DES MOINES — Iowa lawmakers could begin debating as early as Monday the proposal by Gov. Kim Reynolds to establish taxpayer-funded educational savings accounts, which Iowa families could use to pay for private school tuition and other related expenses.
The proposal, which has moved through the legislative process at breakneck pace for such a large and complex piece of legislation, has sparked passionate debate.
Iowans crowded into the Capitol and packed legislative hearing rooms over the past week to sound off on the fast-tracked proposal, after the idea had failed previously. Some wore bright yellow shirts that read “YES to ESAs.” Others held signs that said "NO VOUCHERS" in bold text and “I support Iowa’s public schools.”
More than 1,650 Iowans submitted written comments. House Democrats, who oppose the bill, said 73 percent of the comments submitted online opposed the bill, while 27 percent were in favor.
Here’s a rundown of what the bill would do.
What’s in the bill?
The proposal would create taxpayer-funded educational savings accounts, valued at $7,598 in the first year — the amount the state spends per pupil on public K-12 education — that families could use for private school tuition and other education expenses.
The program would be phased in over three years. In the third year, all K-12 students — including private school students — would be eligible for the funding, with no income restrictions.
The proposal also allows public school districts to use unspent funding from Teacher Leadership and Compensation, Professional Development and Talented and Gifted categorical funds to increase teacher salaries. The governor and House Republicans have said the funding has been underutilized due to the prescriptive nature of the funding and process required to reallocate it.
How will that affect funding to public schools?
Public schools would lose out on the per-pupil funding for any students who chooses to attend a private school. School districts, though, would get roughly $1,200 in state funding for each student who lives in the district but attends a private school, regardless of whether the student is a recent transfer or has always attended private school.
That’s new funding Reynolds and supporters argue could benefit some districts. But for districts with declining enrollment who lose a student to private school, it would be a net loss of $6,385 per student. While districts would get the estimated $1,205, they also lose the $7,590 state aid per pupil. So for every student who leaves, a district would need five or six already in private schools to make it a wash.
How much will it cost?
The governor’s office estimates roughly 14,000 eligible students would participate in the program in the first year, which would cost the state about $107 million in additional state funds deposited in the accounts for parents enrolling children in a private school this fall.
Reynolds’ office estimates an additional roughly 6,000 students will apply in the second year, which would cost the state roughly $156.2 million that year. By the third year, every Iowa family would qualify to receive an account, regardless of income.
The governor's office estimates nearly 20,000 new students would apply for private school assistance in the third year. That would cost the state roughly $313.8 million in the third year. By full implementation in the fourth year, the governor's office estimates that the total annual cost of the government-funded scholarships would be roughly $341 million.
The governor’s office based its estimate on the assumption that about 1 percent of public school students are likely to transfer.
In total, over the course of four years, the plan would cost the state roughly $918 million.
Over the same time period, the state is estimated to spend $15.2 billion on public education and collect $39.2 billion in overall revenue, with expectations of increasing K-12 spending by roughly 2.5 percent each year, according to Republican budget estimates.
Reynolds has recommended that legislators provide $190 million more to public K-12 schools in the next academic year.
According to the governor’s office, Reynolds’ budget proposal would leave a $2 billion unspent balance in the state’s general fund budget.
Democrats note the only information Republicans have provided about the bill's cost come from their own estimates and those of the governor — not the non-partisan Legislative Services Agency.
The agency has not analyzed the fiscal impacts of the bill, and Democrats have said they’d like to see those estimates before it goes to a floor vote. House Democratic Leader Jennifer Konfrst of Windsor Heights said the agency’s fiscal estimate may come Monday.
House Speaker Pat Grassley, R-New Hartford, said he’d like to see the fiscal estimate, but he pointed to the numbers coming out of the governor’s office and said Republicans have been transparent about the cost of the program.
Who would be eligible?
Year 1 (2023-24)
- All kindergarten students
- All public school students
- Private school students at or below 300 percent of the federal poverty level ($83,250 for a family of four)
Year 2 (2024-25)
- All kindergarten students
- All public school students
- Private school students at or below 400 percent of the federal poverty level ($111,000 for a family of four)
Year 3 (2025-26)
- All K-12 students in Iowa, regardless of income
What expenses would the law allow?
The money is to be spent on private school tuition or other expenses, like private tutoring, textbooks or school-related fees or payments for “educational therapies.” That includes fees for private online classes; vocation and life-skills classes approved by the Iowa Department of Educations; materials and services for students with a disability from an accredited provider, including the cost of paraprofessionals and assistants; standardized test fees; and advanced-placement exams for college-level courses offered by high schools.
The money is not to be spent on food, clothing, transportation or disposable school supplies, like pencils and paper, according to the bill’s sponsor.
When do the accounts expire and what happens with leftover money?
Money remains in a student’s individual account until he or she graduates high school, turns 21 or is removed from a private school, whichever occurs first. Any leftover money is transferred to the Iowa Department of Education to be deposited into the state’s general fund.
How will this new program be administered?
Similar to the state’s “529” College Savings Iowa Plans, which are managed by investment company Vanguard and overseen by the Iowa State Treasurer's Office, the accounts would be created in the state treasury under the control of the Iowa Department of Education. A private company would administer the program and oversee those payments.
Funding for the savings account would come from money appropriated to the Department of Education from the state’s general fund.
ClassWallet administers Arizona’s school voucher program, which has faced questions about lax financial oversight in recent years, and is registered in support of Reynolds’ bill.
Erin Murphy of The Gazette Des Moines Bureau contributed.