Interest Rate Recalibration Pursuant to

NYSEL 3602 6(e)(5)(c) as Amended by Chapter 57 of the Laws of 2013:
Implementation, Lists of Affected Bonds/Projects and Waiver Application Instructions

  • Education law requires the commissioner to revise the assumed amortization schedule for remaining debt service payments for outstanding principal and interest at the end of 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 not change

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

  • The State Education Department must notify 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


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  final 2013-14 statewide average rate when available and applied to remaining balances as of  7/1/2014. (Spreadsheet estimates based on 2012-13 rate.)
  • 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  the 2013-14 statewide average rate 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 applicable interest rate for the 2013-14 school year, when available (Spreadsheet estimates based on 2012-13 rate.)
Click below to see a spreadsheet displaying the estimated impact of the interest rate reduction on projected 2014-15 Building Aid on retro bond assumed debt service. http://stateaid.nysed.gov/build/xls_doc/retro_bonds_subj_to_2014-15_interest_rate_change.xls(excel 239 KB)

Impact on Prospective Amortizations

  • Prospective project costs not funded through DASNY currently 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 7/1/2005, the interest rate will change starting with the 2014-15 aid year, and the new rate will be the  final 2013-14 statewide average rate  when it becomes available in fall 2014 or the applicable 13-14 rate for Big 4 city districts (Spreadsheet estimates based on 2012-13 rate).

Click below to see a spreadsheet displaying the estimated impact of the interest rate reduction on 2014-15 Building Aid on prospective projects subject to recalibration.
http://stateaid.nysed.gov/build/xls_docs/prospective_projects_subj_to_2014-15_interest_rate_change.xls (excel 348 KB)


Waivers from Interest Rate Recalibration

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 to the amortization going forward; prior year aid is not affected

  • 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: May 1, 2018