Impact-Aid Districts Pay the Price When Federal Checks Come Late

By Joetta L. Sack — June 02, 1999 8 min read
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Without impact-aid funding from the federal government, Chuck Squier says, his district would simply shut down.

The only school in this prairie village relies on those payments for nearly three-quarters of its $1.6 million annual budget.

But the money, as Mr. Squier and other superintendents have found, is not always guaranteed. While Congress has appropriated generous increases for impact aid in recent budgets, the U.S. Department of Education sometimes doesn’t get the checks out in time--or, in some cases, at all. This tiny, 150-student district on the Santee Sioux Indian Reservation has twice been mistakenly cut off from the program in the past five years.

Those errors highlight a problem that has plagued the fifth-largest federal K-12 program for years, school administrators say. While it rarely snags attention, the 49-year-old, $864 million impact-aid program is a lifeline to its more than 1,600 eligible districts. The money helps pay basic operating costs in districts where federal installations cut into the local tax base.

Impact aid, established during the Truman administration, reimburses districts for property-tax revenues lost because such facilities as military bases, public-housing projects, and American Indian reservations.

In essence, the Education Department becomes a mega-taxpayer, doling out checks based on complicated formulas that tabulate the number of students coming from federal properties and the cost of their educations.

But if the federal government’s payment is late, or it fails to come at all, local school leaders have little recourse. Increasingly, those officials are voicing their frustrations.

“If [Education Department officials] don’t pay their education bill, we can’t cut off their education services,” said John B. Forkenbrock, the executive director of the Washington-based National Association of Federally Impacted Schools, or NAFIS. “They get by with paying partial costs, while the taxpayers are subsidizing it.”

Because impact aid is sent out only after that year’s appropriations bill is passed--unlike some programs in which money is set aside earlier in time for the new school year--money can be late in coming. And getting their payments on time is vital, administrators say.

“A whole district’s operation could come to a halt if the impact-aid payment does not come early in the year,” said Wayne Lett, the superintendent of the 32,000-student Newport News, Va., district. Newport News, which is home to a Navy base, has had to eliminate some supplemental services and make other adjustments when federal payments came late.


The 9,300-student Bellevue, Neb., district, which serves the children of Offutt Air Force Base, is receiving impact-aid payments from the past five years to make up for miscalculated payments.

Like Santee, Bellevue is a so-called heavily impacted district, meaning it receives higher funding per student because so many of its students are drawn from federal property. Still, planning an annual budget is a challenge because district officials never know how much impact aid they will receive--or whether they will receive their correct allocation on time, Superintendent John F. Deegan said.

“It’s like working somewhere for three months before you find out what you’re getting paid, then only getting paid a portion of it,” Mr. Deegan said.

In light of past experiences, Bellevue officials now draw up two budgets: one with and one without their estimated impact-aid payment. Bellevue’s teachers work on a “conditional contract"--the condition being that the district receives its impact-aid checks.

“It’s just a struggle, every inch of the way, to get the money and get the planning done,” said Lin Willett, the president of the Bellevue Education Association, a National Education Association affiliate.

Federal Response

In Washington, though, federal administrators at the Education Department believe that the current process is generally working well and that a new computer system will alleviate some lingering problems.

According to the Education Department, 75 percent of the impact-aid checks were mailed within 60 days of the approval of the annual appropriations bill in 1997. And, 98 percent of the checks were in the mail within 100 days.

“Data-entry errors are rare,” said Catherine Schagh, the department’s impact-aid administrator. The agency checks every application twice, she added, and often finds mistakes made by district employees unfamiliar with the complicated forms--mistakes that delay payments.

“The newest person on the district staff usually gets this assignment,” Ms. Schagh said.

This school year, though, the problems came to a head when the Education Department implemented its new computer system, programmed to avoid the “Y2K” computer bug. Because of a glitch, all the checks for 1998-99 were held up until March, at least. But ultimately, the new system will significantly speed up the process, Ms. Schagh said.

Fed up with the delays and uncertainty, Mr. Deegan and other superintendents approached freshman Rep. Lee Terry, the Nebraska Republican whose home district includes the Bellevue schools.

Based on their conversations, Mr. Terry has introduced a bill, HR 1206, that would move administration of impact aid from the Education Department to the Department of the Treasury, the agency that distributes government checks. (“Congressman Wants Treasury To Administer Impact-Aid Program,” March 24, 1999.)

“The horror stories of how impact aid has been treated by the Education Department really inspired me to act,” Mr. Terry said in a recent interview.

The Education Department does not support Mr. Terry’s bill, Ms. Schagh said. “We don’t think [a move] would be good for the program. It still supports elementary and secondary education,” she said.

But the National Association of Federally Impacted Schools argues that the Education Department has not been an advocate for the program, choosing instead to seek funding for new programs such as President Clinton’s class-size-reduction initiative.

In its fiscal 2000 budget plan, the Education Department has proposed eliminating the “heavily impacted” category, the very category that benefits districts such as Bellevue and Santee.

Santee’s Challenges

An early-1970s facility, the Santee Community School needs money to replace its roof and a faded red carpet that, in some places, is held together by duct tape. But Mr. Squier said his first priority is education programs to reverse damage done when Santee’s impact-aid funding was mistakenly cut.

When Mr. Squier became the superintendent here four years ago--the fifth person to hold the job in six years--teachers had been laid off, educational programs had been cut, and basic supplies were hard to find. When he investigated, he found the cuts were due to a severe decrease in impact-aid funding two years earlier--because the Education Department mistakenly said the district did not have enough Native American students to qualify. But all 150 of Santee’s students are Native American.

The problem was corrected, and now, the district spends about $10,000 per pupil, which counts money coming from impact aid, the state, and an occasional grant.

“We get criticized” because of that high figure, Mr. Squier said, “but [critics] don’t have a clue about what we’re dealing with here.”

The district sits on the Missouri River just across from South Dakota, nestled in Nebraska’s remote Sandhills region, where the only industry is ranching and the next town is 20 miles away. Santee’s only businesses are a decrepit casino, a convenience store, and a warehouse that employs a few residents to make boxes. Most of the prefabricated homes clustered in the town are owned by the federal government.

Mr. Squier wants to expand after-school programs for his students, who usually wander the streets at night for lack of anything to do, he said. There’s also a desperate need for more health and technology classes, he said, and, eventually, he’d like a new gym for community-based activities.

“The Santee Sioux are independent, self-reliant people,” Mr. Squier said. But without impact aid, he added, “we absolutely have no place to go.”

Funding Battles

Practically since the program’s inception, the White House and Congress have pushed and pulled over its funding. Nearly every president has proposed cuts in impact aid.

This year, President Clinton proposed cutting the program by 15 percent, to $736 million, in fiscal 2000. Education Department officials say they are simply trying to better target the aid to where it is needed most.

Impact aid, though, is bolstered by a strong lobbying force on Capitol Hill.

In 1997, House and Senate lawmakers from areas with impact-aid districts created caucuses to push for funding and advance other related issues; the caucuses now boast 46 senators and 118 representatives as members. Twice a year, NAFIS members meet in Washington and lobby congressional and Education Department officials.

Thanks to such clout, the program has received a 25 percent increase in the past four years, from $693 million in fiscal 1996 to the $864 million in 1999, the current fiscal year.

AFIS and members of Congress have been meeting with the Education Department in recent months to explain the problems facing the program and try to iron them out. Ms. Schagh said the new computer system should alleviate many of the complaints. Mr. Forkenbrock of NAFIS, meanwhile, believes the advocacy from Congress has gained the department’s attention.

Rep. Terry said he doesn’t expect quick action on his bill that would transfer responsibility for impact aid to the Treasury. But he said he was working behind the scenes with other members of Congress and planned to talk to Education Department staff members. And he is working with aides to Sen. Chuck Hagel, another Nebraska Republican, to introduce similar legislation in the Senate.

“What I’m trying to do is educate my colleagues one-on-one about what the problem is,” Mr. Terry said.

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A version of this article appeared in the June 02, 1999 edition of Education Week as Impact-Aid Districts Pay the Price When Federal Checks Come Late


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