Private school scholarship program heads to governor’s desk

Gov. Kim Reynolds made private school scholarships her top priority for the 2023 legislative session. That goal was reached Tuesday when lawmakers sent the bill to her desk.

Reynolds praised the House and Senate for passing the bill, saying she planned to sign it later on Tuesday.

“For the first time, we will fund students instead of a system, a decisive step in ensuring that every child in Iowa can receive the best education possible,” she said in a statement. “… With this bill, Iowa has affirmed that educational freedom belongs to all, not just those who can afford it.”

The bill will provide Iowa students with $7,598 each year to use for private school tuition and associated costs. All public school students will be eligible to use an educational savings account or ESA starting in the 2023-2024 school year. Students currently attending private schools must meet income limits to qualify in the first two years of the program; all private students would be eligible in the third year.

Public school districts will receive an estimated $1,205 for each student living within the boundaries of their district who attends a private school, even if they have never been enrolled in a public school.

The Iowa Senate approved House File 68 early Tuesday on 31-18 vote. Three Republicans, Sens. Lynn Evans, Charlie McClintock and Tom Shipley, joined Senate Democrats in voting against the bill.

The Senate debate directly followed the Iowa House passing the legislation 54-45 at 9 p.m. Nine Republicans voted against the bill, along with all House Democrats. Similar legislation failed in the House the past two years.

During nearly 10 hours of debate, Democrats said the legislation moved too fast and that it wasn’t popular with Iowans. “It has been rushed. We have too many questions. It is not ready for prime time,” House Minority Leader Jennifer Konfrst, D-Windsor Heights, said.

Republican Sen. Jeff Taylor said he and other legislators heard from thousands of Iowans in the weeks since the session began about the private school scholarship bill. The majority who contacted him, he said, were opposed to the legislation, but he said he wanted those Iowans to know their message was heard. While Taylor, of Sioux City, said some concerns were valid, he did not believe the legislation would “destroy” Iowa’s public education system as some critics claimed.

“In the end, I’m voting yes because although I see some potential problems … I am convinced that this is the best route to take at this time in history,” he said.

The majority party countered Democrats’ assertions about the bill’s unpopularity by pointing to GOP victories in the 2022 election. Rep. John Wills, the bill’s floor manager, said Reynolds’ reelection and Republican gains in both chambers showed voters supported her education agenda.

“If Iowans are really opposed to school choice, then why are we winning seats?” Wills R-Spirit Lake said.

Somber starts to debate

Debates in both chambers began with a moment of silence for victims of an Iowa school shooting Monday. Two students were shot and killed Monday at “Starts Right Here,” an alternative education program in downtown Des Moines, police reported.

The nonprofit’s founder, Will Holmes, a Des Moines area rapper known by his stage name, Will Keeps, was also shot and was in surgery Monday night, according to a statement from the school’s board of directors.

The debate centers on accountability, discrimination

Democrats said private schools are not held to the same standards and oversight that public schools are in terms of accepting all students.

“If private schools want more tax dollars then they should be required to accept every student as public schools do,” Democratic Sen. Eric Giddens, D-Cedar Falls, said as debate began in the Senate. “And shouldn’t taxpayer funding come with the same oversight and budget rules that public schools follow?”

While Iowans can ensure that their taxes are going to proper use at public schools, the legislation does not outline transparency standards or regulations on how to spend public money, State Auditor Rob Sand, a Democrat, said in a news release.

Public schools are required to hold open meetings, maintain public records and follow budget laws, Sand said, which allows his office and other public watchdogs to find cases of waste, fraud and abuse. Private schools do not have these same obligations, he said.

“After a private school gets public dollars as tuition, they could buy a teacher or teachers brand new Ford Mustang convertibles in the name of incentive pay,” Sand said in a statement. “The public may not find out at all, and if they did, there may be no recourse for taxpayers. That is flatly, fundamentally irresponsible.”

Educational companies and parents were found to misuse government funds in other states’ “school choice” programs, such as in Arizona’s ESA program. Iowa could see the program’s funds misused, Democrats argued, especially when not holding private schools to additional accountability measures to qualify for these funds.

The legislation requires private schools be accredited in Iowa. Republican Rep. Steven Holt said that this process meets the transparency and reporting requirements that critics call for.

“But the reality, in my judgment, is that answering to engaged parents is the most important measure of accountability,” Holt said. “Because parents can measure success for their children far better than government agencies ever could.”

Democratic Rep. Josh Turek said the ESA program was particularly limiting for students with special needs. Private schools have “systematically excluded” disabled students, he said, and do not have to follow the same standards as public schools do through the Disability Education Act.

“There are no restrictions on private schools, excluding disabled children, nor were they nor will ADA standards be legally enforced,” Turek, Council Bluffs, said. “Meanwhile, the costs associated with educating children with disabilities will continue to be shouldered by the public school system, with ultimately less resources at their disposal.”

Wills disagreed that private schools discriminated against LGBTQ+ students, students of color and those with disabilities, citing Iowa law that prohibits private schools from discriminating against Iowans through civil rights protections. Religious schools not allowing students of a different faith are allowed to do so through religious freedom protections, he said.

But Wills said the program was a response to parental demands for more choices because of public school practices. He pointed to certain reading material available in Iowa public schools as well as Linn-Mar Community School District’s policy of allowing transgender students to use a name and pronouns different from what they were assigned at birth without informing the student’s parents.

“Maybe they don’t trust the public schools anymore,” he said.

Senate President Amy Sinclair said claims the program was discriminatory were “basest form of fear mongering.”

Iowans of color are disproportionately in low-income households, face discipline and violence at school, and graduate high school at lower rates than white Iowans, she said. Families of color would benefit from the ESA program because it would remove the income barrier for those who wish to send their children to private schools, Sinclair said.

“If this money is denied to any child, especially minorities, based on the ability of their parents to pay, this should be considered criminal,” Sinclair said.

Will there be additional costs?

Democrats had called during committee debate last week for the Republican majorities to wait for the nonpartisan legislative staff to release a fiscal note on the program before moving forward. But House Speaker Pat Grassley and others pointed to the governor’s office report, saying that they had enough information to proceed.

The Legislative Services Agency released its fiscal analysis Monday morning. The nonpartisan office’s estimates roughly lined up with the governor’s calculations. Private school scholarships will cost the state nearly $107 million in fiscal year 2024, LSA estimated, matching the amount Reynolds allocated. Once the program is fully phased in, the agency calculated it will cost the state just under $345 million each year, while the governor estimated it would cost around $341 million.

This investment is money being diverted from Iowa’s public schools, critics argued. But Republicans disagreed with characterizations that funding private school scholarships was to the detriment of public K-12 education. In an Education Reform Committee meeting on the bill, Grassley said it was important to put that figure in the context of state education spending. Public education receives more than half of Iowa’s proposed state spending at $3.65 billion in FY2024.

The governor’s office and LSA projected that per-pupil state aid for K-12 schools will continue to increase at a rate of about 2.5% in coming years. Once fully phased in, however, the ESA program costs are not expected to increase, the fiscal analysts said.

However, the legislation does not include any limits on how many Iowans can use education savings accounts after the first two years. The bill prohibits current private school students from qualifying if their family’s income is above 300% of the federal poverty line in the first year of the program and 400% in the second year. But that phases out in year three when all current private and public school students can use the ESA program.

The LSA and governor assume 1% of public school students will transfer to non-public schools using program funds for the first three years. They expect the transfer rate to drop to 0.02% in 2025.

Some information left unknown

But these estimates include caveats. There is no data available to determine the number of current public school students who will elect to participate in the program, how many will qualify for special education services, and the capacities of nonpublic schools to take in additional students. These figures, and others that remain unknown, could impact how many pupils participate in the program.

There are also questions on how much it would cost for the state to pay for a third-party company to administer the ESA program. Democrats repeatedly asked majority party members to give estimated additional costs, but Republicans said because there was no request for a proposal to contract with a company, they cannot provide that figure.

Konfrst said Republicans were asking their colleagues to vote “blind” by not giving the full costs of the program upfront.

“I don’t think that we’re voting blind,” Wills responded. “We know that there’s going to be an additional cost. Each of the vendors that I am aware of have which income streams that vary in different ways. … So, we could be faced with a situation where we have a very low cost to the state.”

Reynolds said in a KCCI interview the state has already issued a request for information from companies that could work with Iowa in transferring the funds from the state to the planned scholarship accounts.

Before taking up the governor’s proposal, the House passed a rules change that allowed the chamber to take up the bill. House Resolution 3, which passed 58-40, includes a rule exempting legislation going through the House Education Reform Committee from having to go through the Appropriations or Ways and Means committees.

Democrats opposed the change saying it reduced transparency. Konfrst asked what her fellow lawmakers were avoiding when they removed the financial committee review from the process.

“We shouldn’t be passing legislation or rules that circumvent the process or eliminate input from the public or each other,” Konfrst said. “To the 39 new members of this chamber, I am so sorry that your first vote is one that circumvents the process and that allows less oversight of incredibly expensive legislation.”

The first time through the House

The success for Reynolds in the third week of the 2023 session came after several years of failure to sign a private school scholarship program into law. Other versions of ESA bills failed in the House in previous sessions despite hosting a Republican majority. Some Republicans who represented rural districts in Iowa said the program would hurt students in rural school districts, by diverting money from public schools to private schools which families in their districts couldn’t access.

Common Good Iowa, a public policy advocacy organization, found 41 of Iowa’s 99 counties do not have a private school, and 23 counties have only one.

The 2022 midterms gave Republicans a larger majority in the House and a supermajority in the Senate. It also changed the makeup of the Republican caucus, as the governor supported challengers to incumbent Republicans who opposed private school scholarships.

House Republicans who voted against the bill Monday were:  Reps. Michael Bergan, Brian BestJane Bloomingdale, Chad IngelsBrian LohseGary MohrThomas Moore, David Sieck and Brent Siegrist.

Republican Rep. Skyler Wheeler said Democrats always claimed that Republican education proposals would be a death toll for Iowa’s public schools. Wheeler said that critics took the same “doom and gloom” approach to GOP online education and charter school bills.

“We heard the same thing, literally the exact same thing: ‘schools are going to close, rural Iowa is going down,’” he said. “… Nothing happened. It literally didn’t happen, and here we are. The third time’s a charm.”

— Jared Strong contributed to this story.

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