Impact Aid

An Overview for PTA Membership As of Jan 25, 2014

Rodney M. Davis, Colonel, U.S. Army Retired, Military Family Support Committee, NPTA

• Purpose• Scope• Acknowledgements• Organization Roles• Department of Education Impact Aid

Program• Department of Defense Impact Aid Program• Points of Contact for Assistance

Agenda

Purpose: To provide information necessary for a general understanding of Impact Aid.

Scope: This presentation addresses various aspects of the Impact Aid Program. However, its primary focus is on the information necessary for a basic understanding of Impact Aid related to military children.

The following organizations provided content and technical advice instrumental in the development of this presentation: National Association of Federally Impacted Schools Military Impacted Schools Association Texas Association of Federally Impacted Schools Department of Defense Education Activity Department of Education

Acknowledgements

• The Department of Education is the primary agency for the administration of the Impact Aid Program.

• The Department of Defense Education Activity supplements the Department of Education program with an Impact Aid for school districts heavily impacted by the military. It coordinates directly with the Department of Education.

• The National Association of Federally Impacted Schools is a nonprofit of school districts with federally connected children. It is organized primarily to educate Congress on the importance of Impact Aid.

• The Military Impacted Schools Association is a nonprofit that serves school districts with a heavy concentration of military children.

Organization Roles

Department of Education Impact Aid

Many local school districts across the United States include within their boundaries parcels of land that are owned by the Federal Government, or that have been removed from the local tax rolls by the Federal Government, including Indian lands.

Why Impact Aid

These school districts face special challenges. They must provide a quality education to the children living on the Indian and other Federal lands and meet the requirements of the No Child Left Behind Act, while sometimes operating with less local revenue than is available to other school districts, because the Federal property is exempt from local property taxes.

Why Impact Aid Cont’d

Impact Aid was designed to assist local school districts that have lost property tax revenue due to the presence of tax-exempt Federal property, or that have experienced increased expenditures due to the enrollment of federally connected children, including children living on Indian lands.

Why Impact Aid Cont’d

• Need for program identified in 1821• First passed as law (signed by Harry

Truman) in 1950.• Since 1950, Congress has provided

financial assistance to local school districts through the Impact Aid Program.

• 2d oldest federal elementary-secondary education program currently in law.

Impact Aid History

The Impact Aid law (now Title VIII of the Elementary and Secondary Education Act of 1965 (ESEA)) provides assistance to local school districts with concentrations of children residing on Indian lands, military bases, low-rent housing properties, or other Federal properties and, to a lesser extent, concentrations of children who have parents in the uniformed services or employed on eligible Federal properties who do not live on Federal property.

Impact Aid Overview

• Program is supported by discretionary funding. It is not forward funded and not permanent

• Program must be approved by House and Senate and signed by the President.

• Applies to public…not Department of Defense Educational Activity (DoDEA), or private schools.

• Payments based on a complicated two-tiered formula only because the program is not fully funded.

• Payments are reduced and distributed on a “needs based” formula…not a simple proration.

• Schools that are more dependent on the funds receive more than others that are not as financially dependent on the payment.

• Revenue does not follow the student.

Impact Aid Overview Cont’d

• Funds are distributed by wire transfer directly into the bank accounts of school districts for general operating fund to pay for operating expenses – teachers, text books, computers, utilities, computers, and other equipment; after-school programs and remedial tutoring; advanced placement classes; special enrichment programs, etc.

• Other than funds specifically for children with disabilities, funds may be used for any legal obligation of the district.

• Normally, no administrative costs at the state level.• It is the most efficient of all education programs.• 1,400 school districts impacted.• Over half a million children of military personnel served.• Currently funded at only less than 60% of need (2013).

Impact Aid Overview Cont’d

• Indian Trust or Treaty Land• Federal Low Rent Housing Projects• Military Installations• Other Federal Land (National parks,

Federal Prisons, VA Hospitals, National Forests, Lakes, Post Office Buildings, IRS, Buildings, etc.)

Four Areas of Impaction (Land)

16

940,000 “Federally Connected Children” Nationwide 2013

.

Military (376,441)Indian Lands (115,172)Low Rent Housing (224,859)Civilian (224,468)

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Impact Aid Funding Federally Connected Children

1. Arizona2. Alaska3. Texas4. New Mexico5. California6. South Dakota7. Montana8. Washington 9. New York10. Hawaii

1. Virginia2. New York3. Texas4. California5. Florida6. North Carolina7. Arizona8. Maryland9. Washington 10. Georgia

Top Ten States 2013

18

2013 Impact Aid Funding by State

• Department of Education Impact Aid: Section 8002 – Payments for Property Section 8003(b) – Basic Support Payments Section 8003(b)(2) – Heavily Impacted

Districts Section 8003(d) – Disability Payments Section 8007(a & b) – Construction Section 8008 – Facilities

Impact Aid Program Components

Note: Although this presentation addresses various aspects of the Impact Aid Program, the primary focus is on Section 8003(b) and 8003(b)(2). They will be discussed after the other sections

Section 8002

• Payments for Federal Property assist local school districts that have lost a portion of their local tax base because of Federal ownership of property.

• To be eligible, a school district must demonstrate that the Federal Government has acquired, since 1938, real property with an assessed valuation of at least 10 percent of all real property in the district at the time of acquisition.

8002 - Federal Property

• Although property is not the focus of this presentation, familiarization with the 8002 formula may be useful. The formula for the computation of the payment for federal land is: Determine average per acre value of all taxable

property in the district Apply that to the number of acres of federal

property Multiply total value of federal property by tax rate Result = 8002 foundation payment owed

8002 - Federal Property Payment Calculation

Section 8003

• Payments are made to school districts for the additional costs of educating Military and Indian lands students with disabilities.

• Any military or Indian land child eligible to receive IDEA funds will attract these dollars.

• Military and Indian land students must have an Individual Education Plan (IEP) on the survey date.

• These payments are in addition to Basic Support Payments and Individual with Disabilities Education Act (IDEA) funds provided on behalf of these children.

8003(d) - Children with Disabilities Payments

• The formula for calculation of the 8003(d) payment is determined by dividing the total appropriation for section 8003(d) by the nationwide total of children with disabilities reported on surveys conducted by the impacted districts.

8003(d) - Children with Disabilities Payments Cont’d

Section 8007

• Construction Grants go to local school districts that educate high percentages of certain federally connected children — both children living on Indian lands and children of members of the uniformed services.

• Districts must have an enrollment of 50% or more Indian Land or Military children or be classified as a Heavily Impacted District under 8003(b)(2).

• These grants help pay for the construction and repair of school buildings. Section 8007(a) provides formula grants to the local school districts based on the number of eligible federally connected children they educate.

• Section 8007(b) provides competitive grants for emergency repairs and modernization (discretionary). Priority is given to school districts with limited bonding capacity for emergency repairs.

8007 - Construction

Section 8008

• Payments for upkeep and repair of school buildings owned by the Department of Education used by local school districts.

• Approximately 50 buildings are currently owned by the U.S. Department of Education.

8008 - Facilities

Section 8003(b)

• Basic Support Payments (BSP) help local school districts that educate federally connected children. These may be the children of members of the uniformed services, children who reside on Indian lands, children who reside on Federal property or in federally subsidized low-rent housing, and children whose parents work on Federal Property.

• In general, to be eligible for assistance a local school district must educate at least 400 such children in average daily attendance, or the federally connected children must make up at least 3 percent of the school district's total average daily attendance.

8003(b) - Basic Support Payments

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940,000 “Federally Connected Children” Nationwide 2013

.

Military (376,441)Indian Lands (115,172)Low Rent Housing (224,859)Civilian (224,468)

• Based on the premise that funding in the local district comes from two sources…50% local business and homeowner taxes and 50% from the state.

• Payments are calculated on a needs basis…not a simple proration. The law uses an individual school district’s “need” and adjusts a school districts BSP based upon the individual need of the district.

• Need is computed by adding together the percentage of federal students and the percentage of the operating budget the BSP payment represents.

• 100% of BSP is the total amount (before adjustments) the district is entitled to receive.

• The Learning Opportunity Threshold (LOT) Payment is the prorated amount the district will receive (if fully funded).

Rationale for 8003(b) BSP Payments

8003(b) Application Process

• School district must determine the number of military/federally connected students. There are three options: Conduct Student Survey Source check (capture data from base housing) Both

• Compile survey results.• Complete application.• Submit application electronically to: State Education Agency – U.S

Department of Education…also a copy to National Association of Federally Impacted Schools (NAFIS).

• Submit application on time: 4:30pm EST. Last day of January or 1st working day following

weekend or holiday. Department of Education has 60 days after Oct 1 to get 90% of the

payments out.• Note: 1 to 60 days late = 10% payment reduction.• 61 days late = total loss of funding.

8003(b) Basic Support Payments Application Steps

• Impact Aid payments not always timely.• School begins in Aug. Federal fiscal year begins Oct 1.• First payment received October - February – May, depending on

Congressional appropriations.• Impact Aid payments based on data from 2d preceding and

sometimes 3d preceding year.• All funds electronically deposited into the school district’s bank

account.• Districts will receive electronic notification and voucher from

Department of Education.• When there is not enough money to provide all districts their

maximum payments, the LOT system funnels available funds to districts with a greater need. As appropriations increase, additional money flows down to school districts with a lower lot.

8003(b) BSP Payments Things to Keep in Mind

Let’s work a few examples in order to gain a better appreciation for how the 8003(b) BSP is calculated. To do so, we’ll need to understand certain terms.

• ADA – Average Daily Attendance – Average daily attendance of federally connected students.

• TCE – Total Current Expenditure – The amount funding in a school districts general operating budget Percentage of district’s budget made up of Impact Aid.

• LCR – Local Contribution Rate – The term used to compute the local loss to the school district as measured by a per pupil expenditure. There are four ways to calculate the LCR. The most commonly used figures are either half of the national or state average per pupil cost…whichever is highest based on data three years prior to year for which the payment is calculated.

• WSU/WFSU – Weighted (Federal) Student Unit – The weight assigned to the various child categories.

Terms

• CWD – Children with Disabilities

• LEA – Local Education Agency (school districts)

• BSP – Basic Support Payment – The amount a district is entitled to receive. Attendance Ratio x WSU x LCR = BSP.

• LOT – Learning Opportunity Threshold – The school district’s need. Determined by the sum of the percentage of federal students and the percentage of the operating budget represented by the Basic Support Payment.

• LOT Modifier (LOT MOD.) – A representation of the degree of dependency of the school district on Impact Aid funding. The higher the LOT Modifier, the closer the LOT payment is to the maximum BSP. The % of federal students compared to the total number of students; and the % that the maximum BSP is of the total current expenditures (Operation and Maintenance Expenditures).

• LOT Payment – BSP x LOT MOD. = LOT Payment

Terms Cont’d

Let’s look at the calculations required to determine the LOT Payment for a school district.

To calculate the LOT payment, we’ll need to: Calculate LCR Determine attendance ratio Calculate total WFSU Calculate maximum BSP Calculate LOT MOD Calculate LOT Payment

8003(b) LOT Payment Calculation

• The most commonly used figures for the calculation of the LCR are either half of the national or state average per pupil cost…whichever is highest based on data three years prior to year for which the payment is calculated.

• Data used to calculate LCR is based on data that is three years prior to the fiscal year for which the payments are to be calculated.

• If the state average per pupil expenditure is $5,000, a district can use $2,500 as the LCR.

• or it can use the national average per pupil expenditure.• Half of the of the national average per pupil expenditure for FY

2014 is $5,397. The district can use $5,397 as the LCR.• A school district can always use the higher.

Calculating the LCR

For the purpose of the following examples we’ll use 1/2 the national average per pupil expenditure as the LCR which is $5,397. Again, the LCR represents the rate of local loss to the school district. Now we’ll need to calculate the total WFSU. The next slide provides a table of weights for each student category.

Weights for Calculating WFSU

Type Student Weight Child of parent living on Indian trust or treaty land 1.25Child of parent in uniformed services (including foreign military officers) residing on federal property

1.00

Child of parent in uniformed services (including foreign military officers) residing off of federal property

.20

Child of parent residing in low rent housing (not including Sect 8)

0.10

Child of civilian parent working and residing on federal property

1.00

Child of civilian parent working on federal Property, but residing on taxable property

0.05

In order to calculate the Total WFSU, we multiply the # of federal students in Average Daily Attendance within each child category x the weight for each student by category. Then we total each category for the Total WFSU.

Calculating the Total WFSUs

Example Calculation of Total WFSUs

Type Student # Federal Students X Weight = Weighted Federal Student Unit

Indian Trust Land 100 1.25 125.00

Military on Federal Property

100 1.00 100.00

Military off federal property

100 .20 20.00

Low Rent Housing 100 0.10 10.00

Civilian Working on Federal Property

100 0.05 5

District Total 500 Total WFSU -> 260

• With the total WFSU and an LCR, we’re able to calculate the maximum BSP.

Total WFSU X LCR = Maximum BSP

260 x $5397 = $1,403,220

Maximum BSP Payment Calculation Example

• At this point we have a basic understanding of the calculation required to determine the maximum BSP involving multiple categories of students. However, keep in mind that the BSP represents an ideal.

• A district will not normally receive the full BSP amount because Congress does not appropriate sufficient funding and so payments are prorated based on need. The LOT payment is the actual payment a district will receive (provided federal funding is appropriated) based on a proration. The program hasn’t been fully funded since 1969.

• Let’s work a different example. We’ll go beyond simply determining

the BSP and calculate a LOT Payment. To do so in this case we’ll focus on only one category of students….military students.

• We’ll need the LOT MOD. in order to calculate the LOT Payment…the amount the district will actually receive.

• The LOT MOD is the proration factor that represents how dependent a school district is on Impact Aid funds --- the higher the LOT MOD, the closer the LOT payment is to the maximum BSP.

• To calculate the LOT MOD., add the percentage of federal students compared to the total number of students; and the percentage that the maximum BSP is of the total current expenditures (Operation and Maintenance Expenditures).

Calculation of the LOT Modifier (LOT MOD.)

In the following example, District A has a dependency factor (or need) of 100% since 54% of its students are federal and 58% of its total budget is based on its BSP Payment. This is an example of one school district that receives 100% of its BSP, as long as the funding level is sufficient to pay districts 100% of their LOT percentage payment.

District B only has a dependency on Impact Aid of 7.6% because federal students make up only 4.2% of its ADA and the BSP makes up only 3.4% of its operating budget. In other words, the LOT payment is only 7.6% of its BSP Payment.

Explanation of Example LOT MOD. Calculation

Example Calculation of LOT MOD. & Payment

Description School District A School District B

Total ADA 1200 (given) 1200 (given)

Total Federal ADA 650 (given) 50 (given)

Type of Federal Student Military on-base Military on-base

Total Current Expenditure $6,000,000 (given) $9,000,000 (given)

WFSU 650 (650 x 1.00) 50 (50 x 1.00)

LCR $5,397.00 (given) $5,397.00 (given)

Total Maximum Basic Payment $3,508,050 (650 x $5397) $269,850 (50 x $5,397)

% Federal Students 54% (650/1200) 4% (50/1200)

BSP % of Total Current Expenditures

58% ($3,508,050/$6,000,000) 3% ($269,850/$9,000,000)

LOT MOD. 100% (54% + 58%) 7% (3% + 4%)

LOT PAYMENT (LOT% x BSP) $3,508,050 (1 x $3,508,050) $18,889.50 (.07x$269,850)

Note: Values indicated as “given” are not based on any calculation to be found on the table

Section 8003(b)(2)

• District must have 40% student impact not counting civilian students whose parent(s) work on federal property or 50% if civilian students are counted.

• Districts must make a “reasonable” tax effort (minimum 95% of the state average).

• District must have less revenue per student than the state average or if the district has less than 350 students has a per pupil expenditure less than the expenditure of a comparable school district or three comparable districts.

8003(b)(2) – Heavily Impacted Districts

Department of Defense Impact Aid

• In addition to Department of Education Impact Aid, since the early 1990s, Congress has provided an appropriation to support LEAs that educate military children.

• The program was established to help school districts with military students who have faced: The prolonged war on terror Lack of adequate funding through the DOE IAP Challenges associated with base closures and

realignments Deteriorating facilities Safety issues Increasing costs of special education services

Department of Defense Impact Aid

There are three DOD Impact Aid programs: Supplement Children with Severe Disabilities Large Scale Rebasing

Department of Defense Impact Aid Cont’d

• Only for school districts with 20% or more military students.• All LEAs that receive DOD supplement Impact Aid also receive

Department of Education Impact Aid.• Other than for children with severe disabilities, the DOD Impact

Aid may be used by the LEA without restriction.• Other than in the case of children with severe disabilities, LEAs

do not need to apply to DOD for supplemental payments. Department of Education provides ADA for military children to DOD and payments are made based on this data.

• DOD contacts selected LEAs about payments for children with severe disabilities. LEAs apply to DOD for payments for children with severe disabilities after contacted by DOD.

• Approximately 115 LEAs receive the DOD Impact Aid annually.

Department of Defense Supplement Impact Aid

• Provides financial assistance to LEAs who have at least two military-connected children with severe disabilities that meet certain special education cost criteria through an application process.

• Approximately 53 LEAs receive the DOD Impact Aid for Children with Severe Disabilities.

Department of Defense (Children with Disabilities) Impact Aid

• Provides financial assistance to LEAs that are heavily impacted by the increase or reduction in military-connected student enrollment resulting from Large Scale Rebasing.

• Eligible LEAs have (or would have had) at least 19.5% military-connected students in average daily attendance in their schools, as counted on their Federal Impact Aid application for the preceding year, and have an overall increase or reduction of no less than 5% or 250 students as a direct result of large scale rebasing.

Department of Defense (Large Scale Rebasing) Impact Aid

National Association of Federally Impacted Schools (NAFIS)www.sso.org/nafisPhone: (202) 624-5455; Email: jocelyn@nafisdc.org

U.S. Department of Educationwww2.ed.gov/about/offices/list/oese/impactaidPhone: (202) 708-5366; Email: impactaid@ed.gov

U.S. Department of Defense Education Activity (DoDEA)http://www.militaryk12partners.dodea.edu/impact.cfm. Phone: (571) 372-6026; Email: Hq.partnership@hq.dodea.edu

Points of Contact for Assistance

Impact Aid

An Overview for PTA Membership As of Jan 25, 2014

Rodney M. Davis, Colonel, U.S. Army Retired, Military Family Support Committee, NPTA