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Supreme Court Backs Federal Interpretation of Impact Aid Act

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The U.S. Supreme Court today upheld the U.S. secretary of education’s method for calculating when states may offset federal impact aid to school districts that educate children living on federal land or near federal installations.

Ruling 5-4 in a case brought by two New Mexico school districts, the justices said the Impact Aid Act could be interpreted as allowing the secretary’s way for determining when a state has an equalized school funding system. Under the statute, states with equalized funding systems may offset the same amount that districts receive in federal impact aid.

For his majority opinion in Zuni Public School District No. 89 v. Department of Education (Case No. 05-1508), Justice Stephen G. Breyer consulted mathematics and statistics volumes, among other sources, to reach his conclusions about the “disparity” calculation at the center of the dispute.

The federal statute calls on the secretary to rank school districts in a given state by wealth and allow that state to offset the impact aid to districts only when the disparity between its wealthiest and poorest districts in per-pupil spending is 25 percent or less. Under the law, however, the top and bottom 5 percent of districts are eliminated from the calculation.

The Supreme Court upheld the method long used by the federal Education Department, which, instead of simply disregarding the top and bottom 5 percent of districts by the number of districts alone, takes student enrollment figures into account. That can alter the ultimate effect of the equalization provision.

In New Mexico, the secretary’s formula disregarded 23 of 89 districts in the disparity calculation, and under that method, the state passed the equalized-spending test.

The two school systems that sued, the 1,585-student Zuni district and the 13,000-student Gallup-McKinley County district, received $8.1 million and $26.8 million, respectively, in federal impact aid in fiscal 2006, the year at issue in the case. Indian reservation land is located within both districts.

District officials argued that under a proper application of the impact-aid law, the secretary would have only eliminated 10 districts from the state’s list, and the resulting disparity in per-pupil spending for the remaining districts would have exceeded 25 percent. As a result, New Mexico would not have been able to offset the districts’ federal aid.

Statute’s ‘Plain Language’

In his opinion for the court, Justice Breyer said the history of the Impact Aid Act supports the secretary’s method.

“The history and purpose of the disregard instruction indicate that the secretary’s calculation formula is a reasonable method that carries out Congress’ likely intent” when it added the language to the Impact Aid Act in 1994, Justice Breyer said.

Joining his opinion were Justices John Paul Stevens, Anthony M. Kennedy, Ruth Bader Ginsburg, and Samuel A. Alito Jr.

Justice Antonin Scalia issued a strongly worded dissent that was joined in full by Chief Justice John G. Roberts Jr. and Justice Clarence Thomas, and in part by Justice David H. Souter.

Justice Scalia said the majority was reaching beyond the text of the federal law.

“The plain language of the federal Impact Aid statute clearly and unambiguously forecloses the secretary of education’s preferred methodology for determining whether a state’s school funding system is equalized,” he said.

Vol. 26

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