Fiscal Cliff Cuts To Impact Aid Would Not Have Significant Effect On Indiana Schools

December 20, 2012 | 6:54 AM

By Rachel Morello

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There’s still time for President Obama and Speaker of the House John Boehner to reach an agreement on income tax rates ahead of a looming budget deadline.

As we’ve written before, no Indiana school district would lose more than 3 percent of its total revenue if the automatic spending cuts do kick in. But if we get to Jan. 1 without a deal, some schools will feel the effects sooner than others. From Ed Money Watch:

Still, some school districts will be harder hit than others because they receive a larger portion of their budgets from federal monies. Some of those districts receive most of their funding from the federal Impact Aid program, which helps districts that lose out on property taxes because of federally advantaged property or personnel within their borders (like military bases or Native American reservations).

The Impact Aid program, funded in fiscal year 2012 at $1.153 billion, will drop to about $1.065 billion post-sequester. At about 75 of the school districts, the cuts to Impact Aid will be more than $500 per pupil. A dozen school districts will receive at least $1 million less in Impact Aid than under the 2013 continuing resolution – and that leaves aside other federal dollars those districts receive, like Title I and special education money.

Most federal school programs — like Title I money for economically disadvantaged students or special education grants — are forward-funded. That means most schools likely won’t feel the effects of the automatic spending cuts until the 2013-14 academic year.

That’s not true for schools that receive money through Impact Aid. They’re facing funding cuts mid-year. But only a handful of those schools are in Indiana.

The New America Foundation’s Clare McCann has pulled data for 1,238 districts from the National Association of Federally Impacted Schools. Here’s how much the seven Indiana school corporations on the list could lose in Impact Aid payments in fiscal year 2013:

• Indianapolis Public Schools — $424
• South Bend Community School Corporation — $725
• Gary Community School Corporation — $1,001
• School City of East Chicago — $1,670
• Loogootee Community School Corporation — $2,749
• Seymour Community Schools — $17,698
• Bloomfield School District — $46,977

Though impact in Indiana is relatively small, McCann notes that a dozen school districts will across the country will lose more than a million dollars if the president and Congress can’t reach a deal.