Iowa could pay millions more than budgeted to help families pay for private school

Hundreds more Iowans than anticipated have applied for a new state-funded private school financial assistance program, potentially costing the state $11.2 million more than lawmakers had budgeted.

As of 10 a.m. Friday, more than 15,500 applications had been submitted for the state's new education savings account program to receive thousands of dollars to pay their students' private school costs, according to the Iowa Department of Education.

And Iowans have more than 20 days left yet to apply.

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The state began accepting applications on May 31, and families have until 11:59 p.m. on June 30 to apply for assistance.

The state's budget for the coming fiscal year includes $107.4 million to fund the new program, which would provide scholarships for roughly 14,000 students — the same number the nonpartisan Legislative Services Agency predicted would enroll in the program in its first year. That includes an estimated 4,841 students who would transfer from a public school to a non-public school.

The new law is expected to 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 LSA fiscal analysis.

While lawmakers set aside more than $107 million for the program in its first year, as with public school funding, “the appropriation from the Legislature is a standing unlimited appropriation,” said Heather Doe, communications director for the Iowa Department of Education.

“All approved ESAs will be funded,” Doe responded in an email.

She did not respond Friday to a follow up message asking how the state would pay for additional scholarships beyond what lawmakers had budgeted and where those dollars would come from.

What the law does

The program, signed into law by Iowa Gov. Kim Reynolds in January, will be phased in over four years until all K-12 students in Iowa will be eligible for roughly $7,600 per year in public funding to put toward private school tuition or other private school expenses.

Assuming all 15,538 applications received get funding, that would cost the state roughly $118.6 million.

The Department of Education declined to say how many applications had been approved.

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 2023-2024 school year are eligible for the ESA program, regardless of income.

Students who attended an accredited non-public school at any time this school year are eligible for the 2023-24 school year, if their household income is at or below 300 percent of the 2023 federal poverty level.

The Department of Education would not provide a breakdown of applications received by ZIP code, current school attendance or income. The department also did not respond to questions about the current capacity of Iowa’s accredited non-public schools to accept new students.

Do Iowa private schools have capacity?

Iowa has about 200 non-public schools, but only 58 of Iowa’s 99 counties have an accredited private school, according to LSA.

Most of the areas where there are no private schools are in rural areas. And several private schools are near or at capacity.

“There are schools all over that have room, certainly,” said Trish Wilger, the executive director of Iowa Alliance for Choice in Education. “Generally speaking, the schools in the smaller towns and rural areas have more capacity somewhat than the urban areas (due to income levels and population), but there’s seating available across the state for new families.”

In Cedar Rapids, some private schools have wait lists for certain grades and are forced to turn families away, while others say they’re nowhere near capacity.

Trinity Lutheran, a preK-8 school in Cedar Rapids that is accredited by the state and the National Lutheran School Association, has about 250 students and a waitlist for kindergarten, 2nd, 4th and 5th grades.

“Our school is full,” Principal Mark Mueller said, adding the school is adding a second kindergarten class. “We might have an empty seat or two in a few of our classrooms.”

Mueller said school officials are “being very cautious how we are approaching ESAs.”

“We want to see how this plays out through the next three years before we start taking some real aggressive actions and making major changes to the building,” he said.

Mueller said the school has increased its tuition, but no more than it would normally to account for increasing costs. He said tuition will increase to $6,435 from $6,135 for the coming school year.

“We don’t want to just be adding kids to be adding kids,” Mueller said. “We want to maintain a good teacher-to-pupil ratio that we have right now.”

Chris McCarville, president of Xavier High School, said he’s projecting the school will add about 25 students who do not currently attend Xavier Catholic Schools come the fall, above what school officials were projecting for next school year.

He said the school can accommodate another 200 students.

“We are nowhere near capacity, nor do we expect to be close to that when fall rolls around,” McCarville said. “We feel real confident, very confident we are adequately staffed to serve all students who we expect to be enrolled.”

Some have suggested the new money pouring into the private school industry could lead to the creation of more private schools, especially in areas where there are not private schools.

Wilger said that may happen over time.

The State Board of Education this week approved the accreditation of Royal Legacy Christian Academy, a private school in Waterloo that served 16 students in kindergarten through 6th grade.

ESA approval does not guarantee enrollment

While a family may be approved to receive assistance, that does not guarantee that they’ll be able to use it.

“Non-public school enrollment is unrelated to the Students First ESA application and is strictly between the family and the school,” according to Odyssey, the New York-based company hired by the state to run’s Iowa new private school aid program.

Meaning a family can be approved for a state-funded savings account, but denied enrollment.

Private schools do not have to admit every student and are allowed to turn away children with special needs, learning disabilities or behavioral issues, and can deny admission to gay and lesbian students.

Such policies are allowed under Iowa's Civil Rights Act, which says religious institutions can impose qualifications based on religion, sexuality orientation or gender identity.

Mueller said Trinity Lutheran has a screening process that includes an assessment to “see where kids are at academically.” Generally, families that apply are accepted, he said.

“If they have special needs that we can’t meet, we help them find a school that can meet those needs,” Mueller said, in addition to extensively using services provided Grant Wood Area Education Agency in Cedar Rapids.

However, the new state budget approved by lawmakers reduces funding to Iowa agencies that provide special education services to Iowa students in public and private schools.

Republicans have said all but one Iowa AEA will receive more money than last year, thanks to the state’s 3 percent increase in state supplemental aid to public schools.

Mueller added Trinity Lutheran plans to use ESA money to hire more teachers in the future that can assist in those areas where kids have special needs.

McCarville, too, said Xavier is going through planning to hire more staff to better accommodate all students, “and best serve even more.”

Gov. Reynolds: Law empowers parents

Savings accounts will be funded on July 15, or 30 days after an application is approved, whichever is later.

If a student’s ESA has been funded, but they do not attend an accredited non-public school by Sept. 30, the ESA will be closed and the funds will be retained by the state. ESA funds must be returned by the school for the semester in which the student did not attend, according to the Iowa Department of Education.

Iowa Gov. Kim Reynolds last week lauded the flood of applications for private school savings accounts.

“Iowa changed the face of education, funding students instead of systems,” Reynolds said in a statement. “Giving parents the power to determine the best education for their children wasn’t just a slogan, it was a promise. Today, I’m proud to say we delivered.”

Opponents say 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.

“We’re not anti-public school,” Trinity Lutheran’s Mueller said. “We just really believe in what we’re doing and what our mission is,” and providing parents’ the ability to send their child to the school of their choice.

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