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Elementary, Secondary and Vocational Education

20 June 1977

Statement of

Thomas A. Bobo
Assistant Superintendent

Montgomery Public Schools
Box 1991

Montgomery, Alabama 36103

Public Law 81-874--Impact Aid

Mr. Chairman:

I wish to thank you and the committee for the opportunity of speaking to you today concerning the importance of the Impact Aid law for public education. This law, which was enacted in 1950, is as relevant today as it was at that time. The needs by local school systems today are even greater than the needs which existed in 1950, in many cases. Local public schools have pressures and obstacles today that did not exist in 1950. The needs of the existing PL 874 and 815 laws are of such an extent that if we did not have them, they would need to be created by Congress.

This program has been one of changes--changes that have reflected the will of Congress and the people. These changes have been incorporated into the fundamental doctrines that the Federal Government has a responsibility to local school systems to provide funds for education in lieu of taxes.

The study that was authorized by Congress in 1969 by the Battelle Memorial Institute concluded that:

(1) The Federal Government should continue to provide a program of school assistance in federally affected areas. Particularly in small local areas surrounding a major military installation, it is both inequitable and unrealistic to expect local taxpayers to provide for the education of children brought into the community by the Federal Government under circumstances where the community cannot collect significant tax revenues from either the Federal Government or its employees. In some cases, these children receive their education from schools administered directly by the

Federal Government and financed by Impact Aid. In other cases these children are educated by local educational authorities through a combination of local and State funds and Federal Impact Aid funds. In many of these cases if the Federal program were terminated, the children would receive no education at all; in other cases, the quality of education available would be severely reduced with serious consequences for the Federal Government's attempts to recruit employees to such areas and for the quality of education generally. No other Federal educational program reaches the local educational agencies educating large numbers of federally connected children to a significant degree and it is unrealistic to expect state governments to assume the full costs of educating these children.

(2) The basic features of the current program are sound. The basic mechanism of the current program, namely counting the federally connected students in a district, calculating a per pupil payment for the district and multiplying the number of students by the rate of payment, is sound. It is capable of providing a reasonable approximation of the Federal impact upon a district, and is relatively simple to administer by comparison to alternative methods considered.

(5) A new formula that perfectly reflects the economic burden of Federal installations upon local schools cannot be devised. While it is possible to pinpoint extreme cases of overpayments and underpayments to local districts, no formula can ever be developed that precisely calculates payments upon the basis of net economic burden of Federal installations on local schools. This conclusion follows from the fact

that there is no reliable way to determine what a community would have been like had the Federal Government never established an installation in it. Existing economic knowledge and present economic data simply do not provide the adequate basis for correct speculation on, for example, the revenue position of Washington, D.C., area schools in the event that the Nation's Capital had remained in Pennsylvania rather than being transferred to Washington, D.C.

(6) A new formula for impact aid can be devised that will make the Federal payments more closely correspond to the net burden of Federal installations upon local schools. While no perfect formula can be devised, it is possible to improve substantially upon the present program by a series of changes that are described in detail below.

(9) Some payments should continue to be made on 3(b) students, whether living in the same school district as the property upon which the parent works or not. Under some circumstances school districts are burdened substantially through assuming responsibility to educate the children of Federal employees who live in private (taxpaying) homes and apartments within the school districts. This burden exists whether or not the property upon which the parent works is located within or outside the school district educating the child.

(12) The payments for (b) pupils should be 40 percent of the payments for (a) pupils. The current program pays 50 percent of the (a) payments for the (b) pupils. This relationship was based upon then current (1950) data indication that roughly 50 percent of the property tax

revenues in the United States tended to come from taxes upon the place of residence and the other 50 percent from commercial and industrial property. More recent data indicates that on a national average basis more like 60 percent of property tax revenues come from the places of residence.

Many of the recommendations that are suggested in the Battelle report are now a part of the program. The New Entitlement payment structure that went into effect in 1976 brought about many of the recommended major changes in the law. The following is a chart of these changes.

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