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5. Over the past few years actual payments received by districts have fallen significantly short of the 50% of current cost for A children (representing the local share of that child's educational costs), and 25% of cost for B children (representing one half of the local share).

As an example, in San Diego where in 1976 local taxpayers paid about $725.00 (or 55% of the total cost) for each child's education, the average payment for each category A child was only $602.00, or 50% of the total cost, leaving an extra $123.00 per A child burden on the local taxpayer a total of $870.000.00. Furthermore, the average category B payment was not $360.00, or half of the local tax burden per child, but only $191.00, closer to one quarter of the local tax burden, leaving $170.00 per B child to be paid by other local taxpayers an additional $3,430,000.00. This adds up to nearly $4,500,000.00 a year that is being absorbed by the taxpayers of San Diego to pay for the education of the children of federal employees, in addition to the taxes paid by these federal employees on their own homes.

6. Federal activity is not evenly spread across the nation, but has been concentrated in some communities for reasons that have given no consideration to the financial ability of the local schools to absorb the children of the federal employees and provide an adequate level of education.

7. Impact Aid is directly related to federal activity. If federal activities and mumbers of employees are reduced then Impact Aid will be reduced. There is no need to phase out Impact Aid if the federal government returns to the military status and degree of involvement in social programs that existed before World War II.

8. The Impact Aid program is a very low cost program to administer
both at the federal and local levels. Very little money is spent
on maintaining a bureaucracy in Washington or the school districts.
The General Accounting Office has recently completed a report on the
administration of Impact Aid. I have included, as an addendum to my
comments, an analysis of that report prepared by Mr. Jack Thomas
(formerly Maintenance and Operations Chief of the division of School
Assistance in Federally Affected Areas, U.S.O.E.). Mr. Thomas will
be available this morning to answer any questions the Committee may
have with respect to that report, or the administration of the Impact
Aid program.

The School Assistance in Federally Affected Areas office has traditionally been highly respected for both the competence and dedication of its staff. Recently the changes in the law and the failure to fill authorized positions have hampered effective operation of the program. It is a tribute to the staff and an indication of the legislative quality of the basic law that the twenty-nine separate laws amending Impact Aid have been successfully incorporated and the program has continued to function.

Last week, the Chairman and other members of the Committee wisely requested a study of Impact Aid because of the continuing controversy about the program. We strongly agree that complete information objectively gathered and analyzed is required before new legislation is drafted. However, we are concerned that the perspective of the analyst be objective and that the data be complete. For some reason we do not have great confidence that a study made by a Washington bureaucracy will have the sensitivity to local conditions that is required. Regretfully, we have reached the conclusion that the Office of Management and Budget and the Department of Health, Education, and Welfare are not disinterested parties. To this point in time they have not displayed the knowledge of the law, the operation of the program, local school conditions, or school finance that is required for an effective study. Furthermore, they have made and announced plans to eliminate Impact Aid, before even beginning the study they have promised the Chairman of this Committee. Therefore, we want to request that Impact Aid school districts be directly involved in the design and supervision of a study, done by an independent group.

We propose to supply this Committee with a list of the questions and issues that arise during the course of these hearings, plus other issues that we feel should be included in any comprehensive study of Impact Aid. We hope that with such a list, the Committee will be able to select those questions that are of importance to the Committee in its consideration of Impact Aid, and ensure that those issues are covered by the study.


Lmpact aid has been established by the U.S. Government to provide continuing assistance to local school districts for the burden imposed by tax exemption of federal real property and the presence of eligible, federally connected children. Therefore, the impact aid laws provide assistance to districts on the basis of the number of federally connected children In San Diego last year, the number of children and the payments appropriated were: receiving educational services.

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General Fund Revenue as of June 30, 1976

District Totals



Category "A" Students living on and with parents working on federal property



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Actual payment received during 1975-76 was $5,193,304. Analysis of 1975-76 Impact Aid Effects in San Diego

3,867,993. $8,052,977.


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The burden of 26,366 eligible children represented 21.57 percent of the total of 122,223 pupils enrolled in K-12. 2. In San Diego, Category "A" average payment per student for 1975-76 was $602.42 while the current cost of education was $1,301.47 per student per year. The state provided $446.30, meaning that local resources had to provide $252.75 per student from families which paid no property tax from either home or "business." Category "B" average payment per student for 1975-76 was $191.62 while the current cost of education remained the same at $1,301.47. The state provided the same $446.30, meaning the local resources had to provide $663.55 per student from those families paying This $191.62 per Category "B" student does not approach reimbursing the district for loss only home property taxes. of taxable property, nor come near covering the cost of education.

3. To replace 1975-76 impact aid anticipated income would have taken an addition of 37.5 cents in the 1975-76 tax rate. Under current State finance law (S.B. 90), an increase in tax rate to replace PL 874 funds is not allowed for our district except by a voted tax override.

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For fiscal year 1975-76, local income amounts to 55.58%, State income was 28.98%, beginning balance was 5.09%, and total Federal income was 10.35%.

In October 1976 it is estimated that 15 military installations in the San Diego Unified School District had a land market value of over $945,379,147. In San Diego County, 54% of the land is federally owned.

Category "B" per ADA payment is authorized at approximately 50% or less of Category "A" since Category "B" students live in taxpaying property while their parents' work "place of business" is tax exempt. (In California, 52% of local property taxes are on non-residential property.) Category "B" payment at an average of 60% means that the school district recovers only half of the property tax loss from federal property. Thus the local district is already absorbing a heavy portion of the burden for providing educational services to children whose parents work and/or live on federal tax exempt property.






Prepared for


148 Duddington Place, SE

Washington, DC 20003

Prepared by
Jack Thomas

Educational Consultant

4303 Ann Fitz Hugh Drive

Annandale, VA 22003

June 20, 1977

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This is the analysis and review of the GAO report, "Assessment of the Impact Aid Program" dated October 15, 1976, which you asked that I complete for the Impacted Area Schools.

The GAO report contains six points in the Digest on which USOE was requested to take action. In addition to these six points, several other significant items of the report were treated in this analysis.

This report includes revisions to the draft report submitted to you on
March 3, 1977. These revisions were reviewed, discussed and agreed
upon at the Impact Area Schools conference held in Washington on
May 23 and 24.

I sincerely hope this report will be helpful to the Impacted Area Schools members in interpreting and understanding the GAO report.

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