SECTION II JUSTIFICATION OF THE 3B SECTION OF THE LAW The Rantoul City Schools District 137 is classified as a "heavily-impacted" district as are Mascoutah and North Chicago, Illinois. This classification specifies a 100 percent payment through Tier II for the "A" students because they represent more than 25% of the total enrollment. This is our entitlement under the law, but the reduced payments and lack of funding for the "B" students will create a deficit situation by the end of the present school year unless steps are taken to postpone purchases, curtail summer maintenance, and place some employees on extended vacations. The concept of the Impact Aid program, PL 874, is very simple in that the Federal Government pays the local school districts an amount equal to the loss in local property taxes. Districts obtain these taxes from two major sources, (1) the residence, and, (2) the place of employment. Traditionally, the local tax revenues in an average school district are divided approximately equally between taxes on the residences and taxes on the place of employment. Therefore, for the students classified as "A" pupils whose parents live and work on federal property, no taxes are derived for their education. Under the Impact Aid formula the Federal Government, and by law, the entitlement for reimbursement for the "B" pupil is equal to one-half that of the "A" pupil since one-half of the tax base, that on the place of employment, is lost. In our district and in most districts serving military installations the "B" category is further divided into two types of pupils, those whose parents are in the uniformed services and those whose parents are civilian employees. Our district has four classes of pupils apportioned as follows for the 1976-77 school year: It is apparent that the normal tax base is reduced by the absence of any tax base for the 49% representing the "A" pupils and that one half of the tax base is lost for the 21%, making up the "B" pupils, a total loss of 60%. The Administration's proposal to eliminate the funding for the "B" students is unsound. As shown previously, the tax structure is different for impacted districts because there is no tax on the place of employment for "B" pupils, thus one-half of the normal tax base is non-existent. Does President Carter want to place an additional tax burden on local property owners to pay for the government's share of the education of dependents of Federal Employees? In addition, "B" military families do not pay taxes like everyone else. The Soldiers and Sailors Relief Act allows them to maintain their legal residences in other states so that state income taxes are paid in their home state not where their children are attending school. Most purchases made by the military personnel are made at the base exchanges and commissaries which are totally exempt from Illinois sales tax. These facts should refute the argument by the administration that the value of having a federal installation present with its large payroll outweighs any need for reimbursement for "B" pupils. In the Impact Aid Reform Act of 1974 the entitlement formula for non-military dependents was reduced by 5% to compensate for the amount received by the school district from non-property sources so that, now, the improvement of the local economy argument is no longer valid. If the 3b classification was phased out, as some have proposed, the education tax rate for the Rantoul City Schools, District 137, would have to be increased by 52 mills which represents a 56% increase, or $100 more in property taxes on every $20,000 home. 94-584 77 - 41 SECTION III LOW RENT HOUSING Impact Aid provides money to school districts to help offset tax losses which occur because of tax-exempt federal property within school districts. This includes low rent housing projects. Section 5(e) of PL 874 "authorizes the payment of federal funds to local educational agencies on the basis of numbers of children in the schools of such agencies who reside in low rent housing" "the amount of the payment to any local educational agency which is determined with respect to such agency under paragraph 1 shall be used for special programs and projects designed to meet the special educational needs of educationally deprived children from low income families." Funds provided by the Federal Government through the Impact Aid program throughout the past 25 years have met with great approval on the part of most members of Congress and educators alike because of the very few restrictions on the use of the money. It is treated as it was originally intended a tax replacement payment to the LEA. Tax monies, including Impact Aid funds, in all school districts are used to pay for salaries, utilities, school supplies, or, as it is generally known, to pay for the maintenance and operation of the school. There seems to be a contradiction between the original intent of the law and the stipulations included in the Impact Aid Reform of 1974. It does not necessarily follow that a student residing in low rent housing would be educationally deprived because he is from a "low-income" family. Designating the funds to be used for Title I type projects is another way of circumventing the payment to the local districts due to the lack of approval of the project by the State Administrators of Title I programs. Why should one particular section of Impact Aid funds be different from the other? Impact Aid results from property tax problems not the ability of the students involved. Again, in the concept of Impact Aid, very little property tax is derived from Federal Low Rent Housing thus creating a tax impact on the local district. By definition, it is another federal property, classified much the same as a military installation. Any amendments to the Impact Aid program should include the provision to consider funds received for students residing in Low Rent Housing as maintenance and operation funds to be used for general operating costs. In downstate Illinois, school districts with Federal Low Rent Housing within their boundaries, are receiving between $20 to $40 per child as an in-lieu-of-tax payment. Lack of funding is only one of their great concerns --another is the large number of students concentrated in a small segment of an attendance area which necessarily causes an "impact" on the number of students assigned to the one building. Realizing that not all students from a Low Rent Housing project are "educationally deprived" and also, considering the concentration of funds channeled toward the education of the handicapped and the gifted, the "average" student is being deprived of his share of the necessary support for his education. A per capita allotment equal to one half of the local contribution rate for the district would provide adequate funds for all students from the Low Rent Housing not just a few. SECTION IV OUT-OF-COUNTY AND OUT-OF-STATE PROVISIONS In Section I of this testimony we listed the categories of students under the Impact Aid Reform Measure as well as the Entitlement and Funding Levels. Keeping in mind, the 3(a) classifications are military and the 3(b) classifications are military and civilian employees working on Federal property, attention should be called to the disparity between the entitlement for civilian employees residing in the county and those residing out of the county. Question why should a school district be subjected to a 5% penalty for the children of Federal employees, who, in all probability could not find housing in the area around the federal property? This represents a loss per student of approximately $50 and for every 200 civilian "B" students in a school district the loss represents the salary of one teacher. A recent report by the General Accounting Office indicated that about half of the school districts receiving Federal Impact Aid would need less than a 5% tax increase to maintain their funding if Impact Aid funds were withdrawn. It is apparent that GAO has not made a study of the number of tax referenda defeated throughout the nation in the last two or three years. Careful consideration should be given by Congress that even though the local school district would have to raise local taxes by what GAO considers a small percent, whatever the percent is, is equally as important to the local taxpayer as it is the federal taxpayer (Federal Government), who in this instance has the responsibility. Another aspect of the out-of-county and out-of-state disparity is the cause and effect on the educational program in the school district outside the boundries set by the law. It is, in effect, decreasing the quality of the educational program in the district where the dependents of Federal employees are residing - sometimes forced to reside in that area because housing is not available within the district where the Federal Property is located. Due to the lack of funds a minimum educational program is all that could be offered to the children of these Federal employees. As an example, 10 miles north of Rantoul is Paxton, Illinois located in Ford County. Many military families are living in that district because they could not find housing in Rantoul nor on Chanute Air Force Base. The residents of that community tried |