SF 547 (LSB 2481SV (2) 88)

SENATE FILE 547

BY  COMMITTEE ON EDUCATION

(SUCCESSOR TO SF 372)

A BILL FOR

An Act relating to education savings grants for certain pupils attending an accredited nonpublic school or specified public schools, 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:

    Section 1.  Section 256.7, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  34.  Adopt rules relating to applications for an education savings grant pursuant to section 257.11B, including application processing timelines and information required to be submitted by a parent or guardian.
    Sec. 2.  NEW SECTION.  257.11B  Education savings grant program.
   1.  Pupils with an individual education plan developed in accordance with chapter 256B or who are considered to have a disability according to section 504 of the federal Rehabilitation Act and the federal Americans with Disabilities Act and who are eligible to enroll in grades kindergarten through twelve and who are either attending an accredited nonpublic school or, following a denial of a request for open enrollment under section 282.18, are attending and paying tuition at a public school other than the pupils’ district of residence shall be eligible to receive an education savings grant in the manner provided in this section for school years beginning on or after July 1, 2020. 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 educational expenses as provided in this section.
   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 education, on application forms developed by the department of education.
   (2)  In addition to information deemed appropriate by the department of education, the application shall require certification from the accredited nonpublic or public 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 education shall notify the department of management of the number of pupils in each school district designated for the following school year to receive an education savings grant and the amount of the education savings grant for each pupil. The department of education shall also notify the parent or guardian of each pupil who is approved to receive an education savings grant and the amount of the grant.
   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.  a.  The department of management shall assign each pupil an education savings grant in an amount equal to the product of the pupil’s weighted enrollment that would otherwise be assigned to the pupil under this chapter if the pupil was enrolled in the pupil’s district of residence multiplied by the difference between eighty-seven and five-tenths percent of the regular program state cost per pupil and the statewide average regular program state foundation property tax per pupil in the same school year.
   b.  The department of management shall on July 1 following the determination of the amount of the education savings grant for each approved pupil transfer such amounts to the pupil’s account in the education savings grant fund established under subsection 4. Such amount shall be available to the pupil’s parent or guardian in the manner authorized under subsection 4, paragraph “c”, for the payment of qualified educational expenses incurred by such persons for the pupil during that school 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, 2020, 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 pursuant to chapter 17A 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 determined under subsection 3 shall be deposited into the pupil’s account on July 1, and such amount shall be immediately available 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.  An accredited nonpublic or public 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 a pupil’s account upon conclusion of the fiscal year shall remain in the pupil’s account in the education savings grant fund for the payment of qualified educational expenses in future fiscal years or for the payment of qualified higher education expenses under subsection 8.
   6.  For purposes of this section, “qualified educational expenses” includes tuition and fees at an accredited nonpublic or public 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, fees required by the department of education not to exceed for each grant recipient five percent of the total grant amount in any fiscal year, qualified higher education expenses, as defined in section 12D.1, subsection 2, paragraph “k”, 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 an accredited nonpublic school, including a nonpublic school accredited by an independent accrediting agency approved by the department of education. “Qualified educational expenses” do 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 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. If amounts from the grant have been disbursed from the applicable account in the education savings grant fund, the department of management shall initiate legal proceedings to recover such amounts. A parent or guardian, or a pupil for purposes of subsection 8, who commits a fraudulent practice under this subsection is prohibited from participating in the education savings grant program in the future.
   8.  a.  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 such account in the fund until the pupil is twenty-three years of age. Following graduation from high school until the pupil is twenty-three years of age, moneys in the pupil’s account may be used for qualified higher education expenses, as defined in section 12D.1, subsection 2, paragraph “k”, 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 higher education expenses shall be made in the same manner as payments for qualified educational expenses under subsection 5. Moneys in a pupil’s account when the pupil turns twenty-three years of age shall be transferred by the department of management for deposit in the general fund of the state.
   b.  Notwithstanding the age limitation in paragraph “a”, if the pupil with a positive balance in the pupil’s account in the education savings grant fund upon graduation from high school serves on federal active duty, other than training, and is discharged under honorable conditions, the limitation date otherwise applicable under paragraph “a” shall be extended by one year for each year of federal active duty service by the pupil, but not to a date after the pupil’s twenty-seventh birthday.
   9.  This section shall not be construed to authorize the state or any political subdivision of the state to exercise authority over any accredited nonpublic school or construed to require an accredited nonpublic school to modify its 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. An accredited 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 or the department of education to implement this section that impose an undue burden on an accredited nonpublic school are invalid.
    Sec. 3.  Section 422.7, Code 2019, 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 educational expenses.
    Sec. 4.  APPLICABILITY.  This Act applies to school budget years and fiscal years beginning on or after July 1, 2020.
    Sec. 5.  APPLICABILITY.  The section of this Act enacting section 422.7, subsection 48, applies to tax years beginning on or after January 1, 2020.
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 savings grants for certain pupils attending accredited nonpublic schools or specified public schools if certain conditions are met and establishes an education savings grant fund.
   Under the bill, pupils with an individual education plan or who are considered to have a disability according to specified federal laws and who are eligible to enroll in grades kindergarten through 12 and who are either attending an accredited nonpublic school or, following a denial of a request for open enrollment, are attending and paying tuition at a public school other than the pupils’ district of residence, are eligible to receive an education savings grant in school years beginning on or after July 1, 2020, for the payment of qualified educational expenses, as defined in the bill. 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 education.
   The bill requires that by March 1 preceding the school year for which the education savings grant is requested, the department of education must notify the department of management of the number of pupils in each school district designated for the following school year to receive an education savings grant and the amount of the education savings grant for each pupil. Education savings grants may only be approved for one school year and annual applications must be submitted for education savings grants in subsequent school years. 
   The amount of each education savings grant is equal to the product of the pupil’s weighted enrollment that would otherwise be assigned to the pupil if the pupil was enrolled in the pupil’s district of residence multiplied by the difference between 87.5 percent of the regular program state cost per pupil and the statewide average regular program state foundation property tax per pupil in the same school 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, 2020, and each succeeding fiscal year, the bill appropriates 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 educational expenses 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 a pupil’s account upon the conclusion of the fiscal year shall remain in the pupil’s account in the education savings grant fund for the payment of qualified educational expenses in future fiscal years or for qualified higher 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 higher 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 within 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 allows the department of management to initiate legal proceedings to recover grants and amounts improperly awarded or paid from accounts under the bill.
   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, 2020.
   The bill applies to school budget years and fiscal years beginning on or after July 1, 2020.