Distributional Effects and Distorted Incentives: Funding Policy Under the Federal Impact Aid Program

by Ron Zimmer, Richard Buddin, Brian Gill

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Military children living in the United States generally attend a local public school and have a portion of their education expense paid for by the federal government through the U.S. Department of Education's Impact Aid Program. This study focuses on the workings of the Impact Aid program with a special emphasis on the implications of the statue for military children. The analysis examines the sensitivity of the program funding to various features of military installations. The funding formula for Impact Aid is complex, and this study provides a detailed examination of how well the formula conforms to the purposes of the statue. More specifically, the authors examined the impact of the basic support program (BSP) coupled with the learning opportunity threshold (LOT) affects the distribution of resources.

Originally published in: Journal of Education Finance, v. 27, no. 4, Spring 2002, pp. 939-963.

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