As the Oct. 1st Congressional budget deadline nears, public school leaders are concerned about how it will effect Impact Aid they receive from the federal government.

Nationally, 1,307 school districts receive Impact Aid to make up for the lost tax revenues from federally owned property within their boundaries and to provide critically important education funding for the increased number of students whose parents work on those federal projects, activities or lands, said Larry Wallen, executive director of the Arizona State Impact Aid Association.

How Impact Aid works

Impact Aid was signed into law in 1950, and it is administered by the U.S. Department of Education.

Every dollar appropriated by Congress goes directly to impacted school districts and charter schools.

After that, school board members determine locally how they will use the funds for materials, technology, transportation, staff support or other needs, Wallen said.

Impact Aid is based on the average nationally of per-pupil expenditures, and right now that’s $5,136 per-pupil, Wallen said.

Congress has increased Impact Aid funding by $23 million to $1.328 billion in fiscal year 2017, by $51 million to $1.414 billion in FY 2018 and by $32 million to $1.446 billion in FY 2019.

In Fiscal Year 2020, school leaders at public schools that receive Impact Aid are hoping for a $52 million increase to reach $1.498 billion.

They are also hoping for the passage of the Impact Aid Infrastructure Act by Rep. Tom O’Halleran, which would provide a $1 billion one-time infusion what would address school construction needs of federally impacted schools.

School leaders oppose a plan for Impact Aid vouchers.

Mainly, they would like to see sequestration eliminated, and the Budget Control Act caps raised, Wallen said.

Related stories

Impact Aid: Its role in funding AZ schools (7/10/2019)
Sequestration hurting Arizona schools that receive Impact Aid (11/8/2013)
Arizona Rep. Matt Salmon on proposed Impact Aid changes (1/9/2014)

Concerns about budget and sequestration

That means when the Congressional budget is delayed, schools don’t receive Impact Aid funds in a timely manner, which can cause school maintenance and operations difficulties for school leaders, Wallen said.  

“When Congress goes into October and doesn’t pass a budget, Impact Aid stops being funded,” Wallen said.

“We’ve been lucky the past couple of times there’s been sufficient cash in the accounts that Congress has allowed the Office of Management and Budget to say we’re going to give you 50 percent of your Impact Aid on occasion,” Wallen said.

Impact Aid is current-year funding, unlike most education funding which is budgeted a year in advance.

If Congress doesn’t pass a budget, but does approve a continuing resolution for four months, then schools will receive just four months’ worth of the Impact Aid they usually do, Wallen said.

Some schools “have a cash surplus that Impact Aid has allowed them to build up – that’s primarily Indian Lands schools – but others don’t, and that puts pressure on them,” Wallen said.

That’s where the big concern about sequestration, which limits the size of the federal budget, comes in, Wallen said.

“Back in 2012, Congress said we’ve got to reduce spending. We’ve got to make it a habit, so they passed the budget reconciliation bill and they created what’s called sequestration,” Wallen said.

“In essence, they’re going to take money out and not give it to anybody,” Wallen said.

Sequestration happens if Congress exceeds a spending cap set in a budget category, triggering an automatically imposed across-the-board spending cut on that category.

The amount above the spending cap is held back by the Treasury and not transferred the agencies specified in the appropriations bills.

Sequestration happened in 2013 during the government shutdown.

After that, the Ryan-Murray budget bill set new levels for 2014 and 2015 above the sequestration budget caps.

The Budget Balance Act of 2015 set a slightly higher level for 2016 and 2017.

Then, a Senate Budget Deal set significantly higher levels for 2018 and 2019.

But the caps Congress put in place back in 2012 are still there, and they could revert to them at any time, Wallen said.