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IMPACT AID STATEMENT
JUNE K. QUINT
Business Manager and Legislative Coordinator, Rantoul City
Elementary, Secondary and Vocational Education Subcommittee
House Education and Labor Committee
Thursday, June 30, 1977
Mr. Chairman, and Distinguished Members of the Committee:
I am June K. Quint, Business Manager and Legislative Coordinator for the Rantoul City Schools representing the Superintendent, and the Board of Education of School District 137. We sincerely appreciate the opportunity to express our views on the status of PL 874, Impact Aid. In my capacity, in our school district, I serve as the state coordinator for approximately 200 Impact Aid school districts in Illinois working closely with the Illinois Office of Education in disseminating information on the law. My work with PL 874 dates back to the beginning of the original law back to the days of the Lanham Act. The opinions on various aspects of the law are set forth in Sections to more clearly define the affect on Illinois Schools.
PROBLEMS IN THE ADMINISTRATION OF THE PROGRAM
For the last few years of the law's 25-year existence the Executive Branch and the Congress have disagreed over the School Assistance for Federally Affected Areas Program (SAFA) commonly called Impact Aid PL 874. The battle continues in 1977 and is expected to continue into 1978 under the Carter Administration.
Until the Impact Aid program was overhauled under Title III of the Education Amendments of 1974 (P.L. 93-380) it was the most uncomplicated program to administer. Eunds were awarded to LEA's based on a mathematical formula of the local contribution rate and the average daily attendance of eligible children. There were two categories, the "A" pupil whose parents lived and worked on federal property and the "B" pupil whose parents lived on privately owned property and worked on federal property. The reform of the Impact Aid Program in 1974 created a complex federal aid program by adding to the mathematical formula the entitlement percent by each of the expanded categories and the appropriate funding percentage within a three-tiered funding structure as follows:
Section 2 - eligible if district's tax base has been reduced by acquisition of property by the United States Government constituting 10 percent or more of the total assessed valuation.
Section 4 eligible when activities of the United States increase district's 3a or 3b category children such that total average daily attendance increases by at least five percent and the average daily attendance of federally-connected students increases five percent from the preceding year.
Entitlement and Funding Levels Under Sections 2, 3 & 4
The "savings" or "hold harmless" provisions in the formula are aimed at lessening the financial impact for adversely affected districts. The first provision guarantees at least 80 percent of a school's previous year's payment for "A" and "B" children in each fiscal year. Within school districts where payments represent 10 percent of the FY 73 budget, 90 percent of the previous year's total would be guaranteed. The second provision guarantees districts 90 percent of the previous year's "B"
payment where the percentage of "B" out-of-county and "B" out-of-state children accounts for more than 10 percent of the total number of category "B" children. The third provision ensures that no district will suffer as a result of the new funding status accorded public housing children. Computations are first made as though no funds would be allocated for these children, than calculated with these payments included. When a district is entitled to more money without public housing funding, the U.S. Office of Education will pay the difference. The final provision protects school districts against sudden and dramatic loss of funds due to decrease of federal activity, allowing for a four-year phase-out of payments. When the reduction of federal activity in a school district reduces the Impact Aid children by at least 10 percent in any fiscal year, the district would be guaranteed at least 90 percent of the previous year's payment.
Coupled with the complicated formula designed to reimburse LEA's for the education of dependents of federal employees is the delayed payment schedule from the Office of Education. The pre-final payment for the 1975-76 school year was scheduled to be received by the local districts by March 30, 1977. They anticipate processing 1977 applications so that the districts will receive a 70 percent payment by July 1, 1977. Can schools continue to offer an adequate educational program under this type of funding? Obviously, the answer is no. Schools in Illinois are not allowed to operate under deficit financing and with the lack of payments during the present year, many districts had to either borrow money or resort to delayed
payments of outstanding obligations to close their books for the 1976-77 fiscal year.
Cash flow is an on-going problem in Impact Aid school districts since the funds do not flow on a monthly basis as does school revenue in other districts. The Rantoul City Schools, District 137, must rely on nearly one-third of its revenue coming from the Federal Government under PL 874. Revenue from local taxes and State Aid are insufficient to meet the normal operating costs. Numerous times an emergency preliminary payment had to be secured from the Office of Education so the school district could meet the December payroll.