Today, U.S. Sens. John Thune (R-S.D.) and Mazie Hirono (D-Hawaii) and Reps. Kristi Noem (R-S.D.) and Rick Larsen (D-Wa.) introduced their bipartisan, bicameral legislation to modernize and streamline the federal Impact Aid program, which provides payments from the federal government to local school districts to make up for local taxes lost on account of federal land within their school districts, such as military bases and federal land like Indian Reservations or federal grasslands.

This bill will improve the federal Impact Aid program’s efficiency in a variety of ways, including permanently simplifying payment calculation for federal property, resulting in the ability for school districts to receive timelier payments. In recent years, districts have experienced a delay in receiving timely payments due to delays in the process for calculating land valuation, which puts additional financial burdens on already cash-strapped school districts. The Local Taxpayer Relief Act would also improve the Impact Aid program to ensure schools that have consolidated that were previously eligible continue to be eligible for Impact Aid. 

“School districts need certainty from the federal government about what to budget for annual Impact Aid revenues,” said Thune. “The bipartisan, common-sense changes included in our bill make the Impact Aid program run more efficiently and ensure that school districts with federal lands will receive timelier payments. While I was pleased that Congress acted at the end of last year to extend the simplified payment calculation formulas to accelerate Impact Aid payments, we need to make these improvements permanent by passing our legislation to reauthorize the entire Impact Aid program.”

"Hawaii educates over 13,000 students whose parents serve in our military,” said Hirono. "Federal Impact Aid provides Hawaii’s communities with resources to help serve our students, and the bill my colleagues and I are introducing today will help the Hawaii Department of Education get those resources more quickly and efficiently. As a proud graduate of Hawaii’s public school system, I am committed to ensuring that all Hawaii students receive a quality education.”

“In the past, bureaucratic red tape has delayed critical Impact Aid payments to South Dakota schools, making it difficult to meet needs of South Dakota’s young people,” said Noem.  “The concepts in this bipartisan legislation will help cut through that red tape and continue to deliver critical education dollars to our schools more quickly and efficiently – now and long into the future.”

“Impact Aid provides critical support to schools in my district to make sure students have the best opportunities to succeed today and in the future. This bipartisan bill ensures permanent, on-time payments for school districts where federal activity like military bases limits funding available to public schools through property taxes,” Larsen said.

Created in 1950, the Impact Aid program is the oldest federal education program and represents a commitment to reimbursing districts that host non-taxable federal property activities. This bill improves this program for the 1,300 impacted school districts that educate more than 11 million children across the country without increasing government spending, 

In 2012, Congress included a provision in the FY 2013 National Defense Authorization Act (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.

In December of 2014, Congress included a provision in the FY 2015 NDAA to extend the simplified payment calculation process for federally impacted schools for three years, resulting in timelier payments to school districts.

The Local Taxpayer Relief Act would reauthorize the Impact Aid program and make permanent the NDAA provision simplifying the payment calculation process. 

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