ED Impact Aid Formula

Father and sonFederal funding formulas for Impact Aid varies by program.  Basic Support Payments (BSP) use a formula with two main parts.  The first part, or the BSP maximum, represents the amount that a district would receive if the Impact Aid Program were fully funded by Congress, which has never been the case. The variables considered in calculating the BSP maximum include the number and weight of families that live and work on Federal property, reside in low-rent housing, or who work on Federal land. Weights are used to determine the relative impact various federally connected children place on a school district and, therefore, the reimbursement rates necessary to cover this cost.

The second main factor in the funding formula for Basic Support Payments is the Learning Opportunities Threshold (LOT).  The LOT is the adjustment that determines the scaled down payment to be given to a district when the program is not fully funded.  Since Impact Aid is normally not fully funded, the LOT adjustment usually determines the final payment made to a district.

The Impact Aid Children With Disabilities Program uses a formula similar to the BSP program, but Children With Disabilities formulas apply a different weight to federally connected children with disabilities. This is because districts that support these families are eligible for additional funding under Impact Aid.

The section 8003(b) Impact Aid formula is a technical formula that can be broken down into six steps (outlined below). The first three steps are how Impact Aid calculates the cost of educating federally connected children.  The cost is calculated by looking at the percentage of Federally connected children in a LEA and adding it to the percentage amount of the maximum payment in relation to the operating budget or Total Current Expenditures (TCE). The second adjustment is a percentage determined by the Department based on all the data received and the amount of the appropriation.  Impact Aid suggests that LEAs budget using a LOT% paid figure of 90 percent.

Steps for Basic Support Payment (BSP) Calculation

(All of this information is shown on the Impact Aid voucher a school district receives.)

  1. The number of children * attendance rate =  Average Daily Attendance (ADA)
  2. ADA * Weight in the law = Weighted Student Units (WSU)
  3. WSU * Local Contribution Rate (LCR) = Maximum Basic Support Payment (Max BSP)
  4. Max BSP * LOT % = Full LOT
    1. LOT % = Membership % + Total Current Expenditure % (TCE %)
    2. Membership % = Eligible Federally Connected Children / Total Membership
    3. TCE % = MaxBSP / Total Current Expenditures
  5. Full LOT * LOT% Paid= Prorated LOT
  6. Prorated LOT = Amount Paid to District

The section 8003(d) payment for children with disabilities (CWD) is similar to the 8003(b) formula. The payments are made only for children residing on Indian Lands or children of members of the active duty uniformed services.  The other categories of children do not receive payments under this section of the law.  In order to be eligible, a student must have an Individualized Education Plan (IEP) in place on the survey date.

  1. The number of children * attendance rate = Average Daily Attendance (ADA)
  2. ADA * Weight in the law = Weighted Student Units (WSU)
  3. WSU * CWD Rate = payment
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