The Impact Aid Program is designed to directly compensate local school districts for: (1) local revenue lost due to the presence of federally owned, and therefore tax-exempt, property and (2) costs incurred due to "federally connected" students, such as the children of armed services personnel working at a nearby military base. Unlike most other forms of educational assistance, Impact Aid disburses roughly $1.3 billion annually in unrestricted federal funds directly to local school districts rather than through state agencies.
Established in 1950, the Impact Aid Program was a major general aid source for 1,151 school districts nationwide in 2014, or approximately 8 percent of all districts. For some school districts, Impact Aid supplies as much as 75 percent of the local education operating budget. There are five types of Impact Aid: Basic Support Payments, Payments for Property, Disability Payments, Department of Defense Supplemental Impact Aid Payments, and Construction Payments. Basic Support Payments make up about 87 percent of federal Impact Aid spending.