For Military School Districts, A Funding War On Two Fronts

Like many Texas superintendents, William Walker spent part of last week in Austin, petitioning state lawmakers for increased education funding. Then he turned around and headed to Washington, where the budget gridlock between U.S. House Republicans and the White House threatens to leave some of the state's schools without millions in federal aid they’re due for the current school year.

Walker is the superintendent of San Antonio’s Randolph Field Independent School District, one of three in the state — all in San Antonio — located entirely within the borders of a military base. Unlike most school districts, which on average receive about 10 percent of their funding from the federal government, Randolph relies on federal “Impact Aid” money for half of its revenue.

Congress established the Impact Aid program during the Truman era to compensate school districts that contain military bases, national parks and Indian reservations, which don’t pay property taxes, and therefore don’t provide revenue for schools.

Unlike most federal education money, it’s not forward funded. Because the school year is often well underway without districts knowing when, or how much, they will receive in federal funding — the program hasn’t been fully funded since 1960 — schools must make an educated guess when they budget for the upcoming year.

Walker has been to this dance before. Every year, along with the superintendents from other Impact Aid districts, he travels to the U.S. Capitol to fight for the money that will get his district through the school year. In Texas, as public schools face losing an estimated $7.8 billion in state funding through budget cuts, that means the 38 districts statewide that receive a combined $49 million annually in Impact Aid are waging a war for funding on two fronts: in Austin and Washington.

“It's a total wing and a prayer. We just hope that the federal government comes through,” said Walker, whose district received about half of its $5.5 million in annual Impact Aid funding in February. “We anticipate it, but we never know it's going to get here until it arrives.”

When the federal government is operating on a continuing budget resolution, as it is now, districts get prorated amounts based on need. Districts that depend on Impact Aid for a high percentage of their operating expenses, Walker said, plan ahead by keeping large fund balances on reserve.

In April, two months from the end of the school year, 14 districts — including Killeen ISD, which has nine campuses located on Fort Hood and is the state’s single largest recipient of Impact Aid dollars — have not received a single check from the federal government, according to data from the U.S. Department of Education. That’s put many of them well into their fund balances, Walker said.

San Antonio’s Fort Sam Houston ISD serves 1,300 children of military personnel stationed there and at Camp Bullis. It has not received any of the $5 million in Impact Aid that accounts for 53 percent of its budget, delaying plans for the groundbreaking on a new cafeteria because the district must dip into its fund balance just to meet payroll each month, said district Executive Director of Business and Finance Julie Novack.

Part of the problem, according to John Forkenbrock, the executive director of the National Association of Federal Impact Aid Schools, is that funding for other federal education programs — like Title I, student loans, and Pell Grants — has priority, and the Education Department does not have enough discretionary money to fund all of them. Impact Aid districts receive on average about 60 percent of what they’re due, he said, though because funding flows to the districts with the greatest need first, some receive nearly all of their funding while others get by with much less.

With a possible shutdown of the federal government looming if Congress and the President can’t come to a consensus on the budget, it’s conceivable the districts that have yet to receive funds could complete the entire school year without receiving any payment at all, Forkenbrock said. That will put districts in a position of either losing interest (if they have to use a significant portion of their fund balances) or paying interest (if they are forced to borrow money to meet operating expenses), he said, because it is very difficult to cut costs in the middle of a school year. At that point, he said, districts have already bought supplies and contracted with employees.

In the past, there have been efforts to change the way Impact Aid is funded, Forkenbrock said, but they have failed to gain traction because in order to shift to a forward-funded model, the government would have to double-fund in one year — something that’s just not possible with a deficit. And he doesn’t expect the situation to be any different next year.

“We’ll end up with almost the same thing we're having now for 2012. They’ll be a continuing resolution next fall, and in December, another repeat… of nothing but gridlock,” he said. “We're just caught up in a mess, and there's not much we can do about it.”