Title 20, EducationRelease 119-110
§7709 State Consideration of Payments in Providing State Aid
Title 20 › CHAPTER 70 — STRENGTHENING AND IMPROVEMENT OF ELEMENTARY AND SECONDARY SCHOOLS › SUBCHAPTER VII — IMPACT AID › § 7709
Summary
States must not count certain federal education payments when deciding which local school districts get state aid or how much aid they get. States also cannot give state aid in a way that makes a district get less money just because it received those federal payments. One exception lets a State reduce its aid to districts that get certain federal payments if the U.S. Secretary of Education certifies that the State runs a program that evens out spending between school districts. To qualify, the State must show that, in the second fiscal year before the year in question, the highest per-pupil spending did not exceed the lowest by more than 25 percent, after leaving out the top 5 percent and bottom 5 percent of districts and after considering extra costs for isolated areas or students with special needs. If a State recently changed its plan, the Secretary can use projected data to approve it, if the State promises to pay back districts if the final data show the plan failed. A State must tell the Secretary in writing at least 120 days before its fiscal year if it wants to count those federal payments in its aid rules, and must show it told its school districts. The Secretary must let the State and districts give input, then certify or reject the plan and offer hearings for those harmed. Only certified plans may treat the federal payments as local resources, and even then only in proportion to the local taxes covered by the plan. If the Secretary or an affected district gets an adverse decision and an administrative process hasn’t finished after 150 days, they may sue the State in federal court; States cannot use 11th Amendment immunity, and the court can order relief.
Full Legal Text
Title 20, §7709
Education, Source: USLM XML via OLRC
(a)General prohibition
Except as provided in subsection (b), a State may not—
(1)consider payments under this subchapter in determining for any fiscal year—
(A)the eligibility of a local educational agency for State aid for free public education; or
(B)the amount of such aid; or
(2)make such aid available to local educational agencies in a manner that results in less State aid to any local educational agency that is eligible for such payment than such agency would receive if such agency were not so eligible.
(b)State equalization plans
(1)In general
A State may reduce State aid to a local educational agency that receives a payment under section 7702 or 7703(b) of this title (except the amount calculated in excess of 1.0 under section 7703(a)(2)(B) of this title and, with respect to a local educational agency that receives a payment under section 7703(b)(2) of this title, the amount in excess of the amount that the agency would receive if the agency were deemed to be an agency eligible to receive a payment under section 7703(b)(1) of this title and not section 7703(b)(2) of this title) for any fiscal year if the Secretary determines, and certifies under subsection (c)(3)(A), that the State has in effect a program of State aid that equalizes expenditures for free public education among local educational agencies in the State.
(2)Computation
(A)In general
For purposes of paragraph (1), a program of State aid equalizes expenditures among local educational agencies if, in the second fiscal year preceding the fiscal year for which the determination is made, the amount of per-pupil expenditures made by, or per-pupil revenues available to, the local educational agency in the State with the highest such per-pupil expenditures or revenues did not exceed the amount of such per-pupil expenditures made by, or per-pupil revenues available to, the local educational agency in the State with the lowest such expenditures or revenues by more than 25 percent.
(B)Other factors
In making a determination under this subsection, the Secretary shall—
(i)disregard local educational agencies with per-pupil expenditures or revenues above the 95th percentile or below the 5th percentile of such expenditures or revenues in the State; and
(ii)take into account the extent to which a program of State aid reflects the additional cost of providing free public education in particular types of local educational agencies, such as those that are geographically isolated, or to particular types of students, such as children with disabilities.
(3)Exception
Notwithstanding paragraph (2), if the Secretary determines that the State has substantially revised its program of State aid, the Secretary may certify such program for any fiscal year only if—
(A)the Secretary determines, on the basis of projected data, that the State’s program will meet the disparity standard described in paragraph (2) for the fiscal year for which the determination is made; and
(B)the State provides an assurance to the Secretary that, if final data do not demonstrate that the State’s program met such standard for the fiscal year for which the determination is made, the State will pay to each affected local educational agency the amount by which the State reduced State aid to the local educational agency.
(c)Procedures for review of State equalization plans
(1)Written notice
(A)In general
Any State that wishes to consider payments described in subsection (b)(1) in providing State aid to local educational agencies shall submit to the Secretary, not later than 120 days before the beginning of the State’s fiscal year, a written notice of such State’s intention to do so.
(B)Contents
Such notice shall be in the form that the Secretary requires, including evidence that the State has notified each local educational agency in the State of such State’s intention to consider such payments in providing State aid.
(2)Opportunity to present views
Before making a determination under subsection (b), the Secretary shall afford the State, and local educational agencies in the State, an opportunity to present their views.
(3)Qualification procedures
If the Secretary determines that a program of State aid qualifies under subsection (b), the Secretary shall—
(A)certify the program and so notify the State; and
(B)afford an opportunity for a hearing, in accordance with section 7711(a) of this title, to any local educational agency adversely affected by such certification.
(4)Nonqualification procedures
If the Secretary determines that a program of State aid does not qualify under subsection (b), the Secretary shall—
(A)so notify the State; and
(B)afford an opportunity for a hearing, in accordance with section 7711(a) of this title, to the State, and to any local educational agency adversely affected by such determination.
(d)Treatment of State aid
(1)In general
If a State has in effect a program of State aid for free public education for any fiscal year, which is designed to equalize expenditures for free public education among the local educational agencies of that State, payments under this subchapter for any fiscal year may be taken into consideration by such State in determining the relative—
(A)financial resources available to local educational agencies in that State; and
(B)financial need of such agencies for the provision of free public education for children served by such agency, except that a State may consider as local resources funds received under this subchapter only in proportion to the share that local tax revenues covered under a State equalization program are of total local tax revenues.
(2)Prohibition
A State may not take into consideration payments under this subchapter before such State’s program of State aid has been certified by the Secretary under subsection (c)(3).
(e)Remedies for State violations
(1)In general
The Secretary or any aggrieved local educational agency may, not earlier than 150 days after an adverse determination by the Secretary against a State for violation of subsections (a) or (d)(2) or for failure to carry out an assurance under subsection (b)(3)(B), and if an administrative proceeding has not been concluded within such time, bring an action in a United States district court against such State for such violations or failure.
(2)Immunity
A State shall not be immune under the 11th amendment to the Constitution of the United States from an action described in paragraph (1).
(3)Relief
The court shall grant such relief as the court determines is appropriate.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2015—Subsec. (b)(1). Pub. L. 114–95, § 7009(2), made technical
Amendments
to references in original act which appear in text as references to section 7703(b) and 7703(a)(2)(B) of this title. Pub. L. 114–95, § 7001(d)(8), made technical amendment to references in original act which appear in two places in text as references to section 7703(b)(2) of this title. Pub. L. 114–95, § 7001(d)(7), made technical amendment to reference in original act which appears in text as reference to section 7703(b)(1) of this title. Pub. L. 114–95, § 7001(d)(1), made technical amendment to reference in original act which appears in text as reference to section 7702 of this title. Subsec. (c)(1)(B). Pub. L. 114–95, § 7009(3), substituted “that the Secretary requires” for “and contain the information the Secretary requires”. Subsec. (c)(3)(B), (4)(B). Pub. L. 114–95, § 7009(1), made technical amendment to reference in original act which appears in text as reference to section 7711(a) of this title. 2002—Subsec. (b)(1). Pub. L. 107–110 inserted “and, with respect to a local educational agency that receives a payment under section 7703(b)(2) of this title, the amount in excess of the amount that the agency would receive if the agency were deemed to be an agency eligible to receive a payment under section 7703(b)(1) of this title and not section 7703(b)(2) of this title” after “section 7703(a)(2)(B) of this title”. 2000—Subsec. (a)(1). Pub. L. 106–398, § 1 [[div. A], title XVIII, § 1812(1)], struck out “or under the Act of
September 30, 1950 (Public Law 874, 81st Congress) (as such Act was in effect on the day preceding
October 20, 1994)” after “under this subchapter” in introductory provisions. Subsec. (b)(1). Pub. L. 106–398, § 1 [[div. A], title XVIII, § 1812(2)], amended heading and text of par. (1) generally. Prior to amendment, text read as follows: “A State may reduce State aid to a local educational agency that receives a payment under section 7702 or 7703(b) of this title (except the amount calculated in excess of 1.0 under subparagraph (B) of section 7703(a)(2) of this title) or under the Act of
September 30, 1950 (Public Law 874, 81st Congress) as such Act was in effect on the day preceding
October 20, 1994 (other than an increase in payments described in paragraphs (2)(B), (2)(C), (2)(D), or (3)(B)(ii) of section 3(d) of such Act of
September 30, 1950) for any fiscal year if the Secretary determines, and certifies under subsection (c)(3)(A) of this section, that such State has in effect a program of State aid that equalizes expenditures for free public education among local educational agencies in such State.” Subsec. (d). Pub. L. 106–398, § 1 [[div. A], title XVIII, § 1812(3)], struck out “or under the Act of
September 30, 1950 (Public Law 874, 81st Congress) (as such Act was in effect on the day preceding
October 20, 1994)” after “under this subchapter” wherever appearing. 1996—Subsec. (b)(2)(A). Pub. L. 104–195 substituted “more than 25 percent” for “more than— “(i) 25 percent for fiscal year 1995, 1996, or 1997; and “(ii) 20 percent for fiscal year 1998 or 1999”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2015 AmendmentAmendment by Pub. L. 114–95 effective Dec. 10, 2015, and effective with respect to appropriations for use under this subchapter beginning fiscal year 2017, except as otherwise provided in such amendment, see section 5 of Pub. L. 114–95, set out as a note under section 6301 of this title.
Effective Date
of 2002 AmendmentAmendment by Pub. L. 107–110 effective Jan. 8, 2002, and effective with respect to appropriations for use under this subchapter for fiscal year 2002, see section 5 of Pub. L. 107–110, set out as an
Effective Date
note under section 6301 of this title.
Reference
Citations & Metadata
Citation
20 U.S.C. § 7709
Title 20, Education
Last Updated
Sep 22, 2026
Release point: 119-110