Delegation to Streamline and Improve Impact Aid in NDAA

Press Release

U.S. Senators John Thune and Tim Johnson and Representative Kristi Noem announced that the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 includes a provision to extend the simplified payment calculation process for federally impacted schools for three years, resulting in timelier payments to school districts.

"School districts need certainty from the federal government about what to budget for annual Impact Aid revenues," said Thune. "Due to complicated payment formulas, Impact Aid districts in South Dakota have suffered from persistently late distribution of these funds, placing an unfair burden on school districts to cover the shortfall. I am pleased that Congress acted to extend the simplified payment calculation formulas to accelerate Impact Aid payments and hope the next Congress will act on my legislation to reauthorize the entire Impact Aid program and make these changes permanent."

"This legislation will improve funding certainty for schools across South Dakota," said Johnson. "The provisions we pushed for will reduce administrative burdens and expedite payments to school districts that have a federal presence in their district. This was the product of extensive bipartisan collaboration and will greatly benefit school districts in our states."

"Our children deserve a quality education, but delayed payments from the federal government have put undue burdens on South Dakota's Impact Aid schools in the past," said Noem. "Our schools that have federal lands in their district deserve more certainty when it comes to the money they're due from the federal government. I was pleased to have this provision included in the initial House-passed version of the bill as well as the final legislation so we can get this funding into our school systems more quickly."

Impact Aid school districts receive compensation from the federal government for local taxes lost due to federal land within their school districts, such as military bases, Indian reservations, or federal grasslands. In recent years, districts have experienced a delay in receiving timely payments, which puts additional financial burdens on already cash-strapped school districts.

In 2012, the delegation worked together to enact a provision in the FY 2013 NDAA to end the highly subjective "highest and best" formula. The "highest and best" formula attempted to determine the "real value" of federal property, which created a highly inefficient payment formula that was subject to local interpretation by assessors on the value of taxable property adjacent to eligible federal property. The provision included in the FY 2015 NDAA extends the use of the simpler formula that removes the subjectivity from the process. It also prevents the U.S. Department of Education from having to conduct regular, lengthy, resource-intensive audits of a school district's Impact Aid application. Historically, these audits have resulted in delayed payments to every eligible district.

In June of 2013, Thune introduced the Local Taxpayer Relief Act (S. 1108) in the Senate along with Senators Mazie Hirono (D-Hawaii) and Tim Johnson to make these changes permanent. Representative Noem introduced and passed companion legislation in the House of Representatives.

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