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C. The Relationship of Federally
One of the basic concepts of PL81-874 is that the Federal Government will pay its just share of maintenance and operation costs borne from local taxation to an LEA for the education of children who reside on and/or reside with a parent on active duty in the uniformed services. A major portion of local revenue for LEA's in 47 States is derived by levying taxes on the assessed valuation of property in the LEA. In the remaining three States, a major source of local revenue for school support is obtained from income taxes, sales taxes, surtaxes, excise taxes, and other miscellaneous receipts.
The ability of an LEA to provide educational services financed from local sources is directly related to the number of children who are provided such services, the assessed valuation of property subject to taxation for school purposes, and the level of educational services provided.
According to the GAO report, the non-impacted LEA's in approximately 64 percent of the States analyzed had a greater assessed valuation per pupil than the impacted LEA's. The report also emphasized that impacted LEA's had a larger tax rate in five of the seven States selected than did the nonimpacted LEA's in the same States.
Another interesting fact confirmed in the report is that mostly large LEA's are impacted. LEA's serving urban and suburban areas typically have higher operating costs due to higher living costs and a greater demand for more educational services than rural areas. These two factors, in addition to the lower assessed valuation per child, account in part for the higher tax rates levied by impacted LEA's.
D. The Effect of Impact Aid Payments
on One State's Equalization Plan
Under the interim regulations of section 5(d) of PL 81-874 (the section which permits States to consider PL 81-874 payments as local resource funds), a State must have a qualifying equalization program for LEA's. If the program qualifies, a State may consider as local sources funds received under PL 81-874 only that which is in proportion to the share that local revenues covered under a State equalization program are of the total local revenues. Also consideration is given to the local leeway option (an option which allows an LEA to raise local funds in excess of that needed to qualify for State equalization aid) in the formula. None of these points were addressed in the case illustrated in the GAO report.
VII. FEDERAL PROPERTY LOCATED
The initial Act did not include children whose parents were employed on Federal property located outside the State in which the LEA was located. In 1953, PL 83-248 amended PL 81-874 to make children eligible whose parents were employed on a Federal property located in another State, if such property was within reasonable commuting distance of the LEA claiming the child. The rationale for this change was that an imaginary State line did not lessen the LEA's cost of educating the Federally connected child or decrease the Federal Government's responsibility to relieve the financial burden on the local taxpayer.
Senate Report 763, 93rd Congress, takes a different position which states:
"'b' category children who reside with a parent employed on Federal property located outside a school district . ... represent minimal impact on the school district's tax base, since their parents' residence is subject to local taxation and the Federal property, since it is located outside the district, does not detract from the district's tax base.
"'b' category children whose parents were employed on Federal property located in another State would not be entitled to payments. Their presence in a school district makes no Federal impact since their parents pay State and local taxes related to the residence and no Federal property to which such children are related is present within the district or the State to affect adversely the district's tax base."
This rationale was used to reduce the rate of payment for the various sub-categories of "b" children under PL 93-380. However, the rate of payment for the uniformed services category child (regardless of where the parent may be assigned) was not reduced. This rationale is inconsistent since it costs as much to educate a child of a civilian parent (regardless where employed) as it does to educate a child of a military parent.
A basic concept for computing the rate of payment was based on the premise that an LEA was entitled to a tax base behind each child. This base is to consist of industrial, commercial, and residential property. When the child neither lived nor the parent worked on taxable property, the LEA was entitled to the full rate; but when either, but not both situations prevailed, the LEA received only 50 percent of the rate of payment. The "b" children whose parents were employed on a Federal property located outside the LEA has been justified on the premise that such children increased the educational load on the LEA even though it did not directly affect its tax base.
VIII. PAYMENT RATES COMPARED TO
LEA'S PER PUPIL COST
The following statement was made by Congressman McConnell, Pennsylvania, and recorded in the Congressional Record of July 14, 1953:
"The Federal responsibility to which PL 874 is addressed will continue for as lorig as the Federal Government continues to own and use large areas of tax-exempt property and to impose substantial burdens on school districts in the form of reductions in their tax base or increase in their educational load or both.
"PL 874 had as its base principle the concept that the Federal Government would compensate a local school district for the burden imposed on such district by the Federal Government and would pay its just share of the maintenance and operation costs borne from local taxation. To carry out this principle, it provided that the amount of payment to any local school agency for children who lived on Federal property, or with a parent employed on Federal property, or both, was determined by reference to the rate of expenditure for school purposes from local tax revenues to comparable communities in the State. In the adniinistration of the law to date, it has been learned that this concept is sound where the bulk of the funds are obtained by local taxation. However, this committee had recorded extensive testimony showing that in those States where the State has adopted a plan financed by State revenues for equalizing educational opportunities in the less wealthy communities in which there is a higher per capita income, the local contribution rate remains low with the result that the Federal payment under PL 81-874 is low. Thus local school agencies in States where the most has been done to raise standards of education by the use of a financing system based on State-wide tax levies find themselves at a great disadvantage under 874 in their effort to meet school needs caused by Federal activities.
"To partially rectify this situation, the bill (House Resolution 6078, 83rd Congress) contains a provision establishing a floor to be used as the minimum rate per child to be used in the computation of the Federal payment."
The minimum rates established by PL 83-248 was one-half the State per pupil cost for the second preceding year.
PL 84-382 amended PL 81-874 to establish an additional minimum rate for one-half the national average per pupil contribution rate not to exceed the State per pupil cost. To avoid the escalator affect of this amendment, PL 81-874 was again amended by PL 85-620 which established the present minimum rate of the greater of one-half the State per pupil cost or one-half the national per pupil cost.
According to the data in the GAO report, the minimum rate provision appears to be achieving the purpose for which it was passed.
IX. CONCLUSIONS AND RECOMMENDATIONS
Conclusion: Inasmuch as the applications which GAO reviewed were
judgmentally and not scientifically selected, the reader should not use the data generated from this report to develop generalizations about the Impact Aid Program. In fact, the GAO report contains the following statement on page five: "The findings apply only to the LEA's studied and results cannot be used to draw overall conclusions about the SAFA program. "
Conclusion: In order to limit and/or reduce the percent of error on
applications, and in order for school districts to adequately comply with all of the numerous and complex regulations and instructions imposed by the various Federal programs, adequate administrative review and adequate methods of disseminating information must be effected. This can best be accomplished through a well-informed field staff.
Recommendation: That adequate regional staff be assigned to provide the
necessary services to applicant LEA's under the Impact Aid Program, and that USOE, on a continuing basis, provide this staff with up-to-date policy and procedural guidelines.
Conclusion: The interpretation used by USOE to determine the eligibility of
the "uniformed services" category child appears to be consistent with the statute and the legislative history. In fact, the excerpt from the House Report 1814, 89th Congress, encouraged simplification of the administration of the program. A requirement that dependency be established for uniformed services eligibility would complicate procedures and would be an invasion of privacy.
Recommendation: That the current USOE interpretation for determining
eligibility of "uniformed services" category children be continued.
Conclusion: The concept of "employed on" Federal property needs to be
more clearly defined. Such a clarification should avoid future incidents similar to those of the Coca-Cola route salesman and the music teacher.
Recommendation: That an administrative policy be developed to provide
assurance and documentation that children of parents temporarily employed on Federal property are not claimed for entitlement.