for debt issued during 2011-12 school year

Click below to see a spreadsheet displaying the estimated impact of the interest rate reduction on your  2012-13 and projected 2013-14 Building Aid on retro bond assumed debt service. http://stateaid.nysed.gov/build/xls_docs/Retro_Estimates_interest_rate_change.xls


Impact on Prospective Amortizations
  • Prospective project costs not funded through DASNY are amortized using the Statewide average rate for the school year in which the project was approved by the Commissioner (CAD)

  • If the amortization began before 7/1/03, the interest rate will change starting with 2012-13 aid year, and the new rate will be the 2011-12 statewide average rate of 2.375%

  • If the amortization began between 7/1/03 - 6/30/04, the rate will change in 2013-14, and the new rate will be the 2012-13 statewide average rate when it is available in fall 2013 (preliminary = 2011-12 rate)

Click below to see a spreadsheet displaying the estimated impact of the interest rate reduction on your prospective project 2012-13 and 2013-14 assumed aidable debt service and aid.
http://stateaid.nysed.gov/build/xls_docs/prospective_estimates_interest_rate_change.xls


Waivers from Interest Rate Recalculation

Districts can apply to the Commissioner of Education for a waiver relating to the interest rate recalculation if they can demonstrate that they are precluded by state or federal law, rule or regulation from refinancing.  Examples of instances where a waiver may be approved include but are not limited to:

  1. Circumstances where bonds cannot be refinanced or advance refunded and retain their tax exempt status due to restrictions in state or federal law or prior refundings.
  2. Circumstances where refundings would not meet the savings requirements in local finance law sections 90 or 90.1.
  3. Instances where districts would exceed their constitutional debt limit as a result of refinancing.
Click here for waiver instructions
Click here for waiver application form


Relevant Processing Information
  • A new assumed amortization for the remaining life of retro bond or prospective the project will be established based on the results of above calculations and the new interest rate

  • New rates will be applied beginning with 2012-13 aid and going forward; prior year aid is not affected

  • 2012-13 output reports and aid will not reflect reduced interest rates until after the waiver process is complete

  • All information provided herein and included in the retro and prospective impact spreadsheets is based on statute in effect as of the date of this posting

Last Updated: March 1, 2013