Two school boards learned Monday night that a major source of funding education for local students is apparently coming to an end if local officials can’t find a way to appeal a recent “review” of their method of sharing federal funds.

An agreement to funnel “Impact Aid” from Nespelem School District to Grand Coulee Dam School District hasn’t been correct for years, a federal “reviewer” recently informed the Nespelem superintendent, a finding that will have a large financial impact on Lake Roosevelt Schools.

For decades, the two districts have operated under a memorandum of understanding (MOU) that some of the money from the federal Impact Aid program coming into Nespelem would be passed through to Grand Coulee Dam according to the number of students from Nespelem actually served by its neighboring district.

The Impact Aid program helps offset money spent by schools to educate students whose parents are employed by the federal government or who live in a district impacted by federal land ownership that prevents collection of property taxes, a major funding source of public schools.

Nespelem is a higher priority district in the federal program because basically all of its students qualify, explained Grand Coulee Dam Superintendent Paul Turner, but GCD only has about 50 percent eligible. That can make a big difference when the program isn’t fully funded, which it never is, he said, which led the districts to agree on the sharing program for the good of their common students.

“Hopefully, they won’t make us pay it back,” Superintendent Effie Dean told her board of directors in Nespelem Monday.

The affected funding would apply only to those students who live in Nespelem but choose to attend Lake Roosevelt Schools in kindergarten through eighth grades. Students from the Nespelem district in grades 9-12 would still warrant the funding for LR because that is also the designated high school for the Nespelem District.

In Coulee Dam, Turner explained the issue to that school board Monday.

“Our impact aid could have some problems moving forward,” Turner said.

He expressed his own confusion over the matter and wanting to talk to people at the Department of Education in Washington D.C., among others, to clarify his understanding of it.

Currently, Impact Aid money applied for by Nespelem School and funneled to the Grand Coulee Dam district comes to about $1 million a year, Turner told The Star.

Just under $600,000 of that is in jeopardy, relating to about 60 students in K-8.

At Nespelem, Business Manager Trisha Schock said the Impact Aid amount received comes to about $9,947 per student.

Dean told the Nespelem board that the reviewer said the school would receive a letter of her findings in August or September stating that they would have to pay money back to the federal government, but that they could apply for a hardship waiver.

Board Chair Jolene Marchand said that possibility had been covered in the MOU between the districts when it was signed.

“So, we still have an agreement between us and Grand Coulee Dam School District,” she said. … We’re held harmless if Impact Aid chooses to penalize, and Grand Coulee has signed that with us. So we have that in place.”

Turner said Tuesday that he thinks the issue centers on Washington’s school choice law that allows parents to choose where their children attend public school.

“The feds are holding our state law over our heads,” he said, adding that he may contact state Attorney General Bob Ferguson on the matter.

In Nespelem, Dean wondered if the new dynamic would change enrollment numbers in the district if less federal money came with the Nespelem students.

Turner said Tuesday that would not be an issue, noting state funding that does follow students.

Jacob Wagner contributed reporting for this story