Snafu May Cost 2,600 Districts Impact-Aid Payments

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WASHINGTON--Members Of the Congress, Education Department officials, and lobbyists for recipients of federal impact aid were searching desperately last week for a way to prevent some 2,600 school districts from missing out on money they were counting on getting next month.

Because of a legislative mix-up, the districts located on or near Indian reservations, military bases, or other federally connected lands are now not scheduled to receive their preliminary impact-aid payments for the year, which customarily arrive in November. As a result, many of the districts may have to take out expensive loans or even lay off employees.

Despite efforts by federal officials and the leadership of the National Association of Federally Impacted Schools, the chances that the government will be able to guarantee the money for the districts look questionable, observers say.

"You're looking at one frustrated, very disappointed little puppy," Charles E. Hansen, director of the department's impact-aid program, told NAFIS members last week, when the funding problem surfaced publicly.

Loans, Layoffs Feared

The origin of the current situation lies in the complicated system for distributing aid to districts whose local revenues are reduced by the federal presence. Because the program uses a funding formula that is based on current-year attendance figures, districts' full impact-aid checks generally do not arrive until eight or nine months into the school year.

To tide them over antil then, districts can receive preliminary payments as early as two months after the school year begins. The preliminary payments provide 50 percent or 75 percent of the funding a district received in the previous year.

Without those preliminary payments, districts will have to scramble to survive until spring, when they will get their full aid amounts.

"Teachers do not like it when they don't get a paycheck," said Richard G. Vought, administrator of the Lac du Flambeau (Wis.) Public School.

Mr. Vought's school has 380 students, 93 percent of whom are Ojibwe Indians. More than $1 million of the school's $3-million budget comes through the impact-aid program.

Mr. Vought said he has already borrowed $500,000 at 4.9 percent interest to get the school through the end of November. Now he is afraid that, without the school's preliminary payment, he will be forced to borrow again, and lose more of the school's impact-aid money to interest.

"You're not going to borrow money for nothing, so that money is going to come from somewhere," Mr. Vought said. "This is creating a cash-flow problem for a lot of districts."

Unintended Consequences

The way in which the Education Department lost its authority to issue preliminary payments can be seen as a case study in how the vagaries of the legislative process sometimes lead to the opposite of the result intended by lawmakers and lobbyists.

It all started with an attempt by the Bush Administration, members of the Congress, and NAFIS to get impact-aid districts their money as early as possible in the school year. Those involved developed a system in which impacted districts would receive up to 96 percent of their payments within a month after the Labor, Health and Human Services, and Education appropriations bill had been signed.

To make that happen within the speeded-up time-frame, the new system required that districts use attendance figures from the previous, rather than current, school year.

The Administration included such a provision in its budget proposal, as did the House and Senate appropriations committees in their bills.

As a safeguard, the provision also was added to a bill reauthorizing dropout-prevention programs. To prevent an overlap between the new and old systems, the bill rescinded authority for the department to issue preliminary payments.

The dropout bill passed the Congress this summer.

Before passage, however, Senator Claiborne Pell, the Rhode Island Democrat who chairs the Senate education subcommittee, received a call from an impact-aid district in his state that anticipated picking up between 200 and 300 students from military families.

If their payment was based on last year's enrollment, Middletown, R.I., school officials pointed out, they would lose $500,000 they would otherwise receive for their new students.

To accommodate the Rhode Island district-and possibly others around the country in a similar situation-committee aides struck the provision regarding prior-year data from the dropout-prevention bill. But they mistakenly failed to delete the amendment that cut off authority for issuing preliminary payments.

Now the dropout-prevention bill is law, and the Labor-H.H.S.-Education appropriations bill has been delayed, possibly until late this year. So the old payment system has been abolished, the new one has not yet been approved--and districts are left without any up-front money.

"It really isn't anybody's fault," said John Forkenbrock, executive director of NAFIS. "Nobody was trying to do this intentionally. It's just the complexity of the program." Looking for Solutions

Mr. Forkenbrock and Mr. Hansen said they have three options to get money to impacted districts as quickly as possible. They can hope the appropriations bill passes quickly; push for passage of another education bill amending the Follow Through program for Head Start graduates-to which the prior-year provision was recently attached; or develop a separate bill to re-establish the departments authority to make preliminary payments.

If the third, and apparently most promising, option is pursued, impact-aid lobbyists say they will have to abandon their effort to switch to the use of prior-year data until the program as a whole comes up for reauthorization in 1993.

"There's an old adage that tells you, you should know when to bend, and I think after looking back at this, we might be better off to back off from prior-year data," Mr. Forkenbrock said.

Meanwhile, Mr. Hansen is looking to see if the department can make preliminary payments even in the absence of an explicit Congressional authorization to do so.

"I have no authority that I can find and we're still looking for some crazy part of the law that would allow me to do something extraordinary," he said. "The current thinking is when the Congress removes an existing authority, it's gone."

Some observers say the funding glitch--and the consequent postponement of funding changes--may have been for the best.

An aide to Mr. Pell said his staff all along had wanted to wait until reauthorization of the program to include prior-year data. NAFIS and the department may have been too eager to push for changes, the aide contended, adding that the delay will provide time to study the issue and avert problems for districts that anticipate an influx of students.

Vol. 11, Issue 07, Page 17

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