Impact Aid
The federal Impact Aid Program is designed to compensate local school districts for educational revenue lost from the presence of federally-owned or property-tax exempted lands or a large number of "federally-connected" students. Because federal property, and the people who live on it, are exempt from a number of state and local taxes, this aid covers expenses to make up for the lost revenue.
Four Types of Impact Aid
Founded in 1950, the Impact Aid Program is unlike most other forms of educational assistance because it disburses the roughly $1.2 billion in annual federal funds directly to affected districts, rather than through state agencies. There are four types of impact aid:
1) Payments for Property
The most common type of impact aid, payments for property, are targeted toward local districts that encompass 1) military bases, 2) Native American lands, or 3) other areas that are exempt from property taxes. Since property taxes support the majority of local educational funding, impact aid is necessary to cover potential budget shortfalls from this foregone revenue. Payments for property are given out regardless of whether there are any school-age children on the exempted lands. This is different from other forms of impact aid, which are based on the children within a district.
To qualify for a property payment, federally exempted lands must constitute at least 10 percent of all assessed value within the local school district. Payments are then determined based on the assessed value of the exempted lands and the local property tax rate.
2) Basic Support Payment
Basic support payments go to districts based upon the number of students they serve that meet certain qualifications. Generally, districts are given payments if they educate students whose parents may be exempt from various types of property and sales taxes — what the Department of Education calls “federally connected children.” More specifically, districts can receive payments if they educate students who come from military families, live on tribal lands or military bases or in federally-subsidized housing, or whose parents work on federal properties. In general, a school district must have at least 400 students, 3 percent of which are federally connected in order to receive basic support payments.
In addition to basic support payments, a district can also be eligible for heavily impacted district payments. These payments currently go to around 20 districts that have a combination of a large number of federally connected children, a high tax rate, and below average per pupil spending rates.
3) Disability Payments
Disability payments are given to districts that educate disabled students that are also federally connected. These payments must be used as if they were given under the Individuals with Disabilities Education Act.
4) Construction Payments
The most recent form of impact aid, these payments help schools cope with construction costs. Funds allocated to construction payments are split into two types of categories: 40 percent of the funds are given to districts that receive basic support payments, while schools can apply for the 60 percent to cover emergency construction and modernization costs.
Who Receives Impact Aid?
Because impact aid goes to districts with specific populations, funding is not equitably distributed among the states. In fact, the top five impact aid recipients account for nearly half of all basic support payments. The largest recipient of basic support payments is Arizona, which received $146.8 million in fiscal year 2007, according to the National Association of Federally Impacted Schools. Other large recipients include Alaska ($98.1 million), New Mexico ($71.1 million), California ($49.9 million), and Texas ($45.1 million). The large payments to these states is not surprising given their sizeable populations of Native American and other federally connected students. On the other end of the spectrum, New Hampshire is the only state to not receive impact aid, while Vermont got just $8,313 in fiscal year 2007.
