Congress Acts To Save Districts’ Impact-Aid Funds

May 03, 1989 2 min read

Washington--The Congress acted last week to correct an error in last year’s impact-aid reauthorization that could have prevented some districts from receiving any funds under the program in the current fiscal year.

The omnibus education bill of 1988 established a new funding formula for the impact-aid program, which compensates districts for lost tax revenues due to the presence of a military base or other federal installation.

The new law included a “hold harmless” provision ensuring that some impact-aid districts would receive payments no less than their fiscal 1987 levels if the appropriations for the program were not enough to fund all districts using the new formula.

But the law did not extend the hold-harmless option to districts in which fewer than 20 percent of students were federally connected, according to John Forkenbrock, executive director of the National Association of Federally Impacted Schools.

About 2,350 of the 2,600 impact-aid districts fit that category, known as “regular B’s. " Without the hold-harmless option, the only way those districts could receive funds was by using the formula, which provides that such districts receive 10 percent of their total entitlement as determined by another part of the law.

Inadequate Funding

The Congress decided through the appropriations process to provide $708 million for impact-aid payments in fiscal 1989. That amount fell so far short of the full-funding level, however, that all impact-aid districts other than the “regular B’s” chose to hold their funding at 1987 levels.

But since that was not option for “regular B’s,” those districts were to be funded using the formula.

Once funds were distributed to the hold-harmless districts, about $36 million remained. That amount was only half of what was needed to give each “regular B” district 10 percent of its entitlement as stated in the formula, according to Mr. Forkenbrock.

In an apparent oversight, the 1988 law did not contain a provision for the “regular B” districts to share equally the available money.

Education Department officials then realized that there were not enough funds to use the formula, that such districts did not have a hold-harmless option, and that there was no authority for them to share the remaining funds. As a result, the department informed the “regular B’’ districts that they would not receive any impact-aid funds for fiscal 1989, Mr. Forkenbrock said.

The legislation cleared by the Congress last week allows the “regular B” districts to share the available money in cases where funds are inadequate to fulfill the formula.

To correct another apparent Congressional oversight, a second provision lifted a cap that prevented “super A” districts, which have heavy concentrations of federally connected students, from receiving funds greater than their fiscal 1987 levels, even if the number of such students served by a district had increased.--rrw

A version of this article appeared in the May 03, 1989 edition of Education Week as Congress Acts To Save Districts’ Impact-Aid Funds