Statewide Interest Rate Calculation For The Assumed Amortization of
Transportation Capital Expense

The statewide average interest rate calculated based on bus borrowings between 7/1 and 6/30 of each school year will be permanently tied to all assumed amortizations of transportation capital expense that will begin in the following aid year. For example, the rate calculated based on borrowings between 7/1/1W and 6/30/1X will be permanently tied to amortizations beginning in the 201X-1Y aid year. That rate will also be tentatively applied to amortizations beginning in the 201Y-1Z aid year, until a permanent rate based on borrowings between 7/1/1X and 6/30/1Y is established in fall 201Y.

The statewide interest rate is calculated from all bus borrowings issued from 7/1 through 6/30 of each school year. The interest to be paid from each amortization schedule is summed Statewide. This sum is the numerator for the statewide calculation. The denominator comes from a calculation that involves the year of amortization and the principal payment for that year. These fields are multiplied together and the result for each line of the amortization schedule is summed to a total field for the debt instrument. This total field is then added to a statewide total field for principal X year. The statewide rate calculation is the (numerator / denominator) times 100. The result is then rounded to the nearest 1/8 of one percent for the actual statewide interest rate.

The following is an example of the calculation of a statewide rate that would result from a sample of four borrowings (three bonds & one BAN)

Bus Borrowing Bond #1
Amount: $1,000,000 Date: 7/1/2012
 
Year Principal Interest Principal * Year
1 $200,000 $30,000 $200,000
2 $200,000 $24,000 $400,000
3 $200,000 $18,000 $600,000
4 $200,000 $12,000 $800,000
5 $200,000 $6,000 $1,000,000
6 $0 $0 $0
Total $1,000,000 $90,000 $3,000,000

 

Bus Borrowing Bond #2
Amount: $500,000 Date: 3/1/2013
 
Year Principal Interest Principal * Year
1 $33,000 $25,000 $33,000
2 $100,000 $23,350 $200,000
3 $100,000 $18,350 $300,000
4 $100,000 $13,350 $400,000
5 $100,000 $8,350 $500,000
6 $67,000 $3,350 $402,000
Total $500,000 $91,750 $1,835,000

 

Bus Borrowing Bond #3
Amount: $100,000 Date: 6/30/2013
 
Year Principal Interest Principal * Year
1 $0 $2,750 $0
2 $20,000 $2,750 $40,000
3 $20,000 $2,200 $60,000
4 $20,000 $1,650 $80,000
5 $20,000 $1,100 $100,000
6 $20,000 $0 $120,000
Total $100,000 $10,450 $400,000

 

Bus Borrowing BAN
Amount: $500,000 Date: 12/31/2012
 
Year Principal Interest Principal * Year
1 $250,000 $2,750 $250,000
2 $250,000 $5,750 $500,000
Total $500,000 $8,500 $750,000

 

  Interest Principal * Year
Bus Borrowing Bond#1 $90,000 $3,000,000
Bus Borrowing Bond#2 $91,750 $1,835,000
Bus Borrowing Bond#3 $10,450 $400,000
Bus Borrowing BAN $8,500 $750,000
Total $200,700 $5,985,000

Calculation: Interest Rate = (Total Interest /Total Principal*Year) * 100

($200,700 / $5,985,000) * 100 = 3.35338
rounded to nearest 1/8% = 3.375

Last Updated: May 31, 2017