On March 7, Rep. Jim Banks (R-IN) introduced the Military Education Savings Act of 2018 to divert funding from a long-standing federal program, Impact Aid, into a voucher-like program to pay for private school tuition, tutoring, or homeschooling materials for military families. The bill is modeled off a Heritage Foundation proposal, which is supported by Secretary of Education Betsy DeVos, to create education savings accounts (ESAs) for certain military-connected students—or students who have a parent on active duty. The ESAs would create an account for military-connected students not enrolled in public schools that could be used for private school tuition, private tutoring, online programs, or textbooks. The proposal is yet another attempt to launch private school voucher programs, instead of investing public money in public schools.
Historical background on Impact Aid
While the bill may seem nonthreatening at first, 80 percent of military-connected students currently attend public schools, and many of those schools rely on Impact Aid funding. As one of the first federal education programs, Impact Aid was created in 1950 to address the absence of a local property tax base to fund the education of military-connected students on installations. The program was later expanded to support any community with significant nontaxable federal property, including Indian treaty or trust land, federal low-rent housing facilities, and national parks and laboratories. Impact Aid attempts to fill the hole in district budgets caused by the loss of that local tax revenue and is crucial for the students in such school districts. Considering that 45 percent of nationwide public education expenditures are derived from local sources such as property taxes, this funding stream provides for basic needs in communities unable to tax federal property.
Nearly $1.2 billion of Impact Aid’s $1.3 billion in fiscal year 2017 funding is from a program known as basic support payments. This flexible funding for public schools is based on the number of federally connected students and is allocated by a formula that aims to distribute federal dollars equitably among school districts. This means the formulas that distribute Impact Aid funds do not create a flat allocation for each federally connected student; instead, they concentrate funding in communities that are most severely affected by nontaxed federal land. In 2017, basic support payments averaged $1,470 for each of the 809,057 federally connected students, but districts with 20 percent to 39 percent federally connected students received an average of $764 per child, while districts with 80 percent or more federally connected students received an average of $7,599 per child.
Implications of the Military Education Savings Act
The Military Education Savings Act proposes creating ESAs for certain military-connected students, which could decimate funding for school districts eligible for Impact Aid. The bill would make ESAs of $4,500 available to eligible children living in “heavily impacted districts” and ESAs of $2,500 available to children in other districts who live on military installations. Those amounts would be deducted from the funding available for Impact Aid. That means that in addition to certain districts losing Impact Aid funding—and state-based per-pupil funding—for each current student that opts out of public school to receive an ESA, this bill would put funding for all Impact Aid districts at risk in multiple ways, including:
- Eligible children already enrolled in private schools or being homeschooled—16 percent of all school-aged military children—could receive ESAs, diluting Impact Aid funding without any change to the number of students affected districts are educating.
- Eligible children aged 0-5—approximately 42 percent of all military children—and dependent children aged 19-21—approximately 4 percent of military children—could receive ESAs, diluting Impact Aid funding without any change to the number of students affected districts are educating.
- Annual contributions to ESAs would increase based on inflation, while total Impact Aid funding amounts are dependent on the annual appropriations process, meaning Impact Aid funding would be further diluted any time it did not keep up with inflation. This is especially concerning given that President Donald Trump’s fiscal year 2019 budget proposed cutting Impact Aid by hundreds of millions of dollars before a last minute addendum restored the cut.
On March 5, the Heritage Foundation released a report on ESAs. They argue that funneling Impact Aid dollars into this voucher-like program would cause a negligible fiscal impact on Impact Aid school districts. Yet the report does not consider how much funding Impact Aid school districts would lose if children not generating Impact Aid funding begin to receive ESAs.
In addition, a press release accompanying the bill’s introduction inaccurately cites a Collaborative for Student Success and Military Times survey that states some service members—35 percent—have considered leaving the military because of “dissatisfaction” with their children’s education, as an argument in support of ESAs. This single question did not probe to see if the source of the dissatisfaction was related to school choice, and it also reached only 101 active duty service members. That should not be sufficient evidence to support a national proposal to dismantle $1.3 billion of federal funding from a nearly 70-year-old program. In fact, the Collaborative for Student Success released a statement in opposition to the Heritage Foundation proposal to underscore how the voucher program would “undercut the very institution that the vast majority of military parents, and indeed all American parents, rely upon.”
School districts vulnerable to the proposal
Military families certainly deserve support and face significant, unique challenges with frequent moves between duty stations and stressful separations during deployments. These challenges are part of the reason that—for the first time—the Every Student Succeeds Act requires states and school districts to track the achievement of military-connected students. Unfortunately, this misguided bill could have a devastating impact on education funding for 10 million students that attend one of the 1,200 Impact Aid school districts. Any proposal that dilutes Impact Aid funding will affect every one of those districts.
One of the communities vulnerable to potential Impact Aid changes is Wagner Community School District, located on the Yankton Sioux Reservation in South Dakota. Wagner receives approximately $4.3 million in Impact Aid funding, which represents more than one-third of its total revenue. Prior to receiving Impact Aid funding, the district had to cut staff positions and reduce benefits, provide 20-year-old textbooks to students, and have the school’s gym double as the cafeteria. Impact Aid now helps cover the school’s daily operations, including teachers’ salaries, textbooks, supplies, and utility bills. Even today, its funding per student is lower than 105 of the other 150 districts in South Dakota.
Fort Leavenworth Unified School District in Kansas serves nearly 2,000 students on land entirely within the boundaries of a military reserve, and 96 percent of its students are children of active duty members. Subsequently, the district relies on Impact Aid for 45 percent of its revenue. This funding even enabled the district to build an additional elementary school. Despite the challenges of a high student turnover rate driven by parents’ reassignments to new duty stations, it remains a high-performing district with math, science, and English language arts achievement rates 15 percent above the statewide average.
The Military Education Savings Act would create uncertainty and cut funding available to federally impacted public schools. It is important for military-connected children to have access to a high-quality education that meets the needs of military families. But rather than threatening the funding that compensates for federal activity in local school districts, policymakers should build on efforts such as the Military Interstate Children’s Compact Commission that seek to make school transitions for military families easier. Public money—including Impact Aid dollars—should go toward helping improve public schools, not be diverted into misguided voucher schemes.
Sarah Shapiro is a research assistant for K-12 Education at the Center for American Progress. Neil Campbell is the director of Innovation for K-12 Education at the Center.