SF 2206 (LSB 5515XS (6) 88)

SENATE FILE 2206

BY  CARLIN

A BILL FOR

An Act establishing an education savings grant program for certain pupils attending a nonpublic school, establishing an education savings grant fund, providing an income tax exemption, making appropriations, providing penalties, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
SHORT TITLE

    Section 1.  SHORT TITLE.  This Act shall be known and may be cited as the “Iowa Student Opportunity Act”.
DIVISION II
EDUCATION SAVINGS GRANTS

    Sec. 2.  Section 8.6, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  17.  To adopt rules relating to the administration of and applications for the education savings grant program pursuant to section 257.11B, including but not limited to application processing timelines and information required to be submitted by a parent or guardian.
    Sec. 3.  NEW SECTION.  257.11B  Education savings grant program.
   1.  a.  For the school budget year beginning July 1, 2021, and each succeeding school budget year, the following resident pupils who are attending a nonpublic school, as defined in section 285.16, located in this state and who maintain enrollment for the entirety of the required attendance period of the school year shall be eligible to receive an education savings grant in the manner provided in this section:
   (1)  A pupil eligible to enroll in grade one through grade twelve if the pupil has attended a public school identified for comprehensive support and improvement under the federal Every Student Succeeds Act, Pub. L. No. 114-95, for the equivalent of the two semesters immediately preceding the school budget year for which the education savings grant is requested and if the pupil is not otherwise ineligible under this section.
   (2)  A pupil who received an education savings grant for the immediately preceding school budget year, who is eligible to enroll in grade one through grade twelve, and who is not otherwise ineligible under this section.
   b.  Education savings grants shall be made available to parents and guardians in the manner authorized under subsection 4, paragraph “c”, for the payment of qualified grant expenses as provided in this section.
   c.  For purposes of this subsection, “resident” means the same as defined in section 282.1.
   2.  a.  (1)  By January 31 preceding the school year for which the education savings grant is requested, the parent or guardian of the pupil requesting to receive an education savings grant 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 for the entirety of the school year.
   (2)  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 following school year.
   b.  By March 1 preceding the school year for which the education savings grant 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 savings grant and the amount of the education savings grant for the pupil.
   c.  Education savings grants shall only be approved for one school year and applications must be submitted annually for education savings grants in subsequent school years. 
   3.  The department of management shall assign each pupil an education savings grant in an amount equal to sixty percent of the regular program state cost per pupil for the same school budget year.
   4.  An education savings grant 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 savings grants 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 savings grants 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 savings grants 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 review necessary to properly administer the program.
   e.  Adopt rules for the administration of the fund and accounts within the fund.
   5.  a.  For each pupil approved for an education savings grant, the department of management shall establish an account for that pupil in the education savings grant fund. The amount of the pupil’s education savings grant shall be deposited into the pupil’s account on July 1, and such amount shall be immediately available for the payment of qualified grant 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.  A nonpublic school that accepts payment from a parent or guardian using funds from a pupil’s account in the education savings grant fund shall not refund, rebate, or share any portion of such payment with the parent, guardian, or pupil.
   c.  Moneys remaining in an eligible pupil’s account upon conclusion of the fiscal year shall remain in the eligible pupil’s account in the education savings grant fund for the payment of qualified grant expenses in future fiscal years during which the pupil participates in the program or for the payment of higher education costs that are qualified education expenses as provided under subsection 8.
   6.  a.  For purposes of this section, “qualified grant 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, qualified education expenses, as defined in section 12D.1, excluding room and board expenses, and other expenses incurred by the parent or guardian that are directly related to the education of the pupil at a nonpublic school, including a nonpublic school accredited by an independent accrediting agency approved by the department of education.
   b.  “Qualified grant expenses” does not include transportation costs for the pupil, the cost of food or refreshments consumed by the pupil, the cost of clothing for the pupil, or the cost of disposable materials, including but not limited to paper, notebooks, pencils, pens, and art supplies.
   7.  a.  A person who makes a false claim for the purpose of obtaining an education savings grant provided for in this section or who knowingly receives the grant or makes a payment from an account within the education savings grant fund without being legally entitled to do so is guilty of a fraudulent practice under chapter 714. The false claim for an education savings grant or a payment from an account shall be disallowed. The department of management shall also close the pupil’s account in the education savings grant fund and transfer any remaining moneys in the account for deposit in the general fund of the state. If the improperly obtained amounts from the grant have been disbursed from the applicable account in the education savings grant fund, the department of management shall recover such amounts from the parent or guardian, or from the pupil for purposes of subsection 8, including by initiating legal proceedings to recover such amounts, if necessary. A parent or guardian, or a pupil for purposes of subsection 8, who commits a fraudulent practice under this section is prohibited from participating in the education savings grant program in the future.
   b.  If, prior to the end of the required attendance period of the school year, a pupil who receives an education savings grant withdraws from enrollment in the nonpublic school or is expelled, the nonpublic school shall notify the department of management in writing of the pupil’s withdrawal or expulsion, and the pupil’s parent or guardian shall notify the department of management of the pupil’s withdrawal or expulsion from the nonpublic school. A pupil’s expulsion from the nonpublic school prior to the end of the required attendance period for the school year shall invalidate the pupil’s eligibility for the education savings grant for the school budget year. A pupil’s withdrawal from a nonpublic school prior to the end of the required attendance period of the school year shall invalidate the pupil’s eligibility for the education savings grant for the school budget year unless the withdrawal is the result of a change in residence of the pupil and the pupil, following written notice by the parent or guardian and certification by the new nonpublic school to the department of management, enrolls in a different nonpublic school in this state for the remainder of the school year.
   c.  (1)  Upon receipt of a notice of expulsion under paragraph “b”, the department of management shall close the pupil’s account in the education savings grant fund and transfer any remaining moneys in the account for deposit in the general fund of the state. In addition, if amounts from the grant for the school budget year during which the pupil is expelled have been disbursed from the expelled pupil’s account in the education savings grant fund, the department of management shall recover such amounts from the parent or guardian, including by initiating legal proceedings to recover such amounts, if necessary.
   (2)  Upon receipt of a notice of withdrawal under paragraph “b” and a determination that the pupil’s withdrawal was not the result of a change in residence, the department of management shall cease disbursements of remaining moneys in the pupil’s account in the education savings grant fund and maintain the pupil’s account if and until such time that the pupil uses the funds for qualified education expenses under subsection 8. In addition, if amounts from the grant for the school budget year during which the withdrawal occurs have been disbursed from the pupil’s account in the education savings grant fund, the department of management shall recover such amounts from the parent or guardian to the extent the amount disbursed exceeds the amount of the grant proportionate to the remaining portion of the school year following the withdrawal, including by initiating legal proceedings to recover such amounts, if necessary. 
   (3)  Upon receipt of a notice of withdrawal under paragraph “b” and a determination that the withdrawal was the result of a change in residence but that the pupil did not enroll in a different nonpublic school in this state for the remainder of the school year, the department of management shall cease disbursements of remaining moneys in the pupil’s account in the education savings grant fund and maintain the pupil’s account if and until such time that the pupil uses the funds for qualified education expenses under subsection 8.
   (4)  If a pupil’s eligibility is invalidated under the provisions of paragraph “b”, the pupil shall be ineligible for an education savings grant for the following school budget year under subsection 1, paragraph “a”, subparagraph (2).
   8.  For each pupil with a positive balance in the pupil’s account in the education savings grant fund upon graduation from high school, the department of management shall maintain the account in the fund until the pupil is twenty-five years of age. Following graduation from high school until the pupil is twenty-five years of age, moneys in the pupil’s account may be used for qualified education expenses, as defined in section 12D.1, incurred by the pupil while attending an institution of higher education under the control of the state board of regents, a community college located in this state, or a private college or university located in this state. Payments from a pupil’s account for qualified education expenses shall be made in the same manner as payments for qualified grant expenses under subsection 5. Moneys in a pupil’s account when the pupil turns twenty-five years of age shall be transferred by the department of management for deposit in the general fund of the state.
   9.  This section shall not be construed to authorize the state or any political subdivision of the state to exercise authority over any nonpublic school or construed to require a nonpublic school to modify its academic standards for admission or educational program in order to receive payment from a parent or guardian using funds from a pupil’s account in the education savings grant fund. A nonpublic school that accepts payment from a parent or guardian using funds from a pupil’s account in the education savings grant fund is not an agent of this state or of a political subdivision of this state. Rules adopted by the department of management to implement this section that impose an undue burden on a nonpublic school are invalid.
    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 savings grant under section 257.11B received by the taxpayer for payment of qualified grant expenses.
    Sec. 5.  APPLICABILITY.  The following applies to school budget years and fiscal years beginning on or after July 1, 2021:
   The section of this division 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 division 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 establishes an education savings grant program for certain pupils attending a nonpublic school.
   Division I of the bill provides that the Act shall be known and may be cited as the “Iowa Student Opportunity Act”.
   Under Division II of the bill, the following pupils who attend a nonpublic school in this state and who maintain enrollment for the entirety of the required attendance period of the school year are eligible to receive an education savings grant: (1) a pupil eligible to enroll in grade 1 through grade 12 if the pupil has attended a public school identified for comprehensive support and improvement under federal law for the equivalent of the two immediately preceding semesters; or (2) a pupil who received an education savings grant for the immediately preceding school budget year and who is eligible to enroll in grade 1 through grade 12. By January 31 preceding the school year for which the education savings grant is requested, the parent or guardian of the pupil requesting to receive an education savings grant must submit an application to the department of management indicating that the parent or guardian intends to enroll the pupil in a nonpublic school for the entirety of the school year.
   The bill requires that by March 1 preceding the school year for which the education savings grant 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 savings grant and the amount of the education savings grant for the pupil, as specified in the bill. Education savings grants must be approved for each school year and applications must be submitted each year.
   The bill creates an education savings grant 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 savings grants. 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 savings grants approved for that fiscal year. For each pupil approved for an education savings grant, the department of management must establish an account for that pupil in the education savings grant fund. The amount of the pupil’s education savings grant 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 grant expenses, as defined in the bill, incurred by the parent or guardian for the pupil during that fiscal year. 
   The bill authorizes the department of management to contract with a private financial management firm to manage the education savings grant fund, in collaboration with the treasurer of state, including providing for the disbursement of education savings grants 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 an eligible pupil’s account upon the conclusion of the fiscal year shall remain in the eligible pupil’s account in the education savings grant fund for the payment of qualified grant expenses in future fiscal years during which the pupil participates in the program or for higher education costs that are qualified education expenses as authorized in the bill. 
   Under the bill, for each pupil with a positive balance in the pupil’s account in the education savings grant fund upon graduation from high school, the department of management is required to maintain the account in the fund until the pupil reaches an age specified in the bill. Until the pupil reaches the age limitation, moneys in the pupil’s account may be used by the pupil for qualified education expenses, as defined in Code section 12D.1. Moneys in a pupil’s account when the pupil reaches the age limitation are transferred by the department of management for deposit in the general fund of the state.
   The bill provides that a person who makes a false claim for the purpose of obtaining an education savings grant or who knowingly receives the grant or makes a payment from an account in the education savings grant fund without being legally entitled to do so is guilty of a fraudulent practice and is subject to a criminal penalty. The bill directs the department of management to recover grants and amounts improperly awarded or paid and requires the closure of the pupil’s account and transfer of all remaining moneys to the general fund of the state. The bill also establishes requirements and procedures for parents or guardians and for the department of management when a pupil receiving an education savings grant withdraws or is expelled from the nonpublic school prior to the end of the required attendance period of the school year, including requirements for disposition of the pupil’s account within the education savings grant fund and recovery of grant funds.
   The bill provides that an education savings grant received by a taxpayer is 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 grant program applies to school budget years and fiscal years beginning on or after July 1, 2021.