Guest Blog: Impact Aid Districts on Edge Over Talk of Government Shutdown

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Today's guest blog comes from Jocelyn Bissonette, Director of Government Affairs for the National Association of Federally Impacted Schools (NAFIS). For more information on Impact Aid: 202/624-5455 or Jocelyn@nafisdc.org.

Headlines in recent Washington Post articles include: “Get Ready: Experts Say a Government Shutdown is Likely,” and “The Time to Dust Off Shutdown, Furlough Plans is Approaching.” Each year begins with optimism that Congress will complete its Appropriations work on time, by the beginning of the October 1 Fiscal Year (FY). But since 1996, Congress has resorted to a stopgap measure, known as a Continuing Resolution (CR), to buy time to finish its work. On several occasions, this inability to complete the process or agree on a CR has led to a government shutdown, as was the case in 2013 following sequestration. For most public school districts, the posturing, brinksmanship, CRs and shutdowns are par for the course and do not immediately impact a school district’s financial situation. Impact Aid is a major exception. 

Impact Aid, ESEA Title VIII, was signed into law in 1950. The program’s purpose is to offset the loss of local revenue for school districts that have nontaxable Federal property within district boundaries, such as military installations, Indian Trust or Treaty lands, national grasslands or laboratories. Roughly 1,200 school districts receive funding from the $1.2 billion program each year. Unlike other Federal education programs, Impact Aid funding goes directly to school districts, bypassing the State, and can be used for any general fund purpose. At NAFIS, we often describe Impact Aid as Uncle Sam’s tax bill to federally impacted school districts.

Another difference from Federal education programs: Impact Aid is not forward-funded. FY 2016 funds for programs like Title I and IDEA are for the 2016-2017 school year, but for Impact Aid they are for the 2015-2016 school year. This means a CR has an immediate impact on Impact Aid-recipient school districts. To date, the U.S. Department of Education has received over 100 “early payment requests” in anticipation that limited Impact Aid funds will be available under a CR. Impact Aid may comprise upwards of 30-percent of a school district’s operating budget. Without a payment early in the school year, these districts may face a cash flow shortage, meaning they would have difficulty funding day-to-day operations, instructional expenditures, utility payments, or payroll. Occasionally, due to cash flow deficits, school districts must defer payroll, dip into their fund balances, or borrow money while they wait for Impact Aid to arrive. This issue is acute for school districts with limited reserves or those where State aid or county tax revenues are not allocated until December.

This situation is exacerbated during a government shutdown, since the Impact Aid payment timeline is further delayed. In addition, this is the time of year when school districts are collecting and compiling data for the Impact Aid application due each January. During a shutdown, U.S. Department of Education staff cannot report to work, and therefore cannot provide valuable technical assistance. 

In the end, Congress must complete its Appropriations work, even if it means relying on the temporary solution of a CR. Avoiding a government shutdown in that process would prevent a gap in important government functions, including funding and technical assistance for federally impacted school districts.

NAFIS is a nonprofit, nonpartisan association of school districts from throughout the United States. Founded more than 40 years ago, NAFIS works to ensure the needs of federally connected school districts, and the students they educate, are met through adequate Federal funds. (P) 202/624-5455 (W) www.nafisdc.org (T) @NAFISschools


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