HF 2261 (LSB 5773YH (6) 88)

HOUSE FILE 2261

BY  SHIPLEY

A BILL FOR

An Act establishing an education scholarship account program for pupils attending a nonpublic school or receiving private instruction, establishing an education scholarship account fund, providing an income tax exemption, establishing school district supplementary weighting for education scholarship recipients, making appropriations, providing penalties, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 8.6, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  17.  Education scholarship applications.  To adopt rules relating to applications for an education scholarship pursuant to section 257.11B, including application processing timelines and information required to be submitted by a parent or guardian.
    Sec. 2.  Section 257.6, subsection 1, paragraph a, Code 2020, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (9)  In addition to amounts under other provisions of this subsection, resident pupils who are participating in the education scholarship account program under section 257.11B and either receiving competent private instruction or independent private instruction pursuant to chapter 299A or enrolled in an accredited nonpublic school shall be counted as two-tenths of one pupil.
    Sec. 3.  NEW SECTION.  257.11B  Education scholarship account program.
   1.  a.  For the school budget year beginning July 1, 2021, and each succeeding school budget year, resident pupils eligible to enroll in kindergarten through grade twelve and who are attending a nonpublic school, as defined in section 285.16, or receiving private instruction, and who are not otherwise ineligible under this section, shall be eligible to receive an education scholarship in the manner provided in this section.
   b.  For purposes of this section:
   (1)  “Private instruction” means competent private instruction or independent private instruction as defined in section 299A.1.
   (2)  “Resident” means the same as defined in section 282.1, subsection 2.
   2.  a.  By January 31 preceding the school year for which the education scholarship is requested, the parent or guardian of the pupil requesting to receive an education scholarship shall submit an application to the department of management, on application forms developed by the department of management, indicating that the parent or guardian intends to enroll the pupil in a nonpublic school or place the pupil under private instruction.
   (1)  In addition to such information deemed appropriate by the department of management, the application shall require certification from the nonpublic school of the pupil’s enrollment for the applicable school year or a statement from the intended provider of private instruction for the pupil for the applicable school year.
   (2)  Applications submitted for pupils, other than those eligible to enroll in kindergarten, shall include evidence of the pupil’s completion and performance on each statewide assessment administered to the pupil required by the pupil’s nonpublic school or, for pupils receiving private instruction, that the parent or guardian has satisfied the provisions of section 299A.3, subsections 1, 2, and 3. To receive an education scholarship, completion of all reports and evaluations described under section 299A.3, subsections 1, 2, and 3, is required for each pupil receiving private instruction.
   b.  By March 1 preceding the school year for which the education scholarship is requested, the department of management shall notify the parent or guardian of each pupil approved for the following school year to receive an education scholarship and the amount of the education scholarship for the pupil.
   c.  Education scholarships shall only be approved for one school year and applications must be submitted annually for education scholarships in subsequent school years.
   3.  The department of management shall assign each pupil an education scholarship in an amount equal to eighty percent of the regular program state cost per pupil for the same school year.
   4.  An education scholarship account fund is created in the state treasury under the control of the department of management consisting of moneys appropriated to the department of management for the purpose of providing education scholarships under this section. For the fiscal year commencing July 1, 2021, and each succeeding fiscal year, there is appropriated from the general fund of the state to the department of management to be credited to the fund the amount necessary to pay all education scholarships approved for that fiscal year. The director of the department of management has all powers necessary to carry out and effectuate the purposes, objectives, and provisions of this section pertaining to the fund, including the power to do all of the following:
   a.  Make and enter into contracts necessary for the administration of the fund.
   b.  Procure insurance against any loss in connection with the assets of the fund or require a surety bond.
   c.  Contract with a private financial management firm to manage the fund, in collaboration with the treasurer of state, including providing for the disbursement of education scholarships in the form of an electronic debit card or checks that are payable directly from the pupil’s account within the fund.
   d.  Conduct audits or other reviews necessary to properly administer the program.
   e.  Adopt rules under chapter 17A for the administration of the fund and accounts within the fund.
   5.  a.  For each pupil approved for an education scholarship, the department of management shall establish an account for that pupil in the education scholarship account fund. Unless already made available to the parent or guardian under paragraph “b”, the amount of the pupil’s education scholarship shall be deposited into the pupil’s account on July 1, and such amount shall be immediately available to the parent or guardian for the payment of qualified educational expenses incurred by the parent or guardian for the pupil during that fiscal year using the payment method authorized under subsection 4, paragraph “c”.
   b.  Upon written request of the parent or guardian, the amount of the pupil’s education scholarship shall be deposited into the pupil’s account and be made available as soon as practicable after the department of management provides notice under subsection 2, paragraph “b”, if qualified educational expenses for the pupil for the applicable school year are due prior to July 1 of the school year.
   c.  A nonpublic school or a provider of private instruction that accepts payment from a parent or guardian using funds from a pupil’s account in the education scholarship account fund shall not refund, rebate, or share any portion of such payment with the parent, guardian, or pupil.
   d.  Moneys remaining in a pupil’s account upon conclusion of the fiscal year shall remain in the pupil’s account in the education scholarship account fund for the payment of qualified educational expenses in future fiscal years during which the pupil participates in the program or for payment to the pupil as provided under subsection 8.
   6.  For purposes of this section, “qualified educational expenses” includes tuition and fees at a nonpublic school, textbooks, fees or payments for educational therapies, including tutoring or cognitive skills training, curriculum fees and materials for a course of study for a specific subject matter or grade level, tuition or fees for nonpublic online education programs, education materials and services for pupils with disabilities, including the cost of paraprofessionals and assistants who are trained in accordance with state law, standardized test fees, and other expenses incurred by the parent or guardian that are directly related to the education of the pupil under private instruction or at an accredited nonpublic school.
   7.  A person who makes a false claim for the purpose of obtaining an education scholarship provided for in this section or who knowingly receives the scholarship or makes a payment from an account within the education scholarship account fund without being legally entitled to do so is guilty of a fraudulent practice under chapter 714. The false claim for an education scholarship or a payment from an account shall be disallowed. If amounts from the scholarship have been disbursed from the applicable account in the education scholarship account fund, the department of management shall initiate legal proceedings to recover such amounts. A parent or guardian who commits a fraudulent practice under this subsection is prohibited from participating in the education scholarship program in the future.
   8.  For each pupil with a positive balance in the pupil’s account in the education scholarship account fund upon graduation from high school or completion of an equivalent level of private instruction, the department of management shall pay such amount from the pupil’s account to the pupil within thirty days of the graduation or completion of instruction or the pupil’s eighteenth birthday, whichever is later.
    Sec. 4.  Section 422.7, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  48.  Subtract, to the extent included, the amount of an education scholarship under section 257.11B received by the taxpayer for payment of qualified educational expenses or paid to the taxpayer under section 257.11B, subsection 8.
    Sec. 5.  APPLICABILITY.  The following applies to school budget years and fiscal years beginning on or after July 1, 2021:
   1.  The section of this Act amending section 257.6.
   2.  The section of this Act enacting section 257.11B.
    Sec. 6.  APPLICABILITY.  The following applies to tax years beginning on or after January 1, 2021:
   The section of this Act enacting section 422.7, subsection 48.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill provides education scholarships for pupils attending a nonpublic school or receiving private instruction and establishes an education scholarship account fund.
   Under the bill, pupils who are eligible to enroll in kindergarten through grade 12 and who attend a nonpublic school or are placed under private instruction under Code chapter 299A are eligible to receive an education scholarship. The parent or guardian of the pupil requesting to receive an education scholarship must submit an application to the department of management indicating that the parent or guardian intends to enroll the pupil in a nonpublic school or provide private instruction. To receive an education scholarship, completion of all reports and evaluations under Code section 299A.3 (1), (2), and (3), is required for each pupil receiving private instruction.
   The bill requires that by March 1 preceding the school year for which the education scholarship is requested, the department of management must notify the parent or guardian of each pupil approved for the following school year to receive an education scholarship and the amount of the scholarship for the pupil. Education scholarships must be approved for each school year and applications must be submitted each year.
   The amount of the education scholarship is equal to 80 percent of the regular program district cost per pupil for the same school budget year. 
   The bill creates an education scholarship fund in the state treasury under the control of the department of management consisting of moneys appropriated to the department of management for the purpose of providing education scholarships. For the fiscal year commencing July 1, 2021, and each succeeding fiscal year, there is appropriated from the general fund of the state to the department of management for deposit in the fund the amount necessary to pay all education scholarships approved for that fiscal year. For each pupil approved for an education scholarship, the department of management must establish an account for that pupil in the education scholarship account fund. The amount of the pupil’s education scholarship is deposited into the pupil’s account on July 1 and such amount is available for use by parents and guardians for the payment of qualified educational expenses, as defined in the bill, incurred by the parent or guardian for the pupil during that fiscal year.
   Upon written request of the parent or guardian, the amount of the pupil’s education scholarship shall be deposited into the pupil’s account and be made available as soon as practicable after the notice of receipt of the scholarship is given to the parent or guardian if qualified educational expenses for the pupil for the applicable school year are due prior to July 1 of the school year.
   The bill authorizes the department of management to contract with a private financial management firm to manage the education scholarship account fund, in collaboration with the treasurer of state, including providing for the disbursement of education scholarships in the form of an electronic debit card or checks that are payable directly from the pupil’s account within the fund.
   The bill provides that moneys remaining in a pupil’s account upon the conclusion of the fiscal year shall remain in the pupil’s account in the education scholarship fund for the payment of qualified educational expenses in future fiscal years during which the pupil participates in the program or for payment to the pupil as authorized in the bill.
   Under the bill, for each pupil with a positive balance in the pupil’s account upon graduation from high school or completion of an equivalent level of private instruction, the department of management is required to pay such amount to the pupil based on timelines established in the bill. 
   The bill provides that a person who makes a false claim for the purpose of obtaining an education scholarship or who knowingly receives the scholarship or makes a payment from an account within the fund without being legally entitled to do so is guilty of a fraudulent practice and is subject to a criminal penalty. The bill allows the department of management to initiate legal proceedings to recover scholarships and amounts improperly awarded or paid from accounts.
   The bill provides that for public school enrollment counts under Code section 257.6, resident pupils who are participating in the education scholarship account program and either receiving private instruction or enrolled in an accredited nonpublic school shall be counted as two-tenths of one pupil.
   The bill provides that an education scholarship received by a taxpayer or amounts paid to the pupil are not taxable income for purposes of state individual income taxation. This provision of the bill applies to tax years beginning on or after January 1, 2021.
   The section of the bill enacting the education savings account program and the section of the bill establishing enrollment values for public school district funding under Code section 257.6 apply to school budget years and fiscal years beginning on or after July 1, 2021.