Impact Aid's 60 Years: 1990 - 2010 - National Association of Federally Impacted Schools

< 1970 – 1990

In recognition of the upcoming 60th anniversary of the Impact Aid Program, “IMPACT” has been tracing the 60 year history of the program. This issue will chronicle the final twenty years 1990 – 2010 the period that saw Impact Aid leap from the past into the future as Congress for the first time since the program’s inception, decided the program needed a major face lift.

In the spring of 1990, NAFIS looked to Congress to consider a set of technical amendments. One such amendment would remove the cap on Super (b) funding (districts with an enrollment of category “b” children of 20 percent and above). The cap was designed to hold a district’s total category (b) payment to a level not to exceed what was received by the school district in fiscal year 1987. A similar cap on category “a” payments was removed in 1989. The concern Congress faced was that if the cap was removed on Super “b” payments, how would it effect payments for those districts with a category “b” enrollment of less than 20 percent, i.e. regular “b’s”. The problem was once again as in the past – how do you fairly split up the pot when the pot is less than half full?

The first round of Base Realignment and Closure

Although there was considerable resistance to the removal of the caps, there was support to change Section 3(e) of the law which provided a three year phase out of funding when a school district suffered a drop in federal student enrollment. The provision had not been updated since 1974.

Senator Warren Rudman (R-N.H.) provided the impetus to make the necessary technical changes to that section of the law. Rudman’s interest in the change was prompted by the closure of Pease Air Force Base located in Portsmouth, New Hampshire. In addition to the section 3(e) change, the 1990 Technical Amendments also addressed problems relating to applications that were filed late and increased the line item funding for heavily impacted school districts to $25 million (up from $20 million); the latter pushed by Senator Nancy Kassebaum (R-Kansas) Keeping in mind that Impact Aid payments were still being funded using a rate of payment (Local Contribution Rate) going back to 1981, the Impact Aid community at the dawn of the 1990’s recognized that they had better work together to fix what was considered by Congress, a broken program. Congress was tired of listening to what was wrong with the 1988 amendments and cited the problems the Impact Aid community had in getting its act together. NAFIS began working as early as 1989 to develop a new image with Congress and within the Impact Aid community itself. Credibility became the message the organization delivered both on Capitol Hill and to its own rank and file.

The Clinton Administration

Deficit reduction remained the theme as William Jefferson Clinton took office in January of 1993. Impact Aid was once again a target for deficit reduction. As before, category “b” was the target. The Clinton plan was to phase out the category “b” category over a 3-year period similar to what the Reagan Administration had tried through the budget reconciliation process in 1981.

Through the efforts of NAFIS, over 70 members of Congress testified before the House Appropriations Subcommittee for Labor, HHS and Education chaired by Representative William Natcher (D-KY), the phase out was turned down. It was clear that a strong political base for the program was in place as the 1994 reauthorization of the Impact Aid Program was about to get started.

1994 ESEA Reauthorization – “The Improving America’s Schools Act”

At the very beginning of the reauthorization process, the NAFIS community knew it had to get its act together and work as a united community. What occurred in 1988 could not be repeated. The word that the Impact Aid Program needed reform was voiced by both the House and the Senate authorizing committees. “Either the program be better targeted to incorporate a need component when the program is not fully funded, or face the consequences.”

This was the message delivered loud and clear to the Impact Aid community as early as 1992.

The Phoenix Proposal

After three years of work, the most of which was undertaken by task forces and working groups within the association, the NAFIS Board of Directors approved a reauthorization approach in August of 1992.

Dubbed the “Phoenix Proposal” for its reference to the mythological bird which rose anew from the ashes of its own tragic fate, it was the end result of a great deal of work on the part of a dedicated group of school administrators. The NAFIS community then voted in favor of the proposal at their fall conference in September of 1992. The proposal was designed as per the message delivered by Congress to do four things:

Simplify the program – waves and tiers needed to be a thing of the past;
The program had to be designed to better address school district needs;
Take into consideration local and state resources; and
Reduce, or if possible eliminate, the perception that the program is filled with “pork.”

Although student categories remained, the proposal developed a weighted funding formula assigning different weights to student categories. In order to better address the issue of need the proposal was designed to measure need based on each school district’s economic profile and budgetary need. In an attempt to address the “pork/special interest” label attached to the program, the Phoenix Proposal suggested the idea of establishing a contingency fund administered by the Secretary. The Secretary could in instances where a unique situation arose consider providing extra funds to a district in need. Congress however scraped the idea when the Department of Education voiced their opposition not wanting that kind of discretionary authority.

Following the completion of the reauthorization process, NAFIS was credited by Congress for developing a document based on legislators’ concerns; the need for program reform and the inclusion of a “need” component. On May 4, 1993, Senator Larry Pressler (R-South Dakota) introduced S. 874, placing into the “official” legislative record a proposal to reauthorize Impact Aid. It would be upon this legislative initiative that NAFIS would continue to rally as the House began to seriously write the bill.

Out with the Civilian b’s

Although the Phoenix Proposal was given high marks by both the Democrats and Republicans on the House Education and Labor Committee, the NAFIS proposal was not able to hold on to two provisions.

Knowing that a “large school” provision was to be included in the House version, NAFIS suggested that it also include a “small school’ provision and secondly the NAFIS proposal would maintain all student categories. The committee bill would not include the small school piece and because ranking Republican member on the committee Rep William Goodling (R-PA) strongly believed that civilian students did not impose a financial impact on a school district, the House bill eliminated the civilian student category from the program.

The Senate bill maintained the civilian category, but then receded to the House in conference with an amendment that was accepted that would maintain the eligibility of school districts enrolling civilian dependent students if the number of such children totaled no less than 2,000 and constituted 15% of their total enrollment [a small school adjustment was later included in the 2000 Impact Aid reauthorization – and language was later included (offered by Senator Wendell Ford (D-KY)) at the request of NAFIS in a FY 1997 Defense Authorization bill, that reduced the eligibility for civilian dependent students to 1,500 OR 10% of their enrollment – 396 school districts became eligible toonce again count their civilian dependent students for purposes of payment].

Federal Property Formula Change

The Clinton Administration wanted to phase out the Federal Properties provision, noting that school districts should by this time have adjusted to the removal of what was once taxable property. Neither the House or Senate authorizing committees agreed with the Administration, and Section 2 remained, albeit with a different cite (Section 8002) and a new method upon which to determine the value of eligible federal property.

Representative Harris Fawell (R-IL) a member of the House Education and Labor Committee proposed a change to the program. From the very beginning in 1950, a school districts (payment in lieu of taxes) payment would depend on what the value of “like” or comparable land is in any given year. If land was agriculture when taken off the rolls in for example 1953, the value of the federal land would be the current assessed value of comparable land (agriculture) in the year for which the application is submitted. Fawell did not feel this 45 year method was an accurate measure of what the value of federal property should be. Under the Fawell provision that was added to the law, a school district would determine the value of the federal land based upon the school district’s own tax assessor’s determination of the value of the taxable land adjacent to the federal property – the term “highest and best” was added to the dictionary of terms found in the Impact Aid law. The question now would be how much it would cost to fund the Section 8002 provision. The community would see it rise from roughly $40 million in 1994, the final year of the old law to over $1 billion. In order to insure funding stability for districts (recognized payment pro rations could potential devastate smaller districts) a technical amendment was included in 1996 (P.L, 104-195) that inserted a hold harmless for payments made in FY 1995 and FY 1996. Payments for FY ’95 would be no less than 85% of what a district received in FY ’94 and payments for FY ’96 would be no less than 85% of what a district received in FY ’95. The hold harmless was later extended through the duration of the authorization in legislation that passed the following year and was again extended in the Impact Aid Amendments of 2000 and in the ESEA (No Child Left Behind) amendments of 2001.

Heavily Impacted Changes

P.L. 104-195 in addition to the Section 8002 amendments, also brought about a new direction to what was then referred to as Section 8003(f) [a precursor to Section 8003(b)(2)]. The changes were designed to expedite payments so that districts received their heavily impacted payment within 6 months after dollars were appropriated rather than 18 months to two years which had been the norm. A pilot program that eliminated the separate line item for Heavily Impacted payments placing all Section 8003 (Basic Support) payments into one appropriation line item, was included in Appropriations Bills beginning in FY 1998 helping expedite the payment process. This was then incorporated in to the Impact Aid reauthorization of 2000 and in the No Child Left Behind Act the following year [The 1996 technical amendments also initiated what has become called today – Table 9 and Table 11 that addressed the issue of housing privatization].

The Impact Aid Coalition(s)

Perhaps the most severe attack on the Impact Aid Program came after the Republican take over of Congress in the 1994 election. Under the label of “The Contract With America” the Republican leadership began a review of existing federal programs to determine which programs could be eliminated (they have outlived their usefulness). On the House side, the House Budget Committee identified Impact Aid as a program that should be phased out. The initial House Budget Resolution (FY 1996) called for a five year phase out of the program. After weeks of intense work by NAFIS (the birth of the Federal Relations Outreach group) along with support from key members of Congress, including the new chairman of the House Education Committee, Rep. Bill Goodling (RPA), the provision was removed from the resolution. Recognizing that Impact Aid was a program that was being targeted, Representative’s Jim Saxton (R-NJ) and Chet Edwards (D-TX) formed what would become called the House Impact Aid Coalition. Tim Johnson (D-South Dakota) an original member of the House Impact Aid Coalition moved to the Senate and along with Senator Kay Bailey Hutchison (R-TX) started the Coalition on the Senate side a year later. The Coalitions more than any other action on the part of NAFIS, has proven to be the most affective education coalition in Congress. The bi-partisan makeup of the Coalition works to take Impact Aid out of the political arena and will continue to do so as long as the community carries a single message. A divided community would mean the Coalitions would lose their effectiveness – something that the community must always be mindful of.

The House and Senate Coalitions again came to the defense of the program in 2002 as the NAFIS membership was called into action to fend off a Bush Administration’s budget proposal that would eliminate the category “b” portion of the program including off-base military students. NAFIS hit the media airwaves by appearing on “ABC News Tonight” and the Lou Dobbs CNN program as well as soliciting editorial support for the program appearing in major national publications. Within just a few months the idea was scrapped and in fact, the Fiscal Year 2002 final appropriations bill gave the program its largest funding increase since the mid 1980’s.

Impact Aid Reauthorization 2000/2001

The reforms of the 1994 reauthorization were maintained in the 2000/2001 reauthorization with little change. The Heavily Impacted pilot program included in the appropriations bills beginning in FY 1998 were made permanent in the 2000 reauthorization. Other changes increased the weight for military off-base from .10 to .20; extended a hold harmless for Section 8002 districts; changes to the construction provision (Section 8007) that provided for both a formula provision and a competitive discretionary provision; and minor changes to the small school adjustment provision and some minor administrative changes. The program was reauthorized as a part of the FY 2000 Department of Defense Authorization Bill as Chairman Goodling who was to retire after the 2000 election wanted to move at least part of the ESEA reauthorization through Congress before his retirement. Because the Impact Aid reauthorization was for the most part a simple extension of current law, as chairman of the House Education Committee he was able to push through the reauthorization on the Defense Authorization Bill. It was then included as Title VIII the following year when the No Child Left Behind Act was passed extending the ESEA provision through fiscal year 2006.

Preparing for the 2007 Reauthorization

NAFIS began to prepare for the 2007 reauthorization as early as late 2004 recognizing that there is a need for some minor change. The LOT distribution formula being the challenge as districts with low to mid LOT percentage became frustrated in the late 1990’s. School districts in Oklahoma started a new organization, the National Council of Impacted Schools (NCIS), with their agenda being to revamp the LOT formula to insure a more equitable distribution of Section 8003 payments.

NAFIS recognizes their concern as well as the concern of NAFIS member districts considered to be low to mid LOT districts.

The “need component” upon which the LOT formula was based has worked and NAFIS does not support any change to a district’s LOT calculation. It does exactly what Congress envisioned it to do in 1994 by establishing a need component. [NAFIS continues to carry the message that the Federal Government has an obligation to provide a full payment to all school districts no matter their impaction].

NAFIS has proposed legislation that would redesign the method of distributing payments when funding is sufficient to make payments at a level that would exceed 100% of LOT.

The exact percentage at which equal pro-ration would go into affect is still a work in progress as NAFIS must insure that school districts do not see a redirection of payments that would have a negative impact on highly impacted districts. Changes are also being proposed that would address the “highest and best” formula of the Section 8002 program; making the formula less subjective; easier to administer; and to speed up the payment process. Other changes address the impact of Department of Defense initiatives and the school facilities provision (Section 8007) The reauthorization of 2007 has lingered through Fiscal Year 2010 with Congress annually extending the current law 2007 – 2010. The new Congress that will convene in January of 2011 will be given the task to find a way to push through a successful ESEA reauthorization. When the time comes NAFIS will be ready to work with Congress to insure that Title VIII (Impact Aid) continues its legacy as the Original Education Program.