Detailed Explanation of Transportation Capital Aid to be Paid Based on Assumed Amortization Beginning with the 2005-06 Aid Year

Chapter 57 of the Laws of 2004 established a new method of apportioning Transportation Capital Aid. For aid years 2004-05 and prior, State Aid partially reimbursed districts for their actual approved debt service expenditures for approved buses based on the actual amortization schedules associated with their borrowings. Districts also were partially reimbursed for actual base year transportation equipment, lease and garage rental expenses. Beginning with the 2005-06 aid year, aid on all types of transportation capital expense is paid based on assumed amortization schedules using a statewide average interest rate.

The following categories of transportation capital expenditures are eligible for Transportation Aid:

  1. Retro assumed debt service expenditures associated with bus borrowings with principal outstanding as of July 1, 2004

  2. Retro assumed debt service expenditures associated with bus leases and garage rentals with payments remaining as of July 1, 2005 (i.e., leases beginning before 7/1/05)

  3. Retro 0405 assumed debt service expenditures associated with the approved cost of a) buses with purchase order (PO) date between 7/1/03 and 6/30/04, but for which no borrowing was reported to SED and for which the first payment was not made until on or after 7/1/04 and b) all buses with purchase order date between 7/1/04 and 6/30/05

  4. Prospective assumed debt service expenditures associated with the approved cost of a)buses with purchase order date on or after 7/1/05 and b)leases beginning on or after 7/1/05

  5. Prospective assumed debt service expenditures associated with aidable transportation equipment purchases

  6. In 2005-06 and 2006-07 only, assumed debt service expenditures for excess of 2003-04 actual bus purchase/lease expenses over estimated 2003-04 bus purchase/lease expenses on file with SED by November 15, 2003

The categories listed above are described in detail below:

  1. Retro assumed debt service expenditures associated with bus borrowings with principal outstanding as of 7/1/04.

    For each existing debt issuance associated with retro bus purchases, an assumed amortization schedule was created based on:

    • The principal remaining for each bus borrowing issued before 7/1/04, calculated by subtracting all cash and principal payments made on the borrowing through 6/30/04 from the total net cost of the buses associated with the borrowing

      Data source: The principal remaining for each borrowing displayed on districts' “retro bus report.” This report was created by integrating multiple years of district reported borrowing (Schedule F2) and bus payment (Schedule F1) information. The information on the report was presented to districts during the 2004-05 school year for their review and confirmation or correction.

    • A remaining life equal to the number of years resulting from the following calculation: 5yrs – (7/1/05 – borrowing date), rounded to the nearest year; borrowings with a remaining principal but a calculated term of 0 or less years are assigned an amortization term of .5 years (the equivalent of one assumed payment)

      Data source: The borrowing date used to calculate remaining life is that reported by districts on Schedule F2s submitted to SED through and including 2003-04 borrowings reported in the 2004-05 school year.

    • A statewide average interest rate calculated using the principal and interest payments for all bonds and BANS issued in the year prior to the aid year; e.g., assumed amortizations beginning in the 2005-06 aid year will be based on bus borrowings issued between 7/1/04 and 6/30/05

    • Equal semiannual assumed payments of principal and interest. For existing borrowings, the first two semiannual payments are assumed to occur in the 2005-06 school year, generating aid in that school year

  2. Retro assumed debt service expenditures associated with bus leases and garage rentals with payments remaining as of July 1, 2005 (i.e., leases beginning before 7/1/05).)

    For each approved lease beginning before 7/1/05, with payments remaining as of July 1, 2005, an assumed amortization schedule is created based on:

    • The amount of the remaining lease paymentsData source: For leases beginning before 7/1/04, remaining payment data was confirmed with individual districts as needed . For l eases beginning between 7/1/04 and 6/30/05, the total cost of the lease as approved by the SED Office of Management Services.

    • A term equal to the number of years remaining on the lease; five years for leases beginning between 7/1/04 and 6/30/05

    • A statewide average interest rate calculated using the principal and interest payments for all bonds and BANS issued in the year prior to the aid year; e.g., assumed amortizations beginning in the 2005-06 aid year will be based on bus borrowings issued between 7/1/04 and 6/30/05 (Click here for a mathematical explanation of the interest rate calculation.)

    • Equal semiannual assumed payments of principal and interest. The first semiannual payments are assumed to occur in the 2005-06 school year, generating aid in that school year.

  3. Retro 0405 assumed debt service expenditures associated with the approved cost of a) buses with purchase order date between 7/1/03 and 6/30/04, but for which no borrowing was reported to SED and for which the first payment was not made until on or after 7/1/04 and b) all buses with purchase order date between 7/1/04 and 6/30/05.

    For each bus purchased, as determined by the purchase order date, an assumed amortization schedule is created based on:

    • The approved cost for each bus:

      Data source: SA-16 bus purchase approvals: approved cost and purchase order date

    • A remaining life resulting from the following calculation: 5yrs – (7/1/05 – purchase order date ), rounded to the nearest year;

    • A statewide average interest rate calculated using the principal and interest payments for all ends and BANS issued in the year prior to the aid year; e.g., the rate applied to assumed amortizations beginning in the 2005-06 aid year will be based on bus borrowings issued between 7/1/04 and 6/30/05; (Click here for a mathematical explanation of the interest rate calculation.)

    • Equal semiannual assumed payments of interest and principal. The first semiannual payments are assumed to occur in the 2005-06 school year, generating aid in that school year.

  4. Prospective assumed debt service expenditures associated with the approved cost of a) buses with a purchase order date on or after 7/1/05 and b) bus/garage leases beginning on or after 7/1/05

    Prospective bus purchases are those buses purchased on or after July 1, 2005, as determined by the purchase order date reported to SED on the SA-16 bus purchase approval form. This form has recently been updated to include the PO date.

    Prospective bus or garage leases are those leases beginning on or after July 1, 2005 as determined by information provided on leases approved by the Office of Management Services. Aidable debt service expenditures for prospective bus purchases and leases will be based on assumed amortization schedules that begin 12 months after the purchase order date or lease begin date, respectively .For each prospective bus or lease, an assumed amortization schedule will be generated based on:

    • Approved cost of each bus purchased on or after 7/1/05 or in the case of leases, the total lease amount approved by the Office of Management Services;

      Data source: PO dates and approved bus costs reported on the SA-16 bus purchase approval form, or in the case of leases, total approved lease amount and begin date on leases approved by the Office of Management Services.

    • A statewide average interest rate calculated using the principal and interest payments for all bonds and BANS issued in the year prior to the aid year; e.g., prospective assumed amortizations beginning in the 2006-07 aid year will be based on bus borrowings issued between 7/1/05 and 6/30/06; (Click here for a mathematical explanation of the interest rate calculation.)

    • A term of 5 years

    • Equal semiannual assumed payments of principal and interest. For example, 2006-07 assumed debt service for a bus with a PO date between 7/1/05 and 12/31/05 will be based on two assumed payments of principal and interest; assumed debt service for a bus purchased on or after 1/1/06 will be based on one assumed payment of principal and interest. Although there are two assumed payments per year for purposes of establishing an assumed amortization schedule, actual Transportation Aid paid on prospective bus purchases/leases is part of regular Transportation Aid and is paid to districts as part of the 3609-a General Aid payment schedule.

    Note: An assumed amortization schedule for a prospective bus purchase or lease is not generated, and aid does not begin to be paid on the bus purchase or bus lease, until 12 months after the purchase order date or lease begin date.

  5. The prospective assumed debt service expenditures associated with transportation equipment purchases. Assumed amortization schedules for transportation equipment purchases are the same as those for prospective bus purchases/leases, except that all assumed debt service expense for an aid year will be based on two equal semiannual payments of principal and interest, regardless of the actual purchase date of the equipment. In other words, the purchase order date for all equipment purchased in a given school year is assumed to be July 1 of the school year. The amortization of the equipment purchase amount will begin one year later.

    Data Source: Total transportation equipment expense reported to SED on Schedule G of the State Aid Management System (SAMS)

  6. In 2005-06 and 2006-07 only,, assumed debt service expenditures for excess of 2003-04 actual bus purchase/lease expenses over estimated 2003-04 bus purchase/lease expenses on file with SED by November 15, 2003.

    For the past several years, districts could only receive aid on the amount of bus purchase expense estimated by November 15 of the year prior to the claim year. For example, 2003-04 bus purchase expense claimed for 2004-05 aid, would only be aided up to the amount of 2003-04 estimated expense reported to SED by 11/15/03. Prior to the implementation of assumed amortization, any "excess" 2003-04 expense not aided in 2004-05 would have become an aidable expense for 2005-06 Transportation Aid. Under assumed amortization, the 2003-04 excess expense will still be aided, but it will be amortized over two years, at the statewide average interest rate. Beginning with 2005-06 data collection due to SED on September 2, 2005, no annual expense will be reported on Form F, and the November 15 "date certain" will no longer be in effect.

Notes:

For every aidable assumed debt service expense category listed in this section, aid is determined by multiplying aidable expenses by the districts selected transportation aid ratio for the current aid year.

Although there are two assumed payments per year for purposes of establishing an assumed amortization schedule, Transportation Aid is still paid to districts as part of the 3609-a General Aid payment schedule.

Districts should review the document entitled "2005-06 State Aid for Transportation Capital Expense: New Reporting Requirements" for a list of reporting changes associated with the statutory changes explained in this document.

Last Updated: May 2, 2017