Impact Aid in Brief
Impact
aid, which was signed into law by President Harry S Truman in 1950, is designed to
directly reimburse public school districts for the loss of traditional revenue sources due
to a federal presence or federal activity. Since its inception, the program has been
amended many times. Today its legal reference is P.L. 107-110, Title VIII and is
authorized through fiscal year 2007.
Traditionally,
property, sales and personal income taxes account for a large portion of the average
school district’s annual budget. But federally connected students can adversely
affect a school district’s financial base because their parents or guardians do one
or more of the following in the school districts that the students attend:
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Often pay no
income taxes or vehicle license fees in their state of residence; |
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Live on
non-taxable federal property; |
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Shop at
stores that do not generate taxes; or |
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Work on
non-taxable federal land. |
Impact
aid provides a payment to school districts in lieu of these lost taxes to assist with the
basic educational needs of its students.
Impact
aid is one of the only federal education programs in which the funds are sent directly to
the school district. As a result, there is almost no bureaucracy or regulations. Impact
aid, however, is subject to the same state regulations as any other school funding.
A
non-federally impacted school has three main sources of revenue for each student: state
aid, local taxes on homes, and local taxes on businesses.
When
businesses are located on federally connected land, they are exempt from local taxes. In
the case of the military, the Soldiers and Sailors Relief Act exempts military personnel
from paying certain local personal property taxes and state income taxes. Businesses
located on a military post with exclusive jurisdiction are also exempt from paying
commercial property tax and purchases are tax free. For the local school district this
means a loss of about 25 percent of its revenue.
The
same is true for homes located on federal property. These homes are exempt from local
taxes, and again the school district loses the revenue normally generated from the
collection of these taxes.
In
2001, Congress re-authorized impact aid and modified sections of the program. School
districts can receive funding from just one of the program's sections or from more than
one section. The sections of impact aid are:
Enacted
in the original legislation in 1950, this section reimburses school districts for the loss
of taxable land to the federal government. The payment is in lieu of the taxes that would
normally be paid by the private land owner and is not based on the presence of children
residing on the property.
Section
8003 (b) provides basic support for a number of different types of federally connected
children, including those who: have a parent in the uniformed services; reside on Indian
lands; live or have parents who work on federal property; and live in federally subsidized
low-rent housing projects.
Eligible
districts include those that: 1) are highly impacted with federal students and have a
higher than average tax rate; 2) have a below average spending rate per pupil when
compared to similar districts.
Indian
land and military students with disabilities are eligible to receive additional funding to
be used in accordance with the Individuals with Disabilities Education Act (IDEA).
Section
8007(a) addresses the construction and maintenance needs of certain districts. Payments
are based on a separate appropriations amount divided by the number of eligible students.
Section
8007 (b) – Construction discretionary competitive grants
This
is a new subsection to the construction provision and would allow 60% of the funds
appropriated for section 8007 to go to eligible school districts to meet
“emergency” construction needs. Will
not be implemented until spring 2003.
Though
the impact aid program has been modified through the 1994 reauthorization, the basic
principle remains the same: Impact aid dollars go directly into a school district’s
general fund to be used as the local school board sees fit.
Nationwide,
there are four types of federally connected children. They are:
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Children
residing on Indian lands; |
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Military
children; |
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Children
residing in federal low-rent housing projects; and |
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Children
whose parents are civilian but work on federal property. The FY 1997 Defense Authorization
Bill lowered the eligibility requirement for this type of student from 2,000 and 15
percent of a district's average daily attendance, to 1,000 or 10 percent. |
Nationwide,
1.2 million federally connected children are eligible for funding under the program. These
students affect more than 1,400 school districts with a total enrollment of more than 15
million, according to 1996 Department of Education figures.
To
be eligible for basic support payments (Section 8003), a school district must have at
least 400 federally connected students or these students must comprise at least 3
percent of the average daily attendance (ADA).
Since
different types of federal students have a different financial impact on the school
district, each type of federal student is assigned a weight. The higher the weight, the
higher the impact these students have on the school district. Student weights are as
follows:
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Student
living on Indian property, 1.25 weight |
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Military
student living on federal property, 1.00 weight |
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Non-military
student living on federal property and parent works on federal property, weight 1.00 |
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Military
student not living on federal property, weight .20 |
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Student
living in low-rent housing project, weight .10 |
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Civilian
student whose parent works on federal property, weight .05 |
The
weights listed can be referred to as WFSUs, or Weighted Federal Student Units. To receive
basic support payments, a school district must conduct a student survey each year to
identify the number and types of federal children it is enrolling. The school district
then completes the impact aid application and submits it directly to the U.S. Department
of Education each year. A copy of the application needs to be sent to the state for
information purposes.
Without
getting caught up in the numbers, impact aid payments are computed using a formula based
on the listed weights. To figure the maximum basic support payment a school district could
receive, determine the district's LCR or Local Contribution Rate. The LCR is a measurement
used to determine the local financial burden of educating federally connected children.
Normally, it is either half of the state or national average per pupil expenditure,
whichever is higher. Here is the step-by-step method to calculate payments:
1. Determine
the LCR.
2. Multiply
each federal student by his/her weight.
3. Add the
weights of all federal students (called WFSU).
4. Multiply
step 1 (LCR) by step 3 (WFSU) for the maximum Basic Support Payment (BSP). When the total
appropriation amount is insufficient to pay the full BSP, proceed to step 5. (The program
has not been sufficiently funded since the 1960s.)
5. Divide the
total federal ADA by the total ADA for the percentage of federal students.
6. Divide the
BSP by the total current operating expenditures, which is the percentage of the current
operating budget that the BSP represents.
7. Add step 5
and step 6 for your Learning Opportunity Threshold Modifier (LOT MOD). If this number is
100 percent, then use 100 percent. The LOT MOD cannot exceed 100 percent.
8. Multiply
the percentage in step 7 by the amount in step 4. This is the LOT or Basic Support
Payment.
9. In the case
of insufficient appropriations, the Basic Support Payment is pro-rated.
To
make the formula easier to understand, let’s use an example school district.
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To figure
the maximum Basic Support Payment for our example district, we determine the Local
Contribution Rate. For the 2001-2002 school year using half the national average per pupil
expenditure, the LCR for our example would be $3,315.00. |
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Multiply the
LCR of $3,315.00 by the total number of Weighted Federal Student Units. For this example,
use 200 total WFSUs — $3,315.00 x 200 = $663,000, which is the amount of the
district’s maximum Basic Support Payment. If Congress fully funded the impact aid
program, our example district would receive $663,000. Since this is not the case let's
move on. |
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For the next
step, total two percentages: 1) The percentage of the total enrollment that represents
eligible impact aid students. For our example let’s use 60 percent. 2) How dependent
is the district on impact aid? If our general fund is $2 million, what percentage is our
maximum Basic Support of $663,000 of $2 million? A quick calculation equals 33 percent. |
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Add the
percent total enrollment (60 percent) and the percent budget (33) for a total percentage
of 93 percent. |
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Take 93
percent of the maximum Basic Support amount which was $663,000. This school district would
then receive $616,590. Pro-rate this amount if Congress does not appropriate sufficent
funds. |
Indian
land and military students with disabilities are eligible for additional funding to be
used in accordance with the Individuals with Disabilities Education Act (IDEA). The amount
of additional funding earmarked for the program's special education (SPED) children is
divided among eligible students. To determine the amount federally connected children
would receive under this provision, each eligible SPED student with a parent residing on a
military base or on Indian land is given a weight of 1.0. A student who resides with a
military parent, but lives off base is weighted at .50. Total the number of SPED weights
in a school district and multiply by the amount per SPED student as provided through the
appropriated figures. The FY 2002 payment computed (estimated) to be approximately $1,000
per SPED weighted unit. However, unlike the Basic Support Payments which go into the
district's general operating fund, SPED funds must be used specifically for special
education.
10/27/04