by Jerry Reiss and Marc H. Brawer
A change to F.S. §55.03 in 2011, when viewed in light of its application to a common issue in family law, essentially converted what was once a two-way stop on two intersecting country roads to a new six-way city intersection, complete with traffic signals.
The History of F.S. §55.03: Calculation of Statutory Interest
Calculating the amount of statutory interest1 applicable to court-imposed judgments2 used to be a relatively straightforward calculation before F.S. §55.03 was changed in 2011. Prior to the law’s modification, to calculate the amount of interest owed on a judgment, one would apply the daily interest rate for the number of days beginning with the date of entitlement and ending with the date of payment.3 Complications arose only in leap years and were easily dealt with by the daily rate being reduced to reflect the extra day for the calculation covering the leap year.
The relatively simple calculation became complicated after Laws of Florida Ch. 2011-1694 amended F.S. §55.03. Under the revised §55.03, the interest rate is recalculated on a quarterly basis.5 For judgments, one uses the daily rate for the quarter in effect at the time a judgment is entered and that rate will apply until the judgment is paid or until the end of the calendar year, whichever is sooner, irrespective of any interest rate changes for a subsequent quarter in that year.6 The interest rate is then adjusted annually on January 1 of each following year. The new interest rate is based on the rate in effect as of January 1.7 This annual interest rate adjustment applies to the majority of judgments, with only a few exceptions not relevant to this article.8 This new interest rate recalculation for judgments became applicable to all unsatisfied judgments when the revised F.S. §55.03 went into effect on July 1, 2011.9
Application of F.S. §55.03 to Support Arrearages
Calculating the amount of statutory interest applicable to judgments for support arrearages10 was never entirely simple, even prior to the amendment of §55.03, because each support payment missed is treated like a simple judgment with simple interest11 applied to each missed payment.12 Therefore, if there were 96 monthly payments past due, each past-due payment required an interest calculation, each of which required more than a few minutes to perform. Afterwards, the 96 results had to be summed.
Now that F.S. §55.03 has been revised to require the recalculation of the statutory interest rate on a quarterly basis and recalculation of the interest rates on judgments annually as of January 1 of each year following entry of the judgment, a logistical nightmare is presented for the family law practitioner, especially considering the impact that the leap year has on the process.
Underlying Concepts for Calculation of Statutory Interest on Support Arrearages
If one treats each month as having the same number of days, the second missed payment has one month less interest than the preceding one, the third missed payment has two months less interest, and so forth. Considering the concept from an algebraic perspective, the number of missed payments (n) and the number of months of interest on all such payments can be aggregated and expressed as (n)(n+1)/2.13 As all missed payments are the same, the formula amount (n)(n+1)/2 can be multiplied by a single payment (P) and the monthly interest rate to determine the total interest on all payments for that year. For purposes of this simplified discussion, the monthly interest rate is the annual simple-interest rate divided by 12. Just because months have a differing number of days does not mean that the entire process of calculations cannot be simplified with a different formula, as will be demonstrated later.
Interest calculation on each missed payment can be broken down between the simple interest earned for the first year and each full year’s interest for all subsequent years that follow, plus the final year’s interest to the valuation date. As demonstrated in introductory algebra classes, addition has associative properties.14 Therefore, all the payments of each year can be summed for the first year the interest is applied. After each year of missed payments, the total amount for that previous year is due on January 1 and the simple interest is applied to the full amount in the exact same way that interest applies to a single judgment amount. The final payments present a third classification of calculations because the final payments involve a partial year, like the first year but with a different valuation date.
This process can be confusing; however, it can be streamlined by following four simple steps which employ tables A and B. The four-step process and accompanying tables will be explained in detail below.15 For the sake of clarity, two examples will be provided following the explanation. Then, this article will conclude with a mathematical proof of tables A and B.
Steps Used to Calculate Statutory Interest on Support Arrearages
• Step One: Payments during the First Year (Table A) — After entry of a judgment awarding support arrearages, the first year’s interest applicable to the new payments is determined by using table A below. Arrearage payments missed in each new calendar year require a first-year interest calculation using table A. Add all such first-year missed payment interest calculations.
As the interest rate now changes quarterly, care must be exercised in years with differing interest rates for each quarter.16 A new missed payment applies the quarterly rate in effect at the time the payment was missed. A missed payment in one quarter can have a different interest rate applied than the payments missed in other quarters in that same year. With the quarterly recalculation of statutory interest rates, it is possible to have four different interest rates apply to the payments missed in any given year. When the interest rate changes during a given year, the interest rate for each missed payment will have to be calculated separately based on the quarter in which the payment was missed. For example, the first three quarters in 2011 had an interest rate of 6 percent and the final quarter had interest rate of 4.75 percent. As a result, any support arrearage payments falling due in 2011 would have two separate interest rate calculations depending on the quarter in which they were missed. Any payments missed during the first nine months would apply a daily interest rate equivalent for 6 percent per annum and those missed in the final three months would apply a daily rate equivalent for 4.75 percent per annum.
• Step Two: Accrual of Interest during Subsequent Years on Amounts Due and Owing from Prior Years — Step one involved interest calculations for each missed payment in the first year. The balance for each of the missed support payments identified in step one is aggregated for the previous year and due on the following January 1. The amount due accrues interest at the rate established when the payments first came due and continues accruing at that rate until December 31, 2011.17 As the new interest rate applies to judgments before July 1, 2011, and after July 1, 2011, alike, the new rate of 4.75 percent applies to all missed payments after December 31, 2011, for 2012, and as the rate is the same on January 1, 2013, for all of 2013, as well. This would be equally true if one were to regroup the interest on the missed payments into step one, two, and three under the associative law of addition.
As steps one and three consider only the newly missed payments when originally due, which calculates interest only for the partial year, step two is streamlined and simplified as single judgment amounts for each year of missed payments due on January 1, following the year that the support payments were first due. This eliminates much of the daily rate computations because full years of interest are substituted and whether the year involves a leap year is irrelevant. The daily rate problems in the first calendar year the payments fall due are taken care of with table A and table B in steps one and three respectively. At most, one daily rate application is required on step two for the final partial year.
• Step Three: Payments during the Final Year (Table B) — Determine from table B the interest on the payments coming due during the final year. This involves exactly one calculation. For example, if the payoff is received as of April 1 in the final year, the information from the March 1 line of table B would be used to calculate the interest accruing for the final three months’ worth of missed payments.
• Step Four: Arriving at the Total Amount of Interest Owed — Add all amounts separately calculated in steps one, two, and three as described above to determine the total interest for all past due support arrearage payments.
Use of the Tables for Calculations
Examples are provided later in this article on how tables A and B are used in steps one through four described above. Tables A and B are provided so that the process of interest on consecutive support payments can be simplified and fewer calculations are needed. Each day of the year is given the weight of one point, reflecting one day of exposure to the daily statutory rate. All points are first aggregated for interest on all payments due and for each interest rate application, and then are summed. The table method is used to impact the first year that consecutive missed payments are considered and the last year. After each year of payments due, all of missed payments still due and owing on January 1 of the following year receive full interest for each full year thereafter, until paid, subject to modification of the new interest rate the same way it impacts a single judgment amount.
Steps One through Four and Tables A and B in Action: Example One
Support payments are set by judgment in the amount of $1,000 per month18 with the first missed payment due on March 1, 2010. Determine the amount of interest assuming a lump sum payment of the support arrearages is received April 1, 2013.
First, note the interest rates and any changes to them during the time period in question. The rate of interest on each payment in 2010 is 6 percent. All 2010 payments continued to accrue 6 percent interest on a daily rate basis through December 31, 2011, because the 2010 annual interest rate continued to apply until F.S. §55.03 was modified effective July 1, 2011, and, thereafter, the interest rate was recalculated for January 1, 2012. After January 1, 2012, the applicable 4.75 percent interest rate began to accrue on the 2010 missed payments for 2012. As 4.75 continued to be the interest rate as of January 1, 2013, it continues to be applicable through receipt of the final payment on April 1, 2013.
• Step One: Payments during the First Year (Table A) — The number of accumulated points for the first 10 payments of 2010 is the March 1 accumulated value from table A of 1,683. The accumulated value is multiplied by the payment amount of $1,000 and the daily rate of 0.0001643836,19 for a total interest attributable to the 10 monthly payments for the 2010 year of $276.66.
The first year of interest attributable to the missed payments coming due in 2011 is calculated in a similar fashion; however, there were two interest rates in 2011 and it must be calculated in two parts. The number of accumulated points attributable to the first three quarters of 2011 (the first nine monthly payments) is 2198.20 The accumulated value is multiplied by the payment amount of $1,000 and the daily rate of 0.000164383621 for a total interest attributable to the first nine monthly payments for 2011 of $361.32.22 For the last quarter of 2011 (the final three monthly payments), the number of accumulated points attributable to the payments corresponds with the accumulated points on the October 1 line of table A, or 184. Multiply the accumulated value by the payment amount of $1,000 and the daily rate of 0.000130137023 for a total interest attributable to the final three monthly payments in 2011 of $23.95.24
For 2012, 12 monthly payments were missed. Therefore, use the accumulated points on the January 1 line of table A for leap-year applications of 2,384. Multiply the accumulated value by the payment amount of $1,000 and the daily rate of 0.000129781425 for a total interest attributable to the 12 monthly payments in 2012 of $309.40.26
In sum, the total interest for step one is $971.33.27
• Step Two: Payments during Subsequent Years on Amounts Due and Owing from Prior Years — In 2010, 10 payments were missed totaling $10,000. Therefore, the $10,000 of 2010 payments accrued 6 percent interest in 2011 and accrued 4.75 percent interest in 2012.28 During the first quarter of 2013, the $10,000 of 2010 payments accrued 90 days at the daily interest rate for 4.75 percent, or more specifically, 1.1712 percent.29 Therefore, the total interest rate applicable to the 2010 amount of $10,000 owed as of the lump sum payment on April 1, 2013, is 11.9212 percent.30 The interest on the $10,000 owed from 2010 as of April 1, 2013, is $1,192.12.31
Next, in 2011, 12 payments were missed totaling $12,000. It accrued 4.75 percent interest in 2012. During the first quarter of 2013 it accrued an additional 90 days at the daily interest rate for 4.75 percent, or more specifically, 1.1712 percent.32 Therefore, the total interest rate applicable to the 2010 amount of $10,000 owed as of the lump sum payment on April 1, 2013, is 5.92212 percent.33 The interest on it as of April 1, 2013, is $710.65.34
Finally, in 2012, 12 payments were missed totaling $12,000. Therefore, the $12,000 of 2012 payments accrued 90 days at the daily interest rate for 4.75, or more specifically, 1.1712 percent.35 Therefore, the interest rate applicable to the 2012 amount of $12,000 owed as of the lump-sum payment on April 1, 2013 for the 90-day period is 1.1712 percent. The interest on the $12,000 owed from 2012 as of April 1, 2013, is $140.65.36
In sum, the total interest for step two is $2,043.31.37
• Step Three: Payments during the Final Year (Table B) — Finally, for the three missed payments in 2013, multiply the March 1 accumulated value from table B of 180 by the daily rate38 and by the $1,000 payment for total interest on the 2013 payments of $23.42.39
• Step Four: Arriving at the Total Amount of Interest Owed — Add steps one through three for a total interest amount due on all missed payments from March 1, 2010 through March 31, 2013, for example one of $3,038.06.40
Steps One through Four and Tables A and B in Action: Example Two
Determine the interest accrued for missed alimony payments of $4,000 per month beginning in February 1, 2012, with a final lump-sum payment of arrears received on April 1, 2013.
• Step One: Payments during the First Year (Table A) — First, note that the statutory interest was 4.75 percent throughout 2012. Use the February 1 accumulated points for the 11 payments in 2012 or 2017. Multiply the accumulated value by the payment amount of $4,000 and the daily rate of 0.000129781441 for a total interest attributable to the 11 monthly payments in 2012 of $1,047.60.42
• Step Two: Payments during Subsequent Years on Amounts Due and Owing from Prior Years — As of January 1, 2013, $44,000 is due from the 11 payments in 2012. Payment occurs on April 1, 2013; therefore, the $44,000 accrued 90 days at the daily interest rate for 4.75 percent or, more specifically, 1.1712 percent.43 So, the total interest applicable to the 2012 amount of $44,000 owed as of the lump sum payment on April 1, 2013, is $515.34.44
• Step Three: Payments during the Final Year (Table B) — In 2013, there are three missed payments of $4,000, or $12,000 in payments. These payments accrued 90 days of statutory interest. Use the accumulated value from the March 1 line of table B of 180. Multiply the accumulated points by the daily rate for 4.75 percent or, more specifically, 1.1712 percent,45 and by the $4,000 payment for a total interest payment of $93.70.46
• Step Four: Arriving at the Total Amount of Interest Owed — Add steps one through three for a total interest amount due on all missed payments for example two of $1,656.64.47
In the two examples, use of the four steps and tables A and B above does not transform the process to one that takes only a few minutes to perform. It does, however, substantially reduce the calculation time from what it would take to do numerous complex calculations.48
Repaying the Judgment with Statutory Interest
The calculations as shown in examples one and two above determined the amount owed if repaid in a single lump-sum amount. However, the repayment of the support arrearage could involve periodic payments once the initial amount has been determined. There are no new principles that need be enunciated with determining balances after repayment, or for that matter, a repayment schedule that involves level payment. The calculation of payments on the debt over time works just like a mortgage or note, except that simple interest is used instead of compound interest.49 The fact that the interest rate now changes quarterly under §55.03 only adds perceived complication because any contract could have introduced this problem with any repayment schedule, having nothing to do with interest specifically on support arrearage payments.
What complicates the repayment schedule has always been part of the intersection of F.S. §55.03 with family law. New missed payments involve a new interest rate, raising the question, “which statutory rate applies to the repayment process?” The problem is resolved when one comes to understand the public policy purpose served by the interest rate. A person or a corporation loses the time value of money when the judgment is not satisfied timely and the interest rate is set to compensate for the short-term interest rates achieved on conservative investments, such as the current average on bond yields.50 With multiple rates applicable to numerous judgments, the revenues were already lost in the prior years when the payments were missed; therefore, the repayment is credited interest based on the date that it is repaid and adjusted annually in the same way that missed payments are charged interest.
Because the interest scheme is an equitable remedy, payments are not treated in the same way that contracts are treated. Interest is computed on the amount owed and shown on one side of the ledger and the credits are computed with interest on the payments and shown on the other side of the ledger. The difference between the two determines how much has been paid at any given date.51 This is the only practical interpretation on repayment for attorneys seeking to collect support arrearages.
Proving Table Values and the Theory
For table A value, let S equal the daily interest rate and P equal the payment amount. For a payment due on December 1, every December has 31 days of interest applied to it. Thus, both the payment of interest and any previous payment in the same calendar year both face 31 days’ interest in December.
Each prior payment adds the number of new days of exposure of interest to the subsequent accumulated total days. Therefore, for payments due beginning on November 1, there are 31 days of interest on the December 1 payment, and 61 days interest on the November 1 payment. As the payment amount is the same, it can be factored out as follows: (31 x S x P) + (61 x S x P) = S x P x (31 + 61) = 92 x S x P. This number is shown in the accumulated points column for November 1 in tables A and B. Likewise, the payments due beginning on October 1 are subject to 92 days of interest, the November 1 payment is subject to 61 days of interest, and the December 1 payment is subject to 31 days of interest. The three payments due and owing are subject to a total of 184 days of interest: (31 x S x P) + (61 x S x P) + (92 x S x P) = S x P x (31 + 61 + 92) = 184 x S x P. The accumulated exposure shown for payments beginning October 1 is 184 as reflected in the accumulated points column for October 1 in tables A and B.
Continuing the pattern, the payments due on September 1 are subject to 122 days of interest, over and above the 184 days of interest applicable to the October, November, and December payments. All four missed payments are subject to a total of 306 days of interest: 184 x S x P + 122 x S x P = S x P x (184 + 122) = 306 x S x P. The accumulated exposure shown for payments beginning September 1 is 306, as reflected in the accumulated points column for September 1 in tables A and B.
For leap-year applications, nothing changes in the process until the February payment is reached. In leap years, the number of days of exposure is increased by one. Therefore, caution must be observed for S as it divides the annual interest rate by 366, instead of 365.
For mid-year modifications, as both addition and multiplication have associative properties, one can obtain the mid-year table amount for consecutive payments in a year involving more than one interest rate by subtracting one accumulative day’s amount from the other to show the amount between the two dates just as was done in the first year in example one above.
For table B, instead of starting the calculation with the last payment due of the year and working the values from last to first, the process is reversed because the resulting amount occurs concurrently with the last payment made. However, the valuation result is identical in every other respect to the table A methodology.
Thus, if January is the last payment due, there is a single payment exposed to 31 days of interest accrual. February payments involve either 28 days or 29 days to the end of February, depending on whether the final years’ payments involve a leap year. As the table B tabulated result works in reverse order to table A, each subsequent month has one extra day and the accumulated points show one day accumulated in succession.
It is important to bear in mind at all times that one crosses the intersection of §55.03 and family law to achieve the equitable restitution to the support recipient for his or her lost use of the money due to untimely payment of support. Whether statutory interest is calculated in a more manual method or steps one through four with tables A and B above are used, care must be taken to avoid miscalculations. Something as simple as a leap year, or something more involved, such as a quarterly change in the statutory interest rate, can cause a miscalculation. In other words, as when crossing any intersection, it is imperative to look carefully for oncoming traffic to ensure safe passage for all travelers.
1 From this point forward, the term “interest” will refer only to statutory interest as established in accordance with Fla. Stat. §55.03 (2012). The terms “interest” and “statutory interest” will be used interchangeably in this article.
2 The statute does not affect a rate of interest established by written contract or obligation. Fla. Stat. §55.03(1) (2012). Therefore, this article will discuss only statutory interest applicable to court-imposed judgments and not interest applicable to judgments based on underlying contracts.
3 Wamsley v. Wamsley, 957 So. 2d 89 (Fla. 2d DCA 2007) (holding that the equitable distribution repayment is credited with 9 percent statutory interest until repaid); Fla. Bar v. Tobkin, 32 So. 3d 60 (Fla. 2010) (holding that the statutory interest at the current rate would accrue on a restitution payment and cost amounts until paid).
4 Laws of Fla. Ch. 2011-169, available at http://laws.flrules.org/2011/169.
5 Florida’s statutory interest rate can be found at Florida’s Chief Financial Officer’s website for the Division of Accounting and Auditing. Florida’s Chief Financial Officer Division of Accounting and Auditing, Vendors, http://www.myfloridacfo.com/Division/AA/Vendors/default.htm#.UY1T91TD_ZQ.
6 Genser v. Reef Condominium Ass’n., Inc., 100 So. 3d 760, 762 (Fla. 4th DCA 2012) (stating that the interest rate as of entry of the judgment should be used to calculate post-judgment interest and would be adjusted yearly thereafter until paid).
7 Id.; Fla. Stat. §55.03(3) (2012).
8 Judgments entered by the clerk of court pursuant to §§55.141, 61.14, 938.29, and 938.03 are not adjusted annually. Fla. Stat. §55.03(3).
9 Genser, 100 So. 3d at 763 (noting that the interest rate on an unsatisfied final judgment changes as the statute prescribing the interest rate is amended unless otherwise provided for in an underlying agreement).
10 The terms “support,” “support payments, “or “support arrearages” will be used throughout this article to refer to child support and/or spousal support, also known as alimony.
11 Merriam-Webster, Simple Interest, http://www.merriam-webster.com/dictionary/simple%20interest (Simple interest is defined as the interest paid or computed on the original principal only.); Mirriam-Webster, Compound Interest, http://www.merriam-webster.com/dictionary/compound%20interest (Compound interest is computed based on both the original principal and interest accrued to date.). Florida law requires that statutory interest be computed as simple interest and not compound interest. West v. Sunbelt Enterprises, 530 So. 2d 433, 436 (Fla. 1st DCA 1988). Therefore, references to “interest” in this article will only be to simple interest.
12 Support arrearage payments become past due from the date such payments were due. Nelson-Higdon v. Higdon, 680 So. 2d 524, 524 (Fla. 1st DCA 1996) (reversing and remanding the judgment to award prejudgment interest on support arrearages from the date the payments were due); Romans v. Romans, 611 So. 2d 92, 93 (Fla. 1st DCA 1996) (holding the wife was entitled to prejudgment interest on spousal and child support arrearages from the date the payments were due); Warner v. Warner, 692 So. 2d 266, 270 (Fla. 5th DCA 1997) (holding that it is error to fail to award prejudgment interest on support arrearages from the date the payments were due); see also Fayed v. Altshuler, 676 So. 2d 1062, 1063 (Fla. 4th DCA 1996) (holding Florida law provides for post-judgment interest as a matter of right, therefore, the request for post judgment interest need not be plead).
13 As is taught in introductory algebra classes, the sum of n consecutive numbers starting with 1 is (n)(n+1)/2.
14 An example of associative properties would be (a+b) + c = a + (b+c).
15 The following step-by-step instructions and accompanying tables assume a calculation involving consecutive payments. If they are not, the payments made when due must be treated as payments against the consecutive amount owed explained under the section, “Repaying the Judgment with Statutory Interest.”
16 Single judgments that establish one amount owed, such as those based on written agreements, do not face this problem, because one statutory interest rate is applied to that judgment amount for that year.
17 This is assuming the payments were due before December 31.
18 Round numbers are used whenever possible to promote simplicity.
19 Taken from the prior statutory interest rates chart or calculated as 6 percent divided by 365 days. More specifically, 0.06 percent/365 = 0.0001643836.
20 Calculated as accumulated points for January 1 (2,382) less accumulated points for October 1 (184). Or, more specifically, 2,382 - 184 = 2,198.
21 Taken from the prior statutory interest rates charge or calculated as 6 percent divided by 365 days. More specifically, 0.06/365 = 0.0001643836. Greater accuracy on daily rates are used here than in the published tables to promote stability in comparing the prior methodology results with the suggested one to avoid compounding differences due to rounding errors.
22 Calculated as 2,198 x 0.0001643836 x $1,000 = $361.32.
23 Taken from the quarterly statutory interest rate chart or calculated as 4.75 percent divided by 365 days. More specifically, 0.0475 percent/365 = 0.0001301370.
24 Calculated as 184 x 0.0001301370 x $1,000 = $23.95.
25 Taken from the quarterly statutory interest rates chart or calculated as 4.75 percent divided by 366 days. More specifically, 0.0475 percent/366 = 0.0001297814.
26 $1,000 x 2,384 points x 0.0001297814 = $309.40. Note that 2,384 points were used in 2012 because it was a leap year. The extra day in the year resulted in a daily interest rate of 0.0475/366.
27 Payments in 2010 ($276.66) + payments for the first three quarters of 2011 ($361.32) + payments for the final quarter of 2011 ($23.95) + payments for 2012 ($309.40) = $971.33.
28 For step two, the daily rate no longer need apply for full-year calculations. It makes a difference only when applied to partial years. Making use of this simplifies the process further.
29 Calculated as 90 x 0.0001301370 = 0.011712.
30 Calculated as the 2011 interest rate (6 percent) + the 2012 interest rate (4.75 percent) + the 90 days of the 2013 interest rate (1.1712 percent) = 11.9212 percent. The leap-year application in step two can be ignored because the whole $10,000 is subject to a full year’s interest; whether 4.75 percent is divided by 365 days and multiplied by 365 days or 4.75 percent is divided by 366 days and multiplied by 366 days, the result is the same.
31 Calculated as $10,000 x 0.119212 = $1,192.12.
32 Calculated as 90 x 0.0001301370 = 0.011712.
33 Calculated as the 2012 interest rate (4.75 percent) + the 90 days of the 2012 interest rate (1.1712 percent) = 5.92212 percent.
34 Calculated as $12,000 x 5.92212 percent = $710.65.
35 Calculated as 90 x 0.0001301370 = 0.011712.
36 Calculated as $12,000 x 1.1712 percent = $140.65.
37 Interest on payments due from 2010 ($1,192.12) + interest on payments due from 2011 ($710.65) + interest on payments due from 2012 ($140.54) = $2,043.31.
38 Taken from the quarterly statutory interest rates chart or calculated as 0.0475/365 = 0.0001301370.
39 Calculated as 180 x 0.0001301370 x $1,000 = $23.42.
40 Calculated as interest from step one ($971.33) + interest from step two ($2,043.31) + interest from step three ($23.42) = $3,038.06.
41 Taken from the quarterly statutory interest rate chart or calculated as 4.75 percent divided by 365 days. More specifically, 0.0475/365 = 0.0001297814.
42 Note that the leap-year modified points value for February 1, 2018, is to be used 2012 was a leap year. Calculated as 2018 x 0.00012978142 x $4,000 = $1,047.60.
43 Calculated as 90 x 0.0001301370 = 0.011712.
44 Calculated as $44,000 x 90 x 0.0001301370 = $515.34.
45 Taken from the quarterly statutory interest rates chart or calculated as 0.0475/365 = 0.0001301370.
46 Calculated as 180 x 0.0001301370 x $4,000 = $93.70.
47 Calculated as interest from step one ($1,047.60) + interest from step two ($515.34) + interest from step three ($93.70) = $1,656.64.
48 As can be seen with the calculation of the statutory interest rates for 2011 payments alone, multiple calculations must be applied when the statutory interest rate changed from 6 percent, per annum to 4.75 percent, per annum.
49 See generally note 11 (contrasting the difference between simple and compound interest and discussing Florida law regarding the treatment of statutory interest as simple interest).
50 In Florida, the chief financial officer calculates statutory interest rates by averaging the discount rate (or the minimum interest rate set by the Federal Reserve for lending to other banks) of the Federal Reserve Bank of New York for the preceding 12 months, then adding 400 basis points to the averaged federal discount rate. Fla. Stat. §55.03(1); Encyclopedia Britannica, Discount Rate, http://www.britannica.com/EBchecked/topic/165320/discount-rate; see also West, 530 So. 2d at 436-437 (holding that interest is a part of the “full compensation” as required under the Florida Constitution for eminent domain proceedings because of the loss of the use of money in the delayed payment of a judgment); see also Fayed, 676 So. 2d at 1063 (holding that Florida law provides for postjudgment interest as a matter of right).
51 West, 530 So. 2d at 436 (observing that interest should not be allowed on a sum that is, itself, interest).
Marc H. Brawer is board certified in marital and family law and an emeritus fellow of the American Academy of Matrimonial Lawyers. After more than 40 years of practicing family law, he is currently concentrating in family law mediation and arbitration, and is of counsel to Brawer, Hirsch and Associates, P.A., in Ft. Lauderdale.
Jerry Reiss achieved Associate Society of Actuaries in 1982 and has been an enrolled actuary since 1983.
This column is submitted on behalf of the Family Law Section, Elisha D. Roy, chair, and Sarah Kay, editor.