Ease for parents is priority, private tuition company says

DES MOINES — The company behind Iowa’s massive education savings account program says it has placed a high value on convenience and user experience as it manages education expenses for thousands of Iowa private school students.

Odyssey, a New York startup founded in 2021 and focused on administering school choice programs like Iowa’s, was selected by the state in a bidding process in February to run the program that has made about $7,600 in taxpayer funds per pupil available to families across the state to pay for private school education. The company will be paid $4.3 million over six years.

A separate program the company runs in Idaho has been the focus of an investigation over ineligible purchases. But the company’s chief executive officer said Iowa’s program is set up with a high level of state involvement to prevent fraudulent purchases.

About 18,600 Iowa students received the accounts for the current school year after the program was passed by Republican lawmakers and signed into law by Gov. Kim Reynolds earlier this year. The program phases in until all K-12 Iowa students, regardless of income, are eligible in the 2025-26 school year.

Odyssey CEO Joseph Connor said in an interview the company has focused on creating an easy-to-use platform for parents who take part in the program and bringing convenience to government programs, which are often seen as confusing.

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“We created this company with the idea that we want to make sure it’s as easy to access a government program as it is, say, Amazon,” he said. “...We want this to feel more like a consumer process that parents and families are used to, and not necessarily something like going to the DMV.”

Connor, a former teacher and lawyer, also founded SchoolHouse, a company that connects families with educators to form at-home “learning pods.” He said Odyssey’s employees include people who have experience at e-commerce companies like Gilt and Stitch Fix, who work on bringing the features of those sites to government.

To get the program going in a short window before this school year, the company built a tool to automate approval of the education savings accounts applications, Connor said. When parents put in their required information, the application checked their identity against state records to ensure they met all the qualifications for the program, providing approval in a few seconds rather than days or weeks.

As the school year has begun and the company has worked through the process of transferring millions of dollars from state-funded accounts to private schools, Connor said it has not run into any significant challenges or disruptions.

Connor did not say how many students who received the funds are actively attending private schools this year because enrollment will not be finalized until the end of September. Some students who received the money may not end up attending a private school due to space limitations. Unspent money will be returned to the general fund.

The education savings account program is expected to cost $345 million each year once it is fully implemented. This year, all students previously enrolled in public schools, and private school students whose families made less than 400 percent of the federal poverty line, were eligible for the state funds.

The program, a chief priority for Reynolds during this year's legislative session, passed with only Republican support. Democrats and public school advocates warned it would take money away from struggling public schools and transfer it to private schools with less accountability and the ability to turn away students with disabilities.

Reynolds and Republicans said the program would provide families with a choice to find the school that works best for their children, regardless of their income.

Idaho program under investigation

Before being selected to run Iowa’s program, Odyssey was chosen in 2022 to administer Idaho’s Empowering Parents program, which gives grants to families for at-home education costs and supplies.

Idaho’s program is under investigation after the state found thousands of dollars in ineligible purchases, approved by Odyssey under the guidance of the state Board of Education, had been made on the state’s marketplace. Those purchases included TVs and sewing machines, according to Idaho EdNews, and accounted for less than 1 percent of the purchases in the program.

Iowa's program has a similar online marketplace run by Odyssey, where approved vendors list products and services that families can purchase with the public dollars. Eligible expenses include laptops, software, tutoring, speech therapy and standardized tests.

When it comes to ensuring Odyssey is approving legal purchases with the state funds under Iowa's program, Connor said the state’s law is more clear about which types of products and services are eligible than the program in Idaho. The Iowa Department of Education makes the final call in verifying vendors that appear on Odyssey’s marketplace.

“In Iowa, the state has been a fantastic partner in being very clear about what is and is not allowed in the marketplace, and so that is the major difference,” he said.

When a vendor applies to provide services or products on the marketplace, Connor said Odyssey does initial verification and the Department of Education makes the final call before those services are available to parents. The vendors include state and national businesses, Connor said.

Connor also noted in Iowa’s program, families are required to pay a student’s entire tuition with the state dollars before they are eligible to make purchases on the marketplace, meaning the majority of the public dollars will go to the private schools.

The Idaho investigation also found Odyssey was holding the taxpayer funds in an interest-bearing account and had collected more than $475,000 in interest, according to Idaho EdNews.

The Idaho State Board of Education said in a news release that "while the state's contract with Odyssey did not contain any condition related to the accrual of interest on Empowering Parents grant funds, Odyssey will work with the State of Idaho to resolve the matter and stands ready to refund the interest earned."

For the Iowa program, Connor said the funds are held by the state treasurer, not Odyssey, and sent directly to a school or vendor once a purchase is approved.

Connor said the company is speaking with parents and schools about what parts of the process worked this year, and which parts need to be improved for the coming years as more students are likely to enroll in the program.

“The rollout went very well, but it was also an expedited rollout, because the law had passed, there had to be all of those processes that were in place,” he said. “So I think we’re all looking forward to next year when there will be a longer period, there will be more of a chance for outreach to families across the state.”