The Every Student Succeeds Act (ESSA), the new federal elementary and secondary education law which replaces the “No Child Left Behind” school accountability act, includes major changes to Impact Aid.

The Impact Aid program provides financial assistance to school districts that are impacted by federal activities. When a school district has federal land within its geographic boundaries, such as a military installation, this land is exempt from taxation. This exemption eliminates the ability of a school district to receive property taxes for such land, even if children who attend schools in the district are living there. Impact Aid provides financial assistance to school districts to help alleviate the loss of this revenue.

Approximately 26 districts in New Jersey receive impact aid, including New Hanover, North Hanover, Pemberton, and Northern Burlington County Regional . Those districts receive impact aid because of their large populations of students who reside on Joint Base McGuire-Dix-Lakehurst. The aid is crucial to those school districts’ finances to ensure they don’t get shortchanged because of the federal presence.

Among the changes made to Impact Aid by ESSA:

  • Eliminates the Maintenance-of-Effort (MOE) Requirement The MOE provision has required that in order to receive funding under certain Impact Aid programs, a district must maintain per student expenditures at the level of at least 90 percent of the previous year’s funding. The Every Student Succeeds Act (ESSA) eliminates this requirement.
  • Reclassifies Certain Military Children for the Purposes of Formula Allocations Under Impact Aid military children who live on base increase the share of Impact Aid funding that a school district receives. ESSA revises and expands provisions that allow certain military children who reside off base to be treated as residing on base, resulting in the generation of higher payment (or funding) levels.
  • Revised Hold Harmless Provision Under the federal property program, ESSA replaces the previous “hold-harmless” provisions (which applied only to fiscal years 2001 and 2002) with language providing that a district whose calculated payment would be reduced by 20 percent, as compared to the previous year, will receive a reduction of no more than 10 percent in year one; 15 percent in year two; and 20 percent in year three; with each of these computations made against the previous year’s payment level.

Significance to School Boards The changes made by ESSA to the Impact Aid programs generally will be of significant interest to districts that have within their borders all or part of a military base, an Indian reservation, a national park or forest, or another major federal facility. These districts and their school boards will want to pay attention to changes in the eligibility criteria and the methods of computing payments, as well as the impact of these changes on payment levels.

Gov. Chris Christie signed legislation intended to aid school districts with large populations of students from military families in May 2015. The bill would permit school districts that receive federal impact aid to establish special reserve accounts to carry over unused funds from one school year to the next.

Assemblymen Ronald Dancer of Plumsted was the sponsor of the legislation, explaining that it would help districts’ long-term budget planning and protect the federal investment in education for military families.

The New Jersey School Boards Association worked with Assemblyman Dancer and the superintendents who represented the specific districts in moving the state legislation forward until it was signed into law by the governor.