This hearing discusses proposed legislation which would reauatorize federal impact aid as part of the Elementary, Secondary and Vocational Education Act of 1987. Three members of Congress and the Assistant Secretary for Elementary and Secondary Education of the U.S. Department of Education presented testimony. Recommendations included the following: (1) realistic levels of impact aid to offset the loss of property tax revenue from tax-exempt military installations are needed by school districts that must educate the children of military personnel; (2) the Federal Government should quaranatee the availability and distribution of impact funds to school districts that must spend inordinate amounts of time preparing and justifying programs and budgets; (3) special consideration should be given to the six coterminous school districts nationwide that have no tax base and are totally dependent on state aid and federal impact aid; and (4) proposed amendments would ensure more equitable distribution of funds by restricting payments to districts that are directly affected by the presence of non-taxable federal properties that serve as the place of employment as well as the place of residence for families with school-age children. Prepared statements from 14 school administrators are appended. (FMW)