Detailed Information on the
Impact Aid Basic Support Payments and Payments for Children with Disabilities Assessment

Work with Congress during NCLB reauthorization to correct the structural flaws in the program.

Develop an annual or long-term performance measure specific to the Payments for Children with Disabilities portion of the program.

Expand on the most recent Impact Aid study, specifically by looking at how the current formula weights might be improved and in what ways the model developed in the 2007 study can be used to track the performance of the funding formula.

Continue development of model for estimating the effectiveness of the program in delivering an appropriate amount of assistance to federally affected school districts.

Develop annual and long-term performance measures for the programs.

Measure: The percentage of eligible applicants who receive initial Basic Support Payments within 60 days after the enactment of an appropriation.

Explanation:

Measure: The number of requests to forgive overpayments of Basic Support Payments.

Explanation:This measure is intended to track programmatic efficiency by calculating the extent to which the Department's payments are accurate.

Measure: The percentage of Impact Aid Basic Support Payment recipients designated as "heavily impacted" districts that have per-pupil expenditures between 80 and 120 percent of their State average per-pupil expenditure. (New measure, added February 2008)

Explanation:This measure is a proxy for how well Impact Aid payments make up for the revenue lost due to the presence of federally connected students. If districts are properly compensated, we expect that they would have sufficient revenues to spend close to the State average. Districts spending more than 20 percent above or below the State average are likely being under- or over- compensated. In 2007, 45.8 percent of districts spent above 120 percent of the State average while 4.2 percent spent below 80 percent of the State average.

Measure: The percentage of Impact Aid Basic Support Payment recipients (excluding districts that receive payments for "heavily impacted" districts) that have per-pupil expenditures between 80 and 120 percent of their State average per-pupil expenditure. (New measure, added February 2008)

Explanation:This measure is a proxy for how well Impact Aid payments make up for the revenue lost due to the presence of federally connected students. If districts are properly compensated, we expect that they would have sufficient revenues to spend close to the State average. Districts spending more than 20 percent above or below the State average are likely being under- or over- compensated. In 2007, 31.2 percent of districts spent above 120 percent of the State average while 4.9 percent spent below 80 percent of the State average.

Is the program purpose clear?

Explanation: The Impact Aid program provides financial assistance to school districts affected by Federal activities through a variety of programs, including Basic Support Payments, Payments for Children with Disabilities, Facilities Maintenance, Construction and Payments for Federal Property. (To learn more about the Impact Aid programs, see http://www.ed.gov/about/offices/list/oese/impactaid/index.html). Most public elementary and secondary education is funded through local property taxes levied by local and State governments. Communities that host Federal activities frequently have a diminished tax base, because the Federal government has acquired local property that cannot be taxed, as well as an increased number of children to be educated in the local schools due to the Federal presence. Basic Support Payments [Sections 8003(a) and (b) of the ESEA] partially compensate local educational agencies (LEAs) for the local cost of educating federally connected children; Supplemental Payments for Children With Disabilities [Section 8003(d)] provide further assistance for the local cost of educating federally connected children with disabilities who are eligible under the Individuals with Disabilities Education Act (IDEA).

Evidence: Sections 8001(1)-(5) and 8003(d)(2) of the Elementary and Secondary Education Act clearly states that the purpose of the Impact Aid Program is to provide financial assistance to local educational agencies that experience a substantial financial burden due to a Federal presence, educate children of parents who either reside or work on Federal property, or educate children of parents in the military.

Does the program address a specific and existing problem, interest, or need?

Explanation: Impact Aid grants partially address the loss in local tax revenue an LEA faces due to the presence of Federal property and the increased local education costs due to the enrollment of federally connected children.

Evidence: Almost all school districts use property taxes to finance school expenditures. Impact Aid provides financial relief to school districts that are burdened by tax revenue loss since Federal property cannot be taxed.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: There is a cap on funding that restricts Payments for Federal Property so that, when combined with Basic Support Payments, they do not exceed the maximum payment from either program. In addition, program regulations specify that children for whom other Federal programs provide substantial funding are not eligible to be counted for Impact Aid. This avoids duplicate funding with Head Start, Department of the Interior, and Department of Defense (DOD) operated or contract schools. The DOD also administers an Impact Aid program for certain LEAs that serve military bases, but the Congress authorizes that program as a supplement to the Impact Aid program administered by the Department of Education. In addition, the DOD supplement does not support LEAs that receive Impact Aid because of the presence of Indian lands or other non-defense Federal activities.

Evidence: Section 8002(b)(1)(A)(i) and 8002(b)(1)(C) of the Elementary and Secondary Education Act spell out the funding cap with respect to Basic Support Payments while program regulations restricting eligibility for children receiving substantial funding under other Federal programs can be found in Title 34 Code of Federal Regulations (CFR) 222.30(2)(ii). Department of Defense (DoD) Supplemental Impact Aid Program, Section 386 of Public Law 102-484, the National Defense Authorization Act for Fiscal Year 1993.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The statute includes special formula provisions designed to alter eligibility and funding levels in ways that benefit select LEAs. The statutory formula does not effectively differentiate compensation for LEAs in different States that provide different school financing arrangements.

Evidence: Section 8003(a)(2)(C) adds extra weighting for children in eight large districts while section 8003(b)(2)-(4) provides additional funding to about 28 "heavily impacted" districts. The formula provisions intended to account for different cost factors are in sections 8003(b)(1)(C),(E) and (G).

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: A limited number of LEAs that qualify as Heavily Impacted Districts or otherwise benefit from special formula provisions receive much larger payments at the expense of the majority of Impact Aid districts.

Evidence: Section 8003(a)(2)(C) adds extra weighting for children in eight large districts while section 8003(b)(2)-(4) provides additional funding to about 28 "heavily impacted" districts. The formula provisions intended to account for different cost factors are in sections 8003(b)(1)(C),(E) and (G). The Department recently contracted for a study of the Impact Aid program that examined the financial burdens that school districts face due to the Federal presence and how well funds were targeted to those districts. Preliminary results indicate that, while heavily impacted districts have the greatest financial burden, they are greatly overcompensated by the payment formula. The average amount of compensation to heavily impacted districts was found to be about double their financial burden.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The program purpose is to compensate for the lost revenue due to a Federal presence. The Department has been unable to develop specific outcome measures for this program because there is no direct method available to calculate the actual revenue loss. As a result, the Department has developed two new long-term output measures that serve as proxies for how well formula payments make up for the lost revenue due to a Federal presence. The output measures are the percentage of Impact Aid Basic Support Payment recipients, and the percentage of "heavily impacted payment" recipients, that have per-pupil expenditures between 80 and 120 percent of their State average per-pupil expenditures. Districts that have been properly compensated should be expected to spend close to their State average while those districts 20 percent above or below the State average can likely be considered under- or over-compensated.

Evidence: Data comes from program office files, Grant Application and Payment System (GAPS), and Basic Support Payment applications.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The current long-term targets are tied to the reauthorization of the Impact Aid program because the formula by which funds are distributed to schools under the Impact Aid program cannot be changed without changes to the authorizing legislation. The long-term targets are set for 2012, the first year that changes resulting from a 2008 reauthorization would be measurable. For regular Basic Support Payment districts, the target is set for an increase from 65 percent of districts spending within 20 percent of the State average to 67 percent. The increase in the target represents a 5 percent increase in performance over the most recent year despite the fact that the actual performance from FY 2004 to FY 2007 fell by 3 percent. For heavily impacted districts, the target is set for an increase from 60 percent of districts spending within 20 percent of the State average to 75 percent. The increase in the target represents a 50 percent increase in performance in less than 5 years. The baselines for these measures were set based on expenditure and payment data from FY 2006. Future long-term targets will be set to coincide with subsequent reauthorizations.

Evidence: Targets and timeframes have been entered into the Department's Program Performance Plans based on baseline data gathered from program office files, Grant Application and Payment System (GAPS) and Basic Support Payment applications.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The Department currently has two annual efficiency measures and recently created two new output measures. The two new output measures are proxies for how well Impact Aid payments make up for the revenue lost due to the presence of federally connected students and have both annual and long-term goals. The output measures are the percentage of Impact Aid Basic Support Payment recipients, and the percentage of "heavily impacted payment" recipients, that have per-pupil expenditures between 80 and 120 percent of their State average per-pupil expenditures. The efficiency measures focus on the timeliness and accuracy of payments made to school districts. The timeliness measure tracks the percentage of eligible applicants who receive initial Basic Support Payments within 60 days after the enactment of an appropriation. The accuracy measure tracks the number of requests to forgive overpayments. The majority of Impact Aid funds are general aid and are used by school districts to pay salaries and fuel bills, purchase books and supplies, and cover a wide range of other operating costs. Local school districts expect to receive Impact Aid funds during the fall of the year in which they are appropriated. In some instances, these funds comprise over one-half of the current operating funds expended by the school districts. Making accurate payments in a timely manner thus supports the general purpose of the program, compensating districts for the loss of tax revenue due to the Federal presence. Because the long-term goals of the program are tied to the changes made in the reauthorization of the Impact Aid program, it is critical to ensure that program efficiencies, especially the accuracy of payments, are maintained at the highest level so that when changes in authorizing legislation take effect, a greater percentage of districts will be properly compensated for the lost revenue due to a federal presence.

Evidence: Data comes from program office files, Grant Application and Payment System (GAPS), and Basic Support Payment applications.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The Department has developed baselines and targets for the two annual efficiency measures and two new output measures. Targets for the efficiency measures have been set at constant levels which provide challenging targets for the Impact Aid program and lead to improved operational efficiency on the part of the program staff. The targets are that 1) 90 percent of eligible applicants receive initial Basic Support Payments within 60 days of an appropriation and 2) the number of requests for forgiveness of overpayments from the Department will be less than 10. These targets have been met in most years. Improvements in the Impact Aid data system have helped to reduce the number of overpayments significantly since 2001 while improved efficiencies within the program have contributed to faster payment processing. Baselines for the two output measures have been established based on data from FY 2006. Annual targets, beginning in FY 2009, have been set at percentages greater than achieved in the past two years.

Evidence: Targets and timeframes have been entered into the Department's Program Performance Plans based on baseline data gathered from program office files, the Grant Application and Payment System (GAPS), and Basic Support Payment applications.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Partners for this program, including LEAs (grantees), Kforce (contractors) and NCES (government partner), work with the program in support of the annual goals of the program. The Impact Aid program office tracks the performance of its contractors and uses incentives as part of a performance based contract to help meet short and long-term organizational objectives. For example, the Department of Education contracts with Kforce to maintain and enhance the functionality of the Impact Aid System (IAS), the database system used to organize and analyze application data and calculate accurate payments under the multiple payment formula provisions of the authorizing statute. The IAS resides on the Education's Central Automated Processing System (EDCAPS) server and is supported by the Office of the Chief Financial Officer (OCFO) and its contractors. The IAS permits efficient analysis and calculation so that payments can be made accurately and within the first 60 days of an appropriation. The National Center for Education Statistics (NCES) is also committed to helping meet program goals by providing expenditure data on an annual basis in a timely manner. This allows the program to meet performance objectives.

Evidence: Program office files, system records, and GAPS payment records. NCES PART review available at http://www.whitehouse.gov/omb/expectmore/detail/10000196.2003.html)

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: In response to the 2005 PART review, the Department contracted with the American Institutes for Research for an evaluation of the Impact Aid program to determine the effectiveness of the program and to help inform reauthorization proposals. The evaluation examined whether school districts with a Federal presence receive fewer educational resources compared with similar districts without a federal presence and how well targeted Impact Aid funds are to those affected school districts by addressing three research questions: 1) What financial burdens do school districts face because of the Federal connection of students in those districts? 2) How well targeted is Impact Aid to districts adversely affected by the Federal connection of their students? 3) Does the targeting of Basic Support Payments address financial burdens more effectively for some types of federally connected students than others? To answer these questions, the researchers developed multiple analytic models to measure the differences in expenditures per-pupil due to the presence of federally connected students. The approach used was to compare the resources spent in Impact Aid districts to non-Impact Aid districts with similar student demographics and characteristics in which to determine the financial burden of a federally connected student to a school district and how much of that burden is met by Impact Aid Basic Support Payments. The analytic models included extensive district and student characteristics taken from the NCES Common Core of Data, Comparable Wage Index data, and 2000 U.S. Census data as well as Impact Aid Program administrative data. The first of two models focused on regular Impact Aid districts while excluding heavily impacted districts, districts with students living on Indian lands and districts in the three states with equalization exemptions, while the second model included all Impact Aid districts and over 13,000 school districts in total, representing over 95 percent of the country's public school student population. In response to the initial evaluation, the Department has determined that additional analyses would help in achieving a better understanding of the performance of the Impact Aid program and contracted for a second evaluation that would examine the disparity in funding for different categories of federally impacted children as well as how the model developed in the first evaluation can be used to track the extent to which formula payments achieve the goals of the program. The Department will continue to assess the need for a new evaluation each year and will contract for evaluations as needed. For example, because the long-term goals are tied to changes made in reauthorization, future analysis may be conducted to evaluate the effects of changes in the statute.

Evidence: Impact Aid Evaluation available at http://preview.ed.gov/programs/8003/resources.html.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The program cannot tie funding levels to achievement of specific outcomes. However, ED has satisfied the second part of the question in that the Department's budget submissions show the full cost of the program (including S & E).

Evidence:

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: ED contracted for a study of the Impact Aid program that examined the financial burdens that school districts face due to a Federal presence and how well the Basic Support Payments and Children with Disabilities formulas reflect actual district need for assistance. Also, the Department has developed annual and long-term performance measures with ambitious long-term goals tied to changes proposed for the upcoming reauthorization of the Impact Aid program.

Evidence: Impact Aid Evaluation available at http://preview.ed.gov/programs/8003/resources.html. Targets and timeframes for performance measures have been entered into the Department's Program Performance Plan based on baseline data gathered from program office files, Grant Application and Payment System (GAPS), and Basic Support Payment applications.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Department collects financial data from those LEAs that receive Payments for Children With Disabilities reporting their expenditures for educating students with disabilities to verify that the Section 8003(d) supplement does not exceed the LEAs' excess costs. The Department also obtains annual financial data through the National Center for Education Statistics (NCES) on the total current expenditures of LEAs that receive Impact Aid Basic Support Payments, and these data become a component of the payment formula used to distribute available funds. The Department examines these data to identify discrepancies that could lead to payment errors. The Department also communicates regularly with the Department of Defense (DoD), the Department of the Interior, Department of Housing and Urban Development, General Services Administration, Bureau of Prisons, and other State and local entities/intermediaries to validate data submitted by applicants in order to ensure that program resources are efficiently and effectively allocated. Information is also shared with State and local officials to facilitate the exchange of information and enhance interagency communication.

Evidence: Program files. Sources of data include Tables 7 and 9 from the Basic Support Payments applications, NCES data collections for LEAs' current expenditures and information gathered by Impact Aid analysts via personal contact and publicly available documents.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Impact Aid program managers are held accountable via the Education Performance Appraisal System (EDPAS) to manage the program efficiently and make payments in a timely and accurate manner. These goals are also incorporated into the program staff's EDPAS agreements, and they are rated on their timeliness and accuracy in reviewing and preparing applications and payments to LEAs. On a regularly scheduled basis, Impact Aid program staff conduct site visits and mail in reviews to ensure that grantees are in compliance with certain program compliance requirements. In addition, grantees are held accountable through annual reporting requirement on the Impact Aid application. For example, districts that received Section 8003(d) funds in the prior year are required to report the expenditure of these funds on Table 7 of the Impact Aid application. The Impact Aid system runs a use test to ensure that the district remains in compliance with applicable law. In accordance with contract law, the Department holds the contractor responsible for system maintenance and availability directly related to the program's operational goals. The Department uses incentives as part of the performance-based contract.

Evidence: Program files, Education Performance Appraisal System (EDPAS) agreements, Impact Aid System (IAS) contract and application supporting documentation.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: The Department establishes timeframes and schedules for the obligation of funds under sections 8003(b) and 8003(d). These funds are used for the purposes intended. For 2007, 94 percent of payments were made within 60 days after the enactment of the appropriation. Section 8003(b) funds are intended to replace lost revenues due to the Federal presence in the district. As a result, these funds have no specific expenditure requirements. Section 8003(d) funds are disbursed for the purposes of supplementing the additional costs for educating children with disabilities. These funds are tracked via annual submissions on Table 7 of the Impact Aid application. The Department conducts a use test to ensure that these funds are expended according to applicable law.

Evidence: Program office files, system records, and Section 8001(1)-(5) of the Elementary and Secondary Education Act.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Program managers are engaged in an ongoing process to enhance the Impact Aid System (IAS), the information technology used to manage application and payment data and calculate payments. System enhancements have automated certain functions to significantly reduce the effort required to load data into the system. System enhancements have also facilitated more efficient and effective data review. Impact Aid managers have also implemented staff performance standards that measure the timeliness of payments. In addition, the Department currently has two annual efficiency measures that track the efficiency and accuracy of operations. Program data from 2007 show that the percentage of payments made within 60 days of enactment of an appropriation and the accuracy of payments made both exceeded performance targets.

Evidence: Impact Aid System and program office files. Impact Aid Program procedures and EDPAS agreements. There have been more than 300 individual functional improvements to the Impact Aid System (IAS).

Does the program collaborate and coordinate effectively with related programs?

Explanation: The Impact Aid program provides the Department of Defense (DoD) with the data that they use to make DoD Impact Aid payments. ED staff have also help DoD estimate the costs school districts will face as a result of military policy changes. DoD and ED staff regularly collaborate and exchange information to maximize the efficiency and effectiveness of both programs.

Evidence: ED program data and DoD briefing materials.

Does the program use strong financial management practices?

Explanation: Recent audits have identified no deficiencies in the financial management of this program.

Evidence: The Impact Aid program has received a clean audit for two consecutive years. To respond to a finding of inadequate segregation of duties, the Impact Aid Program Director created a multi-tiered, two pronged review process to ensure that an adequate segregation of duties. The Department has enhanced the Impact Aid System (IAS) to provide a secondary check to ensure that each action in the system would require approval by two different users.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: No material internal deficiencies have been identified for this program for the past three years. Impact Aid Program managers regularly review policies and procedures to identify any potential management deficiencies. For example, the Impact Aid Program Director formally created a multi-tiered, two-pronged review process to ensure an adequate segregation of duties. The Department has enhanced the Impact Aid system (IAS) to provide a secondary check to ensure that each action in the system would require approval by two different users.

Evidence: System security logs, multi-tiered approval process to initiate, approve, and monitor payments.

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: Section 8003(b) funds are intended to replace lost revenues due to a Federal presence. These funds are treated as local revenue. While there are no expenditure requirements or performance measures linked to these funds, the districts, by treating them as local funds, use them in accordance with the law. The Department monitors the use of section 8003(d) funds through mandatory reporting on Table 7 of the Impact Aid application. The Department also conducts a use test through the Impact Aid System (IAS) to ensure that the funds received are used in accordance with the law. The districts are subject to the Single Audit Act as state auditing requirements. In addition, program staff conduct field reviews and site visits of more than 200 applicants per year. Applicants that receive more funds are reviewed on a frequent basis.

Evidence: Impact Aid application files, system records, Single Audits, state audits, supporting applicant documentation and the documentation resulting from monitoring activities.

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: For Impact Aid funds that mandate data collection and review, program staff monitor these data on an annual basis. For example, The Department monitors the use of section 8003(d) funds through mandatory reporting on Table 7 of the Impact Aid application. The Department conducts a use test to ensure that the funds received are used in accordance with the law. The results of this collection are presented to a wide audience periodically throughout the year at various public speaking engagements. In addition, the Impact Aid program has posted applicant data on its external webpage for wide access. The Department is taking additional steps to create a searchable database of applicant information on its webpage.

Evidence: Impact Aid application files, system records and data reports (http://www.ed.gov/programs/8003/dr.html)

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: Results of progress towards long-term performance goals are not yet available. The Department recently developed two long-term output measures that serve as proxies for how well formula payments make up for the lost revenue due to a Federal presence. The long-term targets, set for 2012, are tied to the Administration's reauthorization proposals for the Impact Aid program.

Evidence: Program Performance Plans and reports.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The program met the annual performance targets for two of the four performance measures in 2007. The percentage of eligible applicants who receive initial Basic Support Payments within 60 days of an appropriation and the number of requests to forgive overpayments both exceeded their annual performance targets for 2007. Baselines for the two output measures have been established based on data from FY 2006 and targets, beginning in FY 2009, have been set at percentages greater than achieved in the past two years. Results of progress towards meeting annual targets are not yet available.

Evidence: Program Performance Plans and reports.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Program data from 2007 show that an increasing percentage of payments are were made in a timely fashion (defined by 60 days after enactment of an appropriation) and have exceeded performance targets. Data also show that the accuracy of payments exceeded performance targets.

Evidence: Impact Aid System and program office files.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: There are no comparable programs with which to compare performance.

Evidence:

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: In response to the 2005 PART review, the Department contracted with the American Institutes for Research for an evaluation of the Impact Aid program. The evaluation examined the financial burdens that school districts face due to a Federal presence, how well targeted Impact Aid funds are to those affected school districts, and whether or not the targeting of Impact Aid funding addresses financial burdens more effectively for some types of federally connected students than others. The researchers developed multiple analytic models to measure the differences in expenditures per-pupil due to the presence of federally connected students. Conclusions from the analysis were mixed. The report found that how much Impact Aid districts spend per student relative to demographically similar districts depends on the types of federally connected students they serve and the concentration of those students. While targeting of funds to the districts with the greatest financial need was found to be poor overall, the analysis found better results with models that excluded heavily impacted districts and districts with Indian lands. The model also revealed that the Impact Aid program is meeting about 40 percent of the financial burden of districts when the heavily impacted districts and districts with Indian lands are excluded. In response to the evaluation report, the Department has determined that additional analyses would help in achieving a better understanding of the performance of the Impact Aid program and contracted for a second evaluation that would examine the disparity in funding for different categories of federally impacted children as well as how the model developed in the previous evaluation can be used to track the extent to which formula payments achieve the goals of the program.

Evidence: Impact Aid Evaluation available at http://preview.ed.gov/programs/8003/resources.html.