Reservation schools’ federal aid slashed in sequestration

The biggest cuts come in funding called Impact Aid, which is a 63-year old program designed to compensate local districts that include federal land not subject to the property taxes that most school systems in the United States use for funding.

Impact Aid came to more than $13 million in the districts located in Fort Washakie, Ethete and Arapahoe in 2010, according to a report prepared for Wyoming legislators by Michelle Hoffman, superintendent of schools in District 14 in Ethete. The payout has risen slightly each year since then until the sequestration struck this year. In the present and next fiscal years, the three districts stand to lose more than $4 million of that funding, according to superintendents on the reservation.

Impact Aid is not unique to reservations. The Laramie County schools receive Impact Aid for every student they enroll who lives on the Francis E. Warren Air Force Base. Districts in Campbell, Uinta and Sweetwater counties also receive Impact Aid. In addition to children living on Indian lands, the law provides aid to districts serving children on “military bases, low-rent housing properties, and other federal properties, or who have parents in the uniformed services or employed on eligible federal properties,” according to a U.S. Department of Education website.

But these non-reservation districts — and also Fremont District 6 based in Pavillion, which is on the reservation — together received less than $1 million in Impact Aid in 2010, according to Hoffman’s report.  And some of these districts, such as those in Cheyenne and Gillette, have large budgets and huge property tax bases. A cut to Impact Aid peels a thin sliver off a tiny slice of the district’s budget pie.

Not so on the reservation. In this fiscal year (FY 2013, which corresponds to the 2012-13 school year) Hoffman’s district has seen Impact Aid funding decline by $1.7 million to just under $4 million. That is an 11 percent cut in a total district budget of $15 million a year.

Because the reservation districts enroll predominantly students who live on the reservation’s trust land, which yields no local property tax income, they have no way to raise local money within the reservation. “We are at the mercy of the federal government,” said one school official.

Like those elsewhere in Wyoming, the reservation districts receive state funding for teachers, transportation, food service and other core expenses, but they rely on federal Impact Aid — long ago called “payment in lieu of taxes”— to pay for services that are not covered under state funding. And as low-income districts with more than their share of social problems, they invest the money in programs that serve their students’ special needs.

What Impact Aid buys

“We have two counselors per building,” said Hoffman. That comes to six counselors in the district, two each in the elementary school, the middle school and the high school.

“That’s not funded through the state,” she said. “The state would like us to have 1.3 counselors in the district. Because of the issues some of our students face, we need to have two. And they are busy all the time.”

The students face issues that come with any low-income district, Hoffman said: “Poverty, alcoholism, drug abuse. We have two full-time nurses in our district, which the state model does not cover. We pay for that through Impact Aid.”

Last week, Hoffman and other education leaders from the reservation spent four days in Washington D.C. to visit with Sen. John Barrasso and Rep. Cynthia Lummis, among other lawmakers, and to argue for the restoration of Impact Aid. Among Hoffman’s specific requests was the maintenance of funding for nurses, who often spot health problems that families and teachers miss.

“Like I told Sen. Barrasso when I met with him, I have middle school students losing their teeth,“ Hoffman said.

Hoffman’s district, and many similar districts around the country, saw trouble coming in 2011 when Congress passed the Budget Control Act. That law set sequestration — across-the-board 10-percent budget cuts to discretionary federal spending — as the penalty for failing to agree on a $1.2 trillion to $1.5 trillion in budget cuts. The reservation districts, following the lead of the National Association of Federally Impacted Schools (NAFIS), looked for ways to save money. Hoffman figured on a loss of $1.5 million or more in Impact Aid.

“We made these cuts by changing our insurance provider [a savings of $1 million] and by not replacing five teachers, one cook and one custodian,” Hoffman said.  “In addition, we have delayed updates to technology and bus purchases and cut some line item budgets up to 5 percent.”

NAFIS, the organization that forecasts Impact Aid, usually with uncanny accuracy, sees more cuts next year, Hoffman said. And eventually the reductions will be harder to make without cutting programs that serve students directly. In 2013-14, the district is budgeting for an additional cut of nearly $570,000 in Impact Aid, in line with estimates by NAFIS.

“As of now, I have about 13 positions of people who are retiring or moving or just not coming back.,” Hoffman said. “We’re taking a real hard look at not replacing them. Eighty-two percent of the budget is wages and benefits. You can’t cut it by cutting stuff. You don’t buy enough stuff to make up more than $2 million in cuts in two years.”

The District 14 School Board will ultimately make these decisions, relying heavily on the recommendations of Hoffman and the district’s business manager. But whatever happens, Ethete’s schools will not be alone, nor will they be in the worst shape among similar schools around the nation.

NAFIS estimates that 1,400 school districts — roughly one in 10 nationwide — will be affected by cuts in Impact Aid this year. In a survey of 400 school districts, NAFIS found that 36 percent of the 334 districts that responded had planned for sequestration in the current fiscal year.

“Those who have budgeted for the sequester are choosing to put off school-building maintenance and are eliminating both non-instructional and instructional staff,” NAFIS executive director John B. Forkenbrock stated in a press release. “Many of these buildings are already in disrepair; and these decisions are now putting students at risk — a risk that can be tied directly to Congress’ failure to act. And federally impacted schools, our military and Native American children, will continue to face the effects of impending cuts in coming years unless sequestration is avoided.”

Current-year funding

Unlike all other federal education programs, which are “forward funded” and which the Department of Education (DOE) says will not be cut until the next federal fiscal year begins Sept. 1, Impact Aid is funded in the current year. So the budget reduction beginning on March 1 cut aid for six months during this federal fiscal year.

To make planning even more difficult, the Impact Aid for a particular fiscal year is paid out over several years. The districts receive one initial payment that represents the bulk of that year’s aid, but smaller amounts are paid out incrementally in later years.  At the same time, additional payments from prior years arrive as well, even if the exact amounts are often a surprise.

The funding is drawn out over several years because verifying the complicated applications submitted by school districts takes time, said Dan Hudson, the retired business manager of Hoffman’s district. Aid is granted on a per-student basis and, often, individual claims about where students live or how they qualify must be verified. The payment starts out with a substantial lump sum. Later payments are likely, but by no means guaranteed, Hudson said.

In Fort Washakie, Assistant Superintendent for Finance Nina Garland said District 21 received a $200,000 adjustment from last year, as well as payments this year from Impact Aid awarded 2008 and 2009.

“It wasn’t much, maybe $1,600 dollars total,” she said. But it was something. And it showed that those two years were still open.

Windfalls and preparation

Fort Washakie, a district smaller than Ethete with about 500 students, also prepared for cuts this year. The district cut two jobs by transferring its local nonprofit radio station to Wyoming Public Radio. KFTW officially became KUWW last month, although the district had been working on the deal since last July, well before sequestration was a certainty.

Another one-time revenue source helped the district bridge the funding gap left by more than $1 million in Impact Aid cuts. The local high school converted from a charter to a public school. In the past, the district paid tuition to the charter school for every student who attended. The state reimbursed the district for tuition the following year.

This year the high school is part of the district, so no tuition bills will come due. But the district will receive about $1 million in reimbursement from the state for last year’s tuition payments, Garland said.

Finally, the district is profiting from growing enrollment. Fort Washakie has been committed to small class sizes for many years. And as the enrollment grew this past year, so did per-student aid from the state and the number of students who qualified the district for Impact Aid.

“We added enrollment and didn’t increase staff,” Garland said.

Reading and classroom aides

Richard McClements, superintendent of schools in District 21, said Impact Aid pays for the extra attention and services that the state does not provide, especially more teachers and caregivers in the classroom.

“Among the many things that Impact Aid does for us as a district serving Native American children,” McClements said, “it is our reading program that is the big difference maker. We also have very small class sizes. Wyoming has a class size of 16 students for K through 3, but our average is 13.9.  On top of that, every classroom teacher in Kindergarten through third grade has a full-time classroom aide. Full time. There are very few districts throughout Wyoming — if any — who can say that.”

Fort Washakie also pays salaries to a group of seven grandparents to work 29-hour weeks in the schools. “They are there to love and mother the children,” McClements said.  “And to work with some of the more difficult children.”

The extra adults in the classrooms enable teachers to focus on students who need the most help, as well as to create smaller subgroups for exercises and activities.

What to cut

In the next week or so, all of the district superintendents on the reservation will be meeting with their boards to decide on budget cuts. Fort Washakie expects big cuts next year and cannot count on the one-time cost and revenue fixes that saved more than $1 million this year.  McClements and Garland are budgeting for another $1 million cut in the initial payment for Impact Aid to about $3 million. The district budget is slightly over $13.2 million now.

Unlike Hoffman, McClements is holding his possible funding cuts close to his vest. The board, not the press, should hear recommendations from him first. This was also the stance taken in District 38, where Superintendent Jonathan Braack declined to talk in specific terms until an official board meeting next week.

But McClements indicated that he wants to find money to save the big line items that keep the classes small and interactive.

When the group of school officials went to Washington to meet lawmakers last week, McClements sent along a document outlining the costs and merits of these programs. The certified classroom aides, one per classroom in K through 3 and 0.5 per classroom in higher grades, cost $750,000. A preschool program to increase the literacy of incoming kindergartners costs $150,000. The grandparents cost $120,000. The state pays for 1.33 reading coaches and the district spends $64,000 to bring the service up to two full-time coaches. None of this is paid for by Wyoming. All of it comes from Impact Aid. None of it could be easily sacrificed if the district wants to offer the same education it provided to students this year.

In addition, all of the districts on the reservation offer free breakfast and lunch to every student, not just those who qualify for subsidized meals. The extra money comes from Impact Aid.

“It’s surprising,” McClements said, “how many children come to school hungry, especially on Monday.”

The calculus is similar in Fort Washakie and Ethete. And each of the districts has a backup plan that they would implement almost as reluctantly as they would cut classroom staff. Dating back to the years when districts built their own school buildings, both Ethete and Fort Washakie have been saving to build new schools. Each district has cash reserves — they are reluctant to say exactly how much — that they want to spend on enhancements to the buildings the state would pay for.

In Ethete, for example, a new elementary school would come without a kitchen. To avoid trucking meals from the high school kitchen to an elementary school some distance away, the district would pay for the kitchen. Both districts want larger classrooms than the state would pay for. And they want to allocate their reserves for that, not to pay for school lunches or classroom programs.

Hudson, the former business manager who said it was “his job” to find the surpluses to pay for a new school building, said the districts could probably get along for a while. But they would eventually run out of money if the discretionary spending caps or sequestration continued, as the Budget Control Act specifies, until 2021.

The solution, he contends, is to find a way to restore funding to the districts.

“I can tell you what I just got through telling those people in Washington,” Hudson said. “When you get into sequestration, especially with Impact Aid, this is not just cutting 5 percent of your budget. What you are doing is you are cutting 5 percent of your people. You are cutting teachers, aides, staff, and cooks. It isn’t just 5 percent. It is real people who are losing their jobs. It is real kids who are not getting the education they are entitled to. That’s the people who end up paying the ultimate price for it. It isn’t the U.S. taxpayer.”

— Ron Feemster covers the Wind River Indian Reservation for WyoFile in addition to his duties as a general reporter. Feemster was a Visiting Professor of Journalism at the Indian Institute of Journalism and New Media in Bangalore, India, and previously taught journalism at Northwest College in Powell. He has reported for The New York Times, Associated Press, Newsday, NPR and others. Contact Ron at ron@wyofile.com.

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