HF 2324 (LSB 5925YH (3) 84)

HOUSE FILE 2324

BY  LUKAN

A BILL FOR

An Act providing education savings grants for certain pupils attending an accredited nonpublic school or receiving competent private instruction, establishing an education savings grant fund, making appropriations, providing penalties, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 12D.3, subsection 1, paragraph a, Code 2011, is amended to read as follows:
   a.  Each participation agreement may require a participant to agree to invest a specific amount of money in the trust for a specific period of time for the benefit of a specific beneficiary. A participant shall not be required to make an annual contribution on behalf of a beneficiary. The maximum contribution that may be deducted for Iowa income tax purposes shall not exceed two thousand dollars per beneficiary per year adjusted annually to reflect increases in the consumer price index.

A contribution to an account that is the result of a transfer from an account in the education savings grant fund under section 257.11B shall not be considered a contribution that may be deducted for Iowa income tax purposes. The treasurer of state shall set an account balance limit to maintain compliance with section 529 of the Internal Revenue Code. A contribution shall not be permitted to the extent it causes the aggregate balance of all accounts established for the same beneficiary to exceed the applicable account balance limit.
    Sec. 2.  Section 256.7, Code Supplement 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  31.  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. 3.  Section 257.6, subsection 1, paragraph a, Code 2011, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (8)  Resident pupils receiving an education savings grant pursuant to section 257.11B and not included in the actual enrollment under another provision of this paragraph.
    Sec. 4.  NEW SECTION.  257.11B  Education savings grant program.
   1.  Pupils eligible to enroll in grades kindergarten through twelve and attending an accredited nonpublic school or receiving competent private instruction under chapter 299A 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, 2013. Education savings grants shall be available for disbursement to parents and guardians for the payment of qualified education 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, indicating that the parent or guardian intends to enroll the pupil in an accredited nonpublic school or provide competent private instruction for the pupil under chapter 299A.
   (2)  In addition to such information deemed appropriate by the department of education, the application shall require the following information:
   (a)  Certification from the accredited nonpublic school of the pupil’s enrollment for the following school year or a statement indicating the parent or guardian’s intent to provide or arrange for competent private instruction for the pupil for the following school year.
   (b)  Certification from the parent or guardian of the pupil that an account has been established in the pupil’s name in the Iowa education savings plan trust pursuant to chapter 12D.
   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 such pupils who are approved to receive an education savings grant.
   c.  Education savings grants shall only be approved for one school year and applications must be submitted under paragraph “a” for education savings grants in subsequent school years. 
   3.
  a.  (1)  The department of management shall assign each pupil an education savings grant in an amount equal to one of the following:
   (a)  For pupils that meet the income eligibility requirement for free and reduced price meals under the federal National School Lunch Act and the federal Child Nutrition Act of 1966, 42 U.S.C. § 1751-1785, one hundred percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year.
   (b)  For pupils from a household with an income that is greater than the income eligibility requirement for free and reduced price meals under the federal National School Lunch Act and the federal Child Nutrition Act of 1966, 42 U.S.C. § 1751-1785, but that is less than one hundred fifty percent of such income eligibility requirement, seventy-five percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year.
   (c)  For pupils from a household with an income that is equal to or greater than one hundred fifty percent of the income eligibility requirement for free and reduced price meals under the federal National School Lunch Act and the federal Child Nutrition Act of 1966, 42 U.S.C. § 1751-1785, but that is less than two hundred percent of such income eligibility requirement, fifty percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year.
   (d)  For pupils from a household with an income that is equal to or greater than two hundred percent of the income eligibility requirement for free and reduced price meals under the federal National School Lunch Act and the federal Child Nutrition Act of 1966, 42 U.S.C. § 1751-1785, but that is less than two hundred fifty percent of such income eligibility requirement, twenty-five percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year.
   (2)  The department of management, in consultation with the department of education, shall reduce the September payment to the pupil’s school district of residence otherwise payable pursuant to section 257.16 for the school budget year by an amount equal to the education savings grant awarded to the pupil for that budget 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 Iowa education savings grant fund established under subsection 4. Such amount shall be available for disbursement to the pupil’s parent or guardian for the payment of qualified educational expenses incurred by such persons for the pupil during that school year.
   4.  An Iowa 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 for the purpose of providing education savings grants under this section. For the fiscal year commencing July 1, 2013, and each succeeding fiscal year, there is appropriated from the general fund of the state to the department of management 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.

   c.  Make disbursements from a pupil’s account within the fund to the pupil’s parents or guardians for the payment of qualified educational expenses.
   d.  Make transfers to pupils’ Iowa education savings plan trust accounts established under chapter 12D. 
   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 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 disbursement to parents and guardians upon filing and approval of claims from the pupil’s account for qualified education expenses incurred by the parent or guardian for the pupil during that fiscal year.
   b.  A parent or guardian of a pupil may on forms prescribed by the department of management submit claims for disbursements of moneys within the account. The department may by rule designate the appropriate supporting documentation necessary for the disbursement of moneys in an account including but not limited to invoices of amounts due and receipts of amounts paid for qualified education expenses.
   c.  The department of management shall upon conclusion of the fiscal year and disbursement of all claims submitted by a parent or guardian before conclusion of the fiscal year transfer any remaining amounts in the pupil’s account within the education savings grant fund to the pupil’s Iowa education savings plan trust account pursuant to chapter 12D.
   6.  For purposes of this section, “qualified educational expense” includes tuition and fees at an accredited nonpublic school, textbooks, payment to a licensed or accredited tutor, curriculum materials, tuition or fees for nonpublic online education programs, education materials and services for pupils with disabilities, standardized test fees, and other expenses incurred by the parent or guardian that are directly related to the education of the pupil at an accredited nonpublic school or directly related to providing competent private instruction for the pupil under chapter 299A.
   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 without being legally entitled to it is guilty of a fraudulent practice. The false claim for an education savings grant shall be disallowed and if amounts from the grant have been disbursed from the applicable account in the education savings grant fund or transferred to an Iowa education savings plan trust account under chapter 12D, the department of management shall initiate legal proceedings to recover such amounts.
    Sec. 5.  APPLICABILITY.  This Act applies to school budget years and fiscal years beginning on or after July 1, 2013.
EXPLANATION
   This bill provides education savings grants for certain pupils attending an accredited nonpublic school or receiving competent private instruction and establishes an education savings grant fund.
   Under the bill, pupils eligible to enroll in grades kindergarten through 12 and attending an accredited nonpublic school or receiving competent private instruction under Code chapter 299A are eligible to receive an education savings grant for school years beginning on or after July 1, 2013. 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 indicating that the parent or guardian intends to enroll the pupil in an accredited nonpublic school or provide competent private instruction for the pupil. As part of the application, the parent or guardian must also certify that an account for the pupil has been established in the Iowa education savings plan trust pursuant to Code chapter 12D (college savings Iowa 529 plan).
   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 applications must be submitted for education savings grants in subsequent school years. 
   The amount of each education savings grant is determined based on the pupil’s household income. For pupils that meet the income eligibility requirement for free and reduced price meals, the grant is equal to 100 percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year. For household incomes greater than the income eligibility requirement for free and reduced price meals but less than 150 percent of such income eligibility requirement, the grant is equal to 75 percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year. For household incomes equal to or greater than 150 percent of the income eligibility requirement for free and reduced price meals, but less than 200 percent of such income eligibility requirement, the grant is equal to 50 percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year. For household incomes equal to or greater than 200 percent of the income eligibility requirement for free and reduced price meals, but less than 250 percent of such income eligibility requirement, the grant is equal to 25 percent of the state foundation aid per pupil received by the pupil’s school district of residence in the same school year.
   The bill creates an Iowa education savings grant fund in the state treasury under the control of the department of management consisting of moneys appropriated to the department for the purpose of providing education savings grants. For the fiscal year commencing July 1, 2013, and each succeeding fiscal year, there is appropriated from the general fund of the state to the department of management 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 educational 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 disbursement to parents and guardians upon filing and approval of claims from the pupil’s account for qualified education expenses, as defined in the bill, incurred by the parent or guardian for the pupil during that fiscal year. 
   The bill requires the department of management to, upon conclusion of the fiscal year and disbursement of all claims submitted by a parent or guardian before conclusion of the fiscal year, transfer any remaining amounts in the pupil’s account to the pupil’s Iowa education savings plan trust account. However, such contributions to a pupil’s Iowa education savings plan trust account are not considered contributions that may be deducted for Iowa income tax purposes under Code section 12D.3.
   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 without being legally entitled to it 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 improperly awarded under the bill.
   Pupils receiving an education savings grant under the bill are counted in the actual enrollment for the pupil’s school district of residence, however, the amount of the grant for each such student is subtracted from the amount of state aid otherwise paid to the school district for that budget year.
   The bill applies to school budget years and fiscal years beginning on or after July 1, 2013.