The Formula Says Washington Owes Schools $2.52 Billion. It Sends 58 Cents on the Dollar.

Since 1950, the Impact Aid program has existed to solve one specific problem: a school district cannot tax a military base, an Indian reservation, or a national park, even though it still has to educate the children who live there.▸ Basic Support Payments under Section 7003(b) of the Elementary and Secondary Education Act are supposed to replace that missing property-tax revenue directly, LEA by LEA. The statute even specifies a formula for what "full" replacement would cost — and then a second formula, layered on top, for what happens when Congress doesn't send that much.

To find an LEA's "maximum payment," the Education Department's FY2026 budget request explains, the statute counts each federally connected child, weights that count by category, and multiplies by whichever "local contribution rate" is greatest — generally half the state's average per-pupil spending.▸ If Congress appropriated enough to cover every LEA's maximum payment, that would be the end of it. It doesn't, so the formula reaches for a second number: the Learning Opportunity Threshold, or LOT, which is capped well below the maximum payment and is itself only paid in full if funding allows. The FY2026 budget request priced what full funding of every LEA's maximum payment would actually cost at $2,523,929,041. The Administration asked for $1,474,000,000 — the same dollar figure requested for FY2024 and FY2025 — which is 58.4% of that number. In FY2024, when the full-funding cost was a smaller $2,347,658,427, the same flat $1,474,000,000 appropriation covered 62.8% of it. The appropriation didn't move; the gap it left did.

FY2026 opened under a continuing resolution, and the Impact Aid Grant System's January 2026 update reported that of the $541,609,607 apportioned to the program by then, it had issued 890 initial Basic Support payments — at 50% proration — plus 194 Federal Property foundation payments.▸ That continuing resolution funded the Department of Education only through January 30, 2026. When it expired, the Impact Aid program's own status page announced on February 2, 2026: "Due to a lapse in appropriations, no Impact Aid payments will be processed and the staff are furloughed." Congress ended that shutdown four days later, and the program didn't finish catching up until spring: the Director's Quarterly Update for FY2026 Q3 reports that final payments for every section — Basic Support, Children with Disabilities, Federal Property — went out by May 29, 2026, with Section 7003(b) landing at a final proration of 96.08%. That 96.08% is a proration of the Learning Opportunity Threshold payment — the target already lowered from the $2.52 billion maximum to fit inside a $1.474 billion appropriation. Even after the formula shrank what districts were owed, the government still didn't pay all of the shrunken number.

Not every federally connected child is worth the same to the formula.▸ Students living on Indian lands carry a 1.25 weight — the highest weight any regular LEA can claim — reflecting, the budget justification says, that they "often are underserved and live in isolated rural areas." A child whose parent works on federal property but lives off it, or who lives in Section 8 low-rent housing, carries one of the lowest weights on the books. The dollars land accordingly: in FY2024, the average payment for an Indian-lands student was $8,411. The average for a low-rent-housing student was $137 — sixty-one times less, for a district in exactly the same funding program, filling out the same annual survey.

Heavily impacted LEAs — districts so consumed by federal land that they qualify for a separate, richer formula tier — do better in the aggregate: $8,231 per student in the FY2026 estimate, against $2,076 for a regular LEA.▸ Only 24 to 26 LEAs nationwide qualify in any given year, out of more than 900 that receive some Impact Aid payment.

The Department tracks a performance measure that asks a simple question: what share of Basic Support recipients spend within 80–120% of their state's average per pupil — the Department's own proxy for "properly compensated"?▸ For regular LEAs, the target has held at 67% since a 2006 baseline. The actual share has fallen every year on record: 60.3% in 2021, 59.5% in 2022, 58.8% in 2023, 56.6% in 2024. For heavily impacted LEAs — the ones receiving the largest per-student checks — the target is 75%, and the actual share was 44.0% in 2024, after bottoming at 40.0% the year before. The formula built to route the most money toward the most impacted districts is, by the Department's own measure, worse at landing them in a normal spending range than the formula covering everyone else.

Dollar and student-count figures are the Education Department's own, drawn from its FY2026 Congressional Justification for Impact Aid (FY2024 actuals and FY2026 budget-request estimates) and from the Impact Aid Grant System's Director's Quarterly Updates, which report what was actually disbursed once FY2026 payments closed. "Heavily impacted LEA" counts vary slightly by source and year (23–26) because eligibility is redetermined annually.