What Is Impact Aid?
Impact Aid is a Federal education program that reimburses school districts for the lost revenue and additional costs associated with the presence of nontaxable Federal property. Because most public school districts are funded largely through local taxes and fees, and because Federal land is exempt from taxation, as are many of the businesses and facilities located on that land, districts are containing Federal property are at a financial disadvantage in funding their schools.
Examples of Federal Impaction
- Military installations
- Indian Trust, Treaty and Alaska Native Claims Settlement Act (ANCSA) Lands
- Federal low-rent housing facilities
- Federal properties such as national parks and Army Corps of Engineers projects and Federal facilities such as national laboratories and VA hospitals
The Basics of Impact Aid
The Impact Aid Program, signed into law by President Harry Truman in 1950, is the nation’s oldest K-12 Federal education program.
Last fully funded in 1969, the Impact Aid Program is the only K-12 Federal education program that is not forward funded. This means a delay in appropriations – caused by a Continuing Resolution (CR) or a government shutdown – has an immediate impact on Impact Aid recipient school districts. Without a payment early in the school year, some districts may have difficulty funding day-to-day operations, instructional expenditures, utility payments, or payroll.
Impact Aid funding is direct, locally controlled and flexible. All Impact Aid funds appropriated annually by Congress are disbursed directly to school districts – bypassing state involvement. They can be used for any general fund purpose, such as instructional materials, salaries, transportation, technology or capital needs. All decisions on how Impact Aid funds are spent are made locally. This flexibility and local control allows school district leaders to target funds supporting all students wherever the needs are greatest.
Each school district must submit an Impact Aid application annually to the U.S. Department of Education. The application deadline is usually January 31. The Department reviews the applications and processes payments based on Congressional appropriations each fiscal year (October 1 – September 30). The Department allocates funding in multiple installments until all available funds are distributed. School district applications are audited, on average, once every five years.
A Brief History of Impact Aid
Today’s Impact Aid program had its beginnings in the early 1800s. Regulations were passed in 1821 to support the cost for schools to educate military-dependent children. The Johnson-O’Malley Act of 1934 identified that there were no local taxes to educate Native American children and provided funding for them. This Act was the first acknowledgement by the Federal Government of its obligation to the local school district for educating children residing on Indian Lands. Additional pieces of legislation passed in the late 1930s and early 1940s were the precursor to the modern day Impact Aid program.
Impact Aid, originally PL. 81-874, was incorporated into the Elementary and Secondary Education Act as Title VIII in 1994. It’s now Title VII of the Every Student Succeeds Act (ESSA). Funding for the program is approved annually by Congress through the Labor, Health and Human Services, Education Appropriations Subcommittee bill, and the program is administered by the U.S. Department of Education.
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