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$275 Million in Impact-Aid Funds To Be Released to Districts

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Washington

About $275 million in impact- aid money that was held hostage by the seven-month federal budget stalemate will soon be released to school districts, even though the Department of Education's fiscal 1996 budget is not yet final.

Secretary of Education Richard W. Riley ordered the move earlier this month following negotiations with Republican lawmakers who lobbied him to help beleaguered impact-aid districts.

Impact aid goes primarily to districts that enroll students from tax-exempt military bases and American Indian reservations. The program is unique in the education budget because its funds go out at the beginning of the fiscal year, with most money being allocated by January. Most federal school aid begins flowing eight months into the fiscal year.

Because the department's 1996 funding has been caught in the partisan wrangling over the federal budget, education officials could only pay out as much as was authorized under 12 temporary spending bills that have financed the agency since Oct. 1, when fiscal 1996 began.

So far, $250 million has gone to the neediest impact-aid schools, said Catherine Schagh, the director of the program.

But the stopgap bills authorized the department to spend about 75 percent of the $728 million the program received last year, according to Marilyn Hall, a budget analyst in the Education Department.

Impact-aid advocates argue that the department should have sent more money than it did. And the delay has forced some schools to limit capital expenditures, borrow money, and cut student services.

Mixed Feelings

"Military people and the Department of Defense recognized the problem, but it took a lot of action before the Department of Education recognized it," said John Deegan, the president of the Military Impacted Schools Association. He is the assistant superintendent of the Bellevue, Neb., school district, where 4,500 of the 8,700 students are from families affiliated with Offutt Air Force Base.

Ms. Hall said that more money was not distributed because federal officials feared they would have overpaid some districts if Congress ultimately appropriated less than 75 percent of last year's funding, or divided it among impact-aid accounts differently.

Advocates lobbied last month to get the full $693 million lawmakers have tentatively agreed to provide for impact aid in 1996 added to the temporary spending bill signed by President Clinton on March 29. But an agreement with GOP leaders was scuttled by Democrats who worried that preferential treatment would set a dangerous precedent during touchy budget negotiations.

On March 29, Rep. Robert L. Livingston, R-La., the chairman of the House Appropriations Committee, assured Secretary Riley that there would be no surprises in the final appropriations bill that would lead to overpayments.

"We could have gotten more money out sooner, but because of questions over uncertainty of how much to be paid, there was no point in it," Ms. Hall said.

The expedited aid will go to districts that qualify this school year for the basic impact-aid program. They will receive 85 percent of their 1995 funding, which is the amount they were guaranteed under a new funding formula enacted in 1994. Some of these districts may receive more money later, and districts dependent on other impact-aid programs will have to wait a little longer.

"Why it took so much focus on the issue to get this, I don't know," said John B. Forkenbrock, the executive director of the National Association of Federally Impacted Schools, a lobbying group here.

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