Since 1950, Congress has provided financial assistance to local school districts through the U.S. Department of Education's Impact Aid program. Impact Aid was designed to help compensate school districts for the loss of tax revenue caused by federal ownership of land, including tribal land and national parks, and for other reasons. In districts with federal property like national parks, the federal government provides compensation directly to the district in lieu of paying property taxes like typical landowners do.
Many school districts in South Dakota rely heavily on Impact Aid money from the federal government each year to help cover annual expenses. There are 37 school districts in South Dakota that participate in the Impact Aid program. School districts eligible for Impact Aid include these revenues in their annual budget for the upcoming fiscal year, but due to complicated payment formulas, Impact Aid districts have suffered from persistently late distribution of these funds due to bureaucratic delays in Washington. This requires school districts to wait significant periods of time before receiving payments, and places an unfair burden on districts to find a way to cover the shortfall, particularly if payments are backlogged for several years.
For these reasons, I introduced, along with Senator Patty Murray (D-Wash.), the Impact Aid Timely Repayment Act, which accelerates the Impact Aid payment time table and requires the Department of Education to finalize payments within three years after the funds have been appropriated instead of the current deadline of six years.
Normally, this legislation would be discussed as part of the reauthorization of all federal education programs. However, because an agreement has not been reached on legislation to re-write various federal education programs, I worked with others to address the Impact Aid situation. Working across the aisle, I was able to include the Impact Aid Timely Repayment Act language as an amendment to the National Defense Authorization Act, which passed the Senate on December 4, 2012, by a vote of 98-0. The National Defense Authorization Act also includes a provision that replaces the complicated and highly-subjective Impact Aid formula with a simple, objective calculation. This removes the subjectivity from the program and will speed-up payments to school districts across the country, including in South Dakota.
The legislation will now be sent to a conference committee to work out the differences between the House and Senate bills. In South Dakota, this program is particularly important to many rural school districts, and I was disappointed that President Obama has proposed ending this program. For districts like Wall, that would represent a loss of over $500,000 in their annual budgets.
As Congress continues to work to strengthen Impact Aid, I will continue to support proposals that provide accurate and timely payments to districts due to the impact that the federal government's exemption from taxation has on various jurisdictions.