History of Impact Aid in the United States

smiling girl with her fatherImpact Aid is the oldest Federal program to support elementary and secondary schools. It is designed to compensate school districts for lost revenue due to the presence of Federal land, including military installations. Many school districts across the United States include within their boundaries parcels of land that are owned by the Federal Government or that have been removed from the local tax rolls by the Federal Government, including Indian lands.

These LEAs, defined as a system of schools connected to one district and/or public charter schools serving as their own LEA, face special challenges — they must provide quality education to the children living on the Indian and other Federal lands while sometimes operating with less local revenue than is available to other LEAs. Federal property is exempt from local property taxes, and since local property taxes contribute in the vicinity of 50 percent of a school district’s revenue depending upon the particular local laws, Impact Aid funds exist to help districts recoup the loss.

Current legislation supporting Impact Aid dates back to the Johnson-O’Malley Act of 1934, requiring the provision of funding to states for the purpose of supporting districts educating Native American children. The act addressed lost property tax revenue to schools operating on tax-exempt Federal property, such as Native American reservations. Then in 1950, Congress extended Impact Aid to help LEAs serve military-connected children as a result of large reassignments of military personnel and their families. 

Since 1950, Congress has provided financial assistance to LEAs through the Impact Aid program, administered by the U.S. Department of Education. ED Impact Aid law—now Title VIII of the Elementary and Secondary Education Act (ESEA)—provides assistance to local school districts with children residing on Indian lands, military bases, low-rent housing properties or other Federal properties and, to a lesser extent, concentrations of children who have parents in the uniformed services or employed on eligible Federal properties who do not live on Federal property.

The U.S. Department of Education is the fiscal agent for the Impact Aid Program. Congress has also provided additional Impact Aid funds on a much smaller scale to the Department of Defense (DoD). Both DoD and ED Impact Aid Programs are subject to congressional appropriations.

Impact Aid programs overseen by ED are discussed in Lesson 2, and DoD Impact Aid programs are discussed in Lesson 4.