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1/ of the total appropriation, 8 percent is set aside for institutions of

higher education; 3.5 percent for Federal activities; 1 percent for
programs for Indian youth; 0.2 percent for programs for Hawaiian natives;
4.5 percent for regional centers; and 1 percent for the Outlying Areas.
The remainder is distributed to the 50 States, the District of Columbia,
and Puerto Rico on the basis of the 5- to 17-year-old population. No
State receives less than 0.5 percent of the remainder. However, for
1987 only, $5.5 million of the total appropriation was first set aside
for the development of audio-visual materials for distribution to LEAS.
For 1988, appropriations language earmarked 83.3 percent of the funds
for grants to States and Outlying Areas.

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One percent of the total appropriation for Science and Mathematics
Education was reserved for the Outlying Areas and Indian schools.
of the remainder, 10 percent was reserved for the Secretary's
Discretionary Fund and 90 percent was distributed to the 50 States,
the District of Columbia, and Puerto Rico on the basis of the 5- to
17-year-old population. Beginning in 1986, 1 percent of the appropri-
ation is for the Outlying Areas and Indian schools, 9 percent is for
the Secretary's Discretionary Fund, and 90 percent is for the States,
the District of Columbia, and Puerto Rico. No State receives less
than 0.5 percent of the amount available to the States.

2/ Science and Mathematics Education State grant allocations are unavail

able pending enactment of reauthorizing legislation.

WEDNESDAY, MARCH 30, 1988.

IMPACT AID

WITNESSES BERYL DORSETT, ASSISTANT SECRETARY FOR ELEMENTARY AND SEC

ONDARY EDUCATION DANIEL F. BONNER, ACTING DIRECTOR, STATE AND LOCAL EDUCATION

AL PROGRAMS, OFFICE OF ELEMENTARY AND SECONDARY EDUCATION W. STANLEY KRUGER, DIRECTOR, DIVISION OF IMPACT AID, OFFICE OF

ELEMENTARY AND SECONDARY EDUCATION SALLY H. CHRISTENSEN, DIRECTOR, BUDGET SERVICE, OFFICE OF PLAN

NING, BUDGET AND EVALUATION THOMAS M. CORWIN, DIRECTOR, DIVISION OF ELEMENTARY, SECOND.

ARY, AND VOCATIONAL ANALYSIS, OFFICE OF PLANNING, BUDGET AND EVALUATION

INTRODUCTION OF WITNESSES

Mr. NATCHER. At this time, we take up the budget request for Impact Aid. We have before the committee Ms. Dorsett, the Assistant Secretary for Elementary and Secondary Education.

Ms. Dorsett, tell us who you have with you at the table, before you give us your statement, please.

Ms. DORSETT. Good afternoon, Mr. Chairman.

To my far left, I have Stan Kruger, Director, Division of Impact Aid, Office of Elementary and Secondary Education. To my immediate left, Daniel Bonner, Acting Director of State and Local Educational Programs, Office of Elementary and Secondary Education.

To my immediate right, Sally Christensen, Director of the Budget Service, Office of Planning, Budget and Evaluation; and to my far right, Tom Corwin, Director, Division of Elementary, Secondary, and Vocational Analysis, Office of Planning, Budget and Evaluation.

FISCAL YEAR 1989 BUDGET REQUEST

Mr. NATCHER. Thank you, Ms. Dorsett. Now, we will be pleased to hear from you.

Ms. DORSETT. Mr. Chairman, and members of the committee, we appreciate this opportunity to appear before you to discuss the 1989 appropriation request of $592,000,000 for Impact Aid program activities under Public Law 81-874 and Public Law 81-815. This request maintains the Federal Government's commitment to compensate school districts for the cost of educating children when enrollments and the availability of revenue from local sources have been adversely affected by Federal activities.

The request includes $557,000,000 for maintenance and operations activities under sections 2 and 3; $10,000,000 for disaster assistance; and $25,000,000 for construction projects.

The 1989 request is $116,000,000 less than the 1988 appropriated level. Most of this decrease reflects the Administration's decision to propose the elimination of payments for "b" children, who reside or whose parents work on Federal property.

The presence of these children creates no significant burden for local school districts. In keeping with the policy of focusing Federal aid on those school districts that are the most heavily burdened by the effects of Federal activities, payments will be made only on behalf of the so-called “a” students, who live on and whose parents work on Federal property and thus do not generate local property tax revenues.

MAINTENANCE AND OPERATIONS

Of the $557,000,000 requested for Maintenance and Operations, an amount of $547,000,000 is requested for section 3(a), an increase of $10,800,000 over the 1988 enacted amount. These funds will be used for making payments for children who reside on and whose parents work on Federal property or are on active duty in the uniformed services.

REVISED DISTRIBUTION FORMULA PROPOSED

For 1989, a more equitable distribution formula is proposed for payments under this section. This revised formula would continue to provide higher rates of payment for districts with higher proportions of federally connected children.

However, the proposed formula contains a sliding scale, with several stages at which payment rates would decrease. This would replace the formula included in recent appropriation acts which results in the abrupt transition from full or nearly full funding to less than half of that amount when a district has fewer than 15 percent "a" children.

The exception to these funding rates would be for payments on behalf of children who reside in federally subsidized, low-rent housing. These payments would continue to be made at reduced ratesup to a maximum of 15 percent of entitlement–because the presence of these children in a school district is generally not a direct result of Federal activities. We expect to make section 3(a) payments to approximately 1,100 districts in 1989 under this proposal.

INCREASED SECTION 3 (d) (2) (B) PAYMENTS In 1989, the Department proposes to earmark $10,000,000 of section 3 funds for increased payments to districts under section 3(d)(2)(B). These are districts that are particularly heavily burdened by the presence of federally connected children, that do not have sufficient funds to provide a level of education equivalent to comparable districts in their States, and that meet additional criteria in the program statute.

In line with the termination of payments for "b" children, section 3(b) children will not be counted for eligibility or payments under section 3(d)(2)(B) in 1989. The level of funds earmarked for

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