The Impact Aid Program is designed to directly compensate local school districts for: (1) local revenue lost due to the presence of federally owned, and therefore tax-exempt, property and (2) costs incurred due to "federally connected" students, such as the children of armed services personnel working at a nearby military base. Unlike most other forms of educational assistance, Impact Aid disburses roughly $1.2 billion annually in unrestricted federal funds directly to local school districts rather than through state agencies.
Established in 1950, the Impact Aid Program was a major general aid source for 1,151 school districts nationwide in 2014, or approximately 8 percent of all districts. For some school districts, Impact Aid supplies as much as 75 percent of the local education operating budget. There are five types of Impact Aid:
Basic Support Payments
Impact Aid Basic Support payments are distributed to school districts through a formula based on the number of students served who meet certain "federal connection" qualifications. Generally, school districts receive payments if they educate students who have a parent who works for the federal government or who live on federal property. Federally connected students include those who:
- Have a parent in the United States military;
- are Native American;
- live on federal property, including an Indian reservation or in public housing; or
- have a parent who works on federal property.
School districts are eligible to receive Basic Support Payments if at least 400 of their students, or 3 percent of their enrollment, are federally connected. The 1,124 school districts that received Basic Support payments in 2014 educated over 8.6 million students, nearly 870,000 of whom are federally connected.
In addition to regular Basic Support payments, some school districts are eligible for additional funding through Heavily Impacted District Payments. A district is eligible for these payments if it is located on a military installation; has a combination of high enrollment of federally connected students, high tax rates, and low per-pupil revenues; or meets certain other criteria. Twenty-seven school districts serving more than 61,000 federally connected students in 2014 received these payments, which accounted for approximately 24% percent of all Basic Support payments in fiscal year 2014.
Payments for Property
Impact Aid also provides Payments for Property to compensate school districts for loss of local property taxes on federally owned land. Payments for Federal Property are targeted toward local districts that encompass: (i) military bases, (ii) Native American lands, or (iii) other areas of federal land that are exempt from property taxes. School districts receive Impact Aid payments to compensate for the presence of federal property regardless of whether any school-age children live on exempted lands. In this respect, Payments for Property differ from other forms of Impact Aid, which are based on the children enrolled within a relevant school district.
A local school district qualifies for a property payment if federally exempted lands constitute at least 10 percent of all assessed value within the school district. Payments are based on the assessed value of the exempted lands and the local property tax rate.
|Source: U.S. Department of Education; Department of Defense|
|DOD figures from FY 2013; new figures not yet available. DOD funding includes Supplemental Program and Children with Severe Disabilities Program.|
Impact Aid provides additional payments to school districts that educate students with disabilities who are also federally connected. School districts must use these funds as if they were provided under the Individuals with Disabilities Education Act, which provides school districts with funds to educate students with disabilities.
School Construction Payments
Impact Aid Construction funds help federally impacted areas finance education capital needs. Forty percent of construction funds are set aside for districts that already receive Basic Support payments. The other 60 percent, meanwhile, are awarded via a competitive grant process and are designed to cover emergency repairs or modernization costs. School districts must have minimal or no authority to tax or issue bonds in order to receive a competitive grant. Emergency or modernization grants cannot exceed 50 percent of the cost of the project for which they are awarded. Impact Aid is the only Department of Education program that allows funds to be used for school construction costs.
Department of Defense Supplemental Impact Aid Payments
While the Department of Education administers the four types of Impact Aid described above, the Department of Defense provides additional supplemental payments for districts with large numbers of children from military families. Districts are eligible for these supplemental payments if at least 20 percent of their students come from military families. Districts can also receive these payments if their number of military dependent students rises by at least 20 percent, with a minimum increase of 250 students. Department of Defense supplemental impact aid payments totaled $37 million in fiscal year 2013.
Who Receives Impact Aid?
Because Impact Aid is distributed to school districts with specific populations, funding is not equitably disbursed among the states. In fact, the top five Impact Aid states account for nearly half of all Basic Support payments. The largest recipient of Basic Support payments is Arizona, which received $160 million in fiscal year 2013. Other major recipients include Alaska ($133 million), Texas ($93 million), New Mexico ($86 million), and California ($57 million). Every state received some impact aid in 2013.