More than 29,000 apply for Iowa education savings accounts. Majority of approved students already attend private school

More than 29,000 Iowa students applied to receive roughly $7,600 in state money to be used to pay for private school costs such as tuition and fees. And nearly 17,500 students — the majority of whom already attend private schools — have been approved so far, Iowa Gov. Kim Reynolds announced Thursday.

The numbers exceed state projections that predicted 14,068 students would be approved to receive education savings accounts in the program's first year.

However, the final cost of the program and the final number of education savings account — or ESA — program participants will not be available until certified school enrollment numbers are finalized in October, Reynolds’ office said.

And not every family approved may be able to use the state-funded assistance, as space is limited at Iowa’s private schools. Some have wait lists for certain grades and are turning families away, while others say they’re nowhere near capacity.

The governor's office said accredited private schools have reported there are roughly 9,000 slots available across the state for new private school students, meaning there could be more students approved than seats available in private schools.

“The tremendous response from Iowa families demonstrates there’s both a need and a strong desire for school choice in our state,” Reynolds said in a statement. “Allowing parents to choose the education that’s best for their children levels the playing field and creates equal opportunities for Iowa’s students.”

Opponents argue the new law will pull critical resources from public schools, which serve more than 90 percent of Iowa students, and will disproportionately benefit higher-income families.

“Imagine what an unlimited budget like the one for Governor Reynold’s private school voucher program would mean for Iowa’s public school students,” said a statement from Mike Beranek, president of the Iowa State Education Association, the state’s largest teachers union. “State-of-the-art labs and equipment, up-to-date technology, and laptops (to) give every student an equal chance for success. We could have nurses and counselors in every building, one-to-one assistance for any child who needs it, music, art, and shop supplies to develop new talent and skills, and the list goes on. Unfortunately for Iowans, the governor and the majority party in the statehouse have decided that unlimited budgets are reserved for just a select few Iowans.”

Nearly 486,500 K-12 students attended Iowa public schools during the 2022-23 school year, according to state certified enrollment numbers.

The law provides $1,205 in state money to public schools for every private school student receiving an education savings account within the public school district's boundaries. The district, though, would lose the $7,600 in per-pupil funding from the state for every student who switches from public to private school.

Funding every application that has already been approved would cost the state $133.5 million. And that number could increase as more applications are approved. The state has until July 31 to complete its review and approve or deny all pending applications.

The Iowa Legislature allocated $107.4 million to fund the program in its first year. And as with public school funding, it is a standing unlimited appropriation, meaning all approved educations savings accounts will be funded, state officials said.

State Rep. John Wills, a Republican from Spirit Lake who floor managed the bill — House File 68 — in the Iowa House, told The Gazette last week there is plenty of money in the state’s rainy day fund to pay for additional scholarships beyond what was budgeted.

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Iowa could pay tens of millions more to help families pay for private school

By the end of the new fiscal year on June 30, 2024, Iowa is projected to have a $2 billion general fund budget surplus and nearly $962 million in cash reserves.

Wills said more money also could be budgeted if needed by lawmakers when the next regular legislative session begins in January.

The nonpartisan Legislative Services Agency estimated the new law would cost the state $345 million annually by 2027, when fully implemented. In total, over the course of four years, the program would cost the state an estimated $879 million, according to the fiscal analysis.

Process starts with state application

All incoming kindergartners and all K-12 students currently attending a public school who choose to enroll in an accredited non-public school for the 2023-24 school year are eligible for the ESA program, regardless of income. Also eligible are students who attended an accredited non-public school this past school year, if their household income is at or below 300 percent of the 2023 federal poverty level. That equates to $90,000 or less for a family of four.

Eligibility expands in the 2024-25 school to include households at or below 400 percent of the federal poverty, currently $120,000 or less for a family of four.

Beginning in the 2025-26 school year, all K-12 students statewide become eligible regardless of income.

In addition to applying for an ESA, families apply to the accredited non-public school of their choice and, if accepted, will later update their ESA account indicating the school their child plans to attend. Accounts will be funded beginning July 15.

The school then sends an invoice for tuition and fees to the ESA account. Once parents approve the payment, funds are transferred from the state-owned bank account in Iowa to the school and the student is considered enrolled, according to the governor’s office.

If a student’s ESA has been funded, but he or she does not attend an accredited non-public school by Sept. 30, the ESA will be closed and the funds will be retained by the state and returned to the general fund, according to the governor’s staff.

Majority of approved applications are current private school students

The state began accepting ESA applications May 31 and families had until 11:59 p.m. June 30 to apply.

As of Thursday, 40 percent — or nearly 7,000 — of the 17,500 applications approved were students planning to move from a public to an accredited private school in Iowa, according to numbers released by the governor’s office, and includes incoming kindergartners. That’s more than the 4,841 students the nonpartisan Legislative Services Agency predicted would transfer in the first year.

The remaining 60 percent were students already attending accredited private schools who met the income eligibility.

The average net household income for applicants moving from public to private schools is $128,500, while the average net household income for current private school applicants is $62,200, the governor’s office said. The governor’s office also said:

Comments: (319) 398-8499; tom.barton@thegazette.com