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Impact Aid Can Boost Charter Schools' Bottom Line

Since 1950, the U.S. Department of Education's Impact Aid program has been part of the funding stream for many school districts. The program is designed to help compensate for the loss of revenue or increases in enrollments that school districts can face as a result of a federal presence, such as a tax-exempt military base. Traditional school districts have been the primary applicants and recipients of Impact Aid. Only local education agencies (LEAs), or school districts, that meet state and federal Elementary and Secondary Education Act definitions for an LEA can apply for Impact Aid. Some charter schools that are their own LEA have applied for Impact Aid and received funding. And, in some cases, charter schools that are part of a school district have received a portion of Impact Aid awarded to the school district. This monthly newsletter of the National Charter School Resource Center (Resource Center) provides information about the Impact Aid program and how accessing the support by charter schools fits into what can be complex local, state, and federal funding circumstances and laws. Resources are provided in the newsletter to further pursue the topic.

Impact Aid takes various forms, with most of the funding going for general use by LEAs. The 2011 appropriation for the Basic Support program was about $1.1 billion and there were 1,311 applicants for the funding. About 1,200 applicants, including 43 charter schools, received funding in 2011. Funding for 2012 is about the same. The Department of Education allocates funding to LEAs largely on the basis of the enrolled number of federally connected children. However, complex formulas determine the actual disbursement, taking into account a variety of factors associated with the scope of the federal impact and the amount of funding available. There also are far smaller specialized components of Impact Aid, such as the Children With Disabilities component, with a 2011 appropriation of $48.5 million. LEAs count the federally connected students who meet the eligibility requirements and include the total as part of the LEAs application for Impact Aid. To be eligible, the students must, for example, have an Individualized Education Program (IEP) in effect at the time of the count.

A critical element of applying for funding is properly counting the qualifying students enrolled in the schools and meeting minimum numbers or percentages of enrollment spelled out in the Impact Aid regulations. Students who are the dependents of military personnel can be part of an Impact Aid census, but students in other categories qualify as well, including those whose parents or guardians work on federal property, children living on Indian lands, and children who reside in federally subsidized public housing projects. For example, the school district in New York City received $4.2 million in 2011 in connection with the 74,489 students tallied in public housing. Children living in Section 8 housing, a federal program that provides vouchers for private housing, are ineligible to be counted for the program.

Each year, LEAs, whether they are charter schools or traditional districts, must go through the process of surveying their students and verifying those who are federally connected as part of the Impact Aid application. LEAs have flexibility about when they count. The Impact Aid program's Lloyd Matthews, who works with applications from charter schools, said that sometimes parents can be reticent to provide even basic information about their work circumstances. But he said that the program must be able to verify the federal connection to award funding. Charter schools, even if they are not their own LEAs, can contribute to the census of federally connected students that provides the basis for additional funding for the entire district. For example, Sigsbee Charter School, which is on Naval Air Station Key West in Florida and is part of the Monroe County School District, produced a school newsletter item that encouraged participation in the Impact Aid census and explained the relevance of the program.

Matthews has presented an overview of the Impact Aid program. Matthews said the program is complex, and he recommended that if charter school leaders think their school may be eligible, they should contact him at Lloyd.matthews@ed.gov before applying for Impact Aid.

Department of Defense Impact Aid Provides Support to Local Education Agencies

In addition to Impact Aid, Congress also appropriates funds for Department of Defense Impact Aid. At least five charter schools that are their own LEAs have received Department of Defense Impact Aid supplement funding. LEAs or school districts where at least 19.5 percent of the students are military dependents qualify for the funding, according to Kathleen Facon, Chief of the Educational Partnership, Department of Defense Education Activity. Determined by Congress, annual funding for the supplement has been between $30 million and $40 million for the past four years. The money is unrestricted and typically goes into an LEA's general fund. There were 116 LEAs that received supplement funding in 2011, with a dozen or fewer LEAs being added to or dropped from the list annually in recent years, according to the Educational Partnership, which administers the program. "The U.S. Department of Education provides us with a listing of those districts that meet the eligibility criteria and we then distribute the appropriation," Facon said in an interview with the Resource Center.

In addition to the supplement, there are two other components of Department of Defense Impact Aid, both also determined by congressional appropriation. One of the components is focused on children with severe disabilities who are the dependents of military personnel and the other is focused on the effects of military base closures and realignments. Annual funding for the disabilities component has amounted to $4 million to $5 million during the past four years. The base closures and realignments component has not been funded in the past four years.

Facon said it may not necessarily make sense for LEAs to seek funding, even if they qualify. Facon said districts must weigh the cost and effort of going through the procedures against the value of the potential aid.

Rules in Individual States Influence What Happens With Federal Impact Aid

Just as complex funding formulas guide the disbursing of federal Impact Aid to LEAs around the country, so too do procedures in individual states. The circumstances pose challenges for charter schools. In New Mexico, for example-where charter schools can be part of a school district or an independent LEA authorized by the state-the full amount of Impact Aid does not necessarily remain with the LEA that applies for and receives the support. That is because New Mexico has a formula for equalizing education funding statewide as part of its system of paying for public education. Multiple variables determine the amount of funding the state sends to an LEA.

On a small scale, the interplay of LEA status for charter schools, the role of traditional school districts, and education funding equalization is at work in a public school community in north central New Mexico. The Jemez Valley Public School District includes two charter schools, San Diego Riverside Charter School, a K-8 school, and Walatowa Charter High School. Both charter schools are located on the Jemez Pueblo, tax-exempt Indian land. The student population that resides there qualifies for Impact Aid. The qualifying students have been counted and included as part of the school district's Impact Aid application, which also includes other types of federally connected students, such as the children of people who work at the federal Los Alamos National Laboratory, according to E. David Atencio, the district superintendent. After the district receives its Impact Aid, the state reduces its funding to the district by 75 percent of the Impact Aid figure. A per-pupil amount consisting of two components of the Impact Aid-Indian education and special education funds, which are exempt from the 75 percent credit taken by the state-is then distributed in the district, with the money following the student. For example, in the current year, about $115,000 was divided among the two charter schools, according to Atencio. The pattern will change in July 2012, when Walatowa will be authorized by the state and be its own LEA, meaning it will be responsible for the Impact Aid application.

"This is a complicated deal," Atencio said in an interview with the Resource Center. "It takes a while to wrap your head around it."

News

USDA Rural Facilities Loan Fund That Charter Schools Have Tapped Quadruples to $1.3 Billion

Funding for a U.S. Department of Agriculture low-interest, direct loan program that charter schools have tapped has increased from about $295 million in 2011 to about $1.3 billion in 2012, and applications are being encouraged, according to the agency. The Community Facilities Program provides support in rural communities with populations of 20,000 or less. Read more.

NACSA Survey Shows Drop in Charter School Closure Rate Since 2008-09

The percentage of charter schools being closed as part of a review of their contract for renewal has fallen from 12.6 percent in 2008-09 to 6.2 percent in 2010-11, according to a survey by the National Association of Charter School Authorizers (NACSA).

"These findings don't tell us whether the right number are being closed," NACSA President and CEO Greg Richmond said in a statement released January 30, 2012, with the survey report, "but our experience suggests that authorizing agencies should be closing more, rather than fewer, poor-performing schools."

The State of Charter School Authorizing 2011: Fourth Annual Report on NACSA's Authorizer Survey shows that the percentage for closures outside the renewal process has remained about the same at 1.5 percent. Nonprofit organizations that serve as authorizers reported the highest percentage of charter school closures inside and outside the renewal process.

The report provides data and trends about the nation's estimated 957 authorizing organizations, which also include local education agencies, institutions of higher education, state education agencies, municipalities and independent chartering boards. They authorize more than 5,600 charter schools that enroll more than 2 million students, according to the report.

Maine's Charter School Law Tops NAPCS Rankings

The newest state with a charter school law also has the best law, according to a January 2012 report from the National Alliance for Public Charter Schools (NAPCS).

Maine, which in September 2011 became the 41st state with a charter school law, ranks first in the NAPCS's Measuring Up to the Model: A Ranking of State Charter School Laws. The report, which is in its third edition, profiles each of the charter school laws and compares them to the NAPCS's model law, which includes 20 essential components.

Quality control policies that the report touts in addition to Maine's are those in Arkansas, Florida, Massachusetts, and New Mexico.

"It's critical that state lawmakers recognize the importance of charter school quality and the impact that their laws have on it," states NAPCS Vice President of State Advocacy and Support Todd Ziebarth, who wrote the report.

Report Profiles, Compares For-Profit and Nonprofit Education Management Organizations Nationwide

A January 2012 report from the National Education Policy Center and Western Michigan University states that 35 percent of all charter schools in the United States are operated by private education management organizations (EMOs), accounting for about 42 percent of all charter school enrollment.

Profiles of For-Profit and Nonprofit Education Management Organizations: Thirteenth Annual Report-2010-2011 describes the national EMO landscape and includes state breakdowns, profiles of companies and student performance data. Read more.

National Report Finds Better Relationships Between Charter Schools and Districts

Charter schools and traditional districts now are "commonly finding themselves sitting down at the bargaining table to work out deals," an evolution from a relationship that has been marked by antagonism and isolation, according to a new report from the Center on Reinventing Public Education (CRPE).

"Districts and charter schools are working on some of the most difficult problems that choice creates in order to reap the deepest and most widespread promise that choice offers," according to Hopes, Fears, and Reality: A Balanced Look at American Charter Schools in 2011. "But moving away from antagonism and defiance and toward true collaboration and problem solving isn't easy."

Charter-district collaboration compacts have been created in at least 16 cities-from Los Angeles, California, to Central Falls, Rhode Island, and from Chicago, Illinois, to Spring Branch, Texas. Collaboration between charter schools and districts has been supported by a Bill and Melinda Gates Foundation program.

The January 2012 report from CRPE covers enrollment systems, access for students with special needs, allocation of building space, improving information for parents about choices, and analysis of where charter-district cooperation fits in education reform. It also includes a review of the charter school landscape and emerging trends, among them that charter schools are serving "a growing share of minority and Hispanic students," rural charter schools "appear to be on the rise," and charter management organizations appear to be driving less of the growth in the charter school sector.

The report is funded by the National Charter School Resource Center (Resource Center) at the American Institutes for Research. The Resource Center is funded by the U.S. Department of Education.

"Hopes, Fears, and Reality is an invaluable resource to help districts and charter schools provide the best opportunities available to improve student outcomes," said Kelly Sparks, Director of the Resource Center. "The report provides concrete strategies and ideas for districts as they manage traditional schools, charters, and other school choice programs."

Events

February 27-29, 2012: The Second Annual Green Schools National Conference will be in Denver, Colorado.

June 19-22, 2012: The National Alliance for Public Charter Schools will hold the National Charter Schools Conference in Minneapolis, Minnesota.

Resources

• U.S. Department of Education, Impact Aid Program. This website provides a description of the federal Impact Aid program and extensive resources to help explain and access the program, including evaluation reports and federal and state staff lists.
• Impact Aid Program, FY 2013 Section 8003, Application Presentation. This presentation from the U.S. Department of Education's Impact Aid Program describes the funding program that is designed to help compensate for the loss of revenue or additional responsibilities for local public schools associated with a federal presence, including tax-exempt lands and military facilities. The presentation provides information about how to apply, including sample forms and documentation requirements.
• Department of Defense Education Activity, Impact Aid. This website provides resources and information about Department of Defense Impact Aid, a supplemental Impact Aid program.
• Education of Military Dependent Students: Better Information Needed to Assess Student Performance. This 2011 Government Accountability Office report covers the role of Department of Defense Impact Aid and the need for data to better assess how the funds are used and the extent to which military dependent students benefit. The report includes descriptions of programs and results of surveys of school districts, including responses to questions about use of funds and issues involving dependent children of military personnel.