House File 2126 - Introduced HOUSE FILE 2126 BY HIGHFILL A BILL FOR An Act relating to special education scholarships for children 1 requiring special education attending a nonpublic school, 2 establishing a special education scholarship fund, providing 3 a tax exemption, making appropriations, providing penalties, 4 and including applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5238YH (3) 85 md/sc

H.F. 2126 Section 1. Section 256B.3, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 15A. To adopt rules relating to special 3 education scholarships pursuant to section 256B.16, including 4 rules for application processing timelines, rules for 5 information required to be submitted by a parent or guardian, 6 and rules for designating participating schools. 7 Sec. 2. NEW SECTION . 256B.16 Special education scholarship 8 program. 9 1. Children requiring special education and attending a 10 participating nonpublic school shall be eligible to receive a 11 special education scholarship in the manner provided in this 12 section for school years beginning on or after July 1, 2015. 13 Special education scholarships shall be made available to 14 parents and guardians in the manner authorized under subsection 15 4, paragraph “c” , for the payment of qualified special education 16 expenses as provided in this section. 17 2. a. (1) By January 31 preceding the school year for 18 which the special education scholarship is requested, the 19 parent or guardian of the child requiring special education 20 shall submit an application to the division of special 21 education, on application forms developed by the division, 22 indicating that the parent or guardian intends to enroll the 23 child in a participating nonpublic school. 24 (2) In addition to such information deemed appropriate 25 by the division of special education, the application shall 26 require certification from the participating nonpublic school 27 of the child’s enrollment for the following school year and 28 information relating to the nonpublic school’s compliance with 29 the child’s individualized education program. 30 b. By March 1 preceding the school year for which the 31 special education scholarship is requested, the division of 32 special education shall notify the department of management 33 of the number of children requiring special education in each 34 school district designated for the following school year to 35 -1- LSB 5238YH (3) 85 md/sc 1/ 8

H.F. 2126 receive a special education scholarship. The division shall 1 also notify the parent or guardian of each child requiring 2 special education who is approved to receive a special 3 education scholarship. 4 c. Special education scholarships shall only be approved 5 for one school year and applications must be submitted under 6 paragraph “a” for special education scholarships in subsequent 7 school years. 8 3. a. The department of management shall assign each child 9 approved for a special education scholarship a scholarship 10 amount equal to the product of the regular program state cost 11 per pupil in the same school year times the weighting the 12 child requiring special education would have been assigned 13 under section 256B.9 if the child was enrolled in the child’s 14 district of residence. 15 b. The department of management shall on July 1 following 16 the determination of the amount of the special education 17 scholarship for each approved child, transfer such amount to 18 the child’s account in the special education scholarship fund 19 established under subsection 4. Such amount shall be available 20 to the child’s parent or guardian in the manner authorized 21 under subsection 4, paragraph “c” , for the payment of qualified 22 special education expenses incurred by the child’s parent or 23 guardian for the child during that school year. 24 4. A special education scholarship fund is created in 25 the state treasury under the control of the department of 26 management consisting of moneys appropriated to the department 27 for the purpose of providing special education scholarships 28 under this section. For the fiscal year commencing July 1, 29 2015, and each succeeding fiscal year, there is appropriated 30 from the general fund of the state to the department of 31 management to be credited to the fund the amount necessary 32 to pay all special education scholarships approved for that 33 fiscal year. The director of the department of management has 34 all powers necessary to carry out and effectuate the purposes, 35 -2- LSB 5238YH (3) 85 md/sc 2/ 8

H.F. 2126 objectives, and provisions of this section pertaining to the 1 fund, including the power to do all of the following: 2 a. Make and enter into contracts necessary for the 3 administration of the fund. 4 b. Procure insurance against any loss in connection with the 5 assets of the fund or require a surety bond. 6 c. Contract with a private financial management firm to 7 manage the fund, and shall, in collaboration with the treasurer 8 of state, provide for the disbursement of special education 9 scholarships in the form of an electronic debit card or checks 10 that are payable directly from the child’s account within the 11 fund. 12 d. Conduct audits or other review necessary to properly 13 administer the program. 14 e. Adopt rules for the administration of the fund and 15 accounts within the fund. 16 5. a. For each child requiring special education approved 17 for a special education scholarship, the department of 18 management shall establish an account for that child in the 19 special education scholarship fund. The amount of the child’s 20 special education scholarship determined under subsection 3 21 shall be deposited into the child’s account on July 1 and 22 such amount shall be immediately available for the payment of 23 qualified special education expenses incurred by the parent 24 or guardian for the child during that fiscal year using the 25 payment method authorized under subsection 4, paragraph “c” . 26 b. A participating nonpublic school that accepts payment 27 of funds from a child’s account in the special education 28 scholarship fund shall not refund, rebate, or share any portion 29 of such payment with the parent, guardian, or child. 30 c. Moneys remaining in a child’s account upon conclusion of 31 the fiscal year shall remain in the child’s account within the 32 special education scholarship fund for the payment of qualified 33 special education expenses in future fiscal years until such 34 time that the recipient is no longer eligible for a special 35 -3- LSB 5238YH (3) 85 md/sc 3/ 8

H.F. 2126 education scholarship under this section. 1 6. For purposes of this section: 2 a. “Participating nonpublic school” means a nonpublic 3 school that is determined by the division of special education 4 to be qualified to provide special education to the child 5 requiring special education and that is not receiving funding 6 for providing such special education to the child from moneys 7 derived under section 273.9, this chapter, other than this 8 section, or chapter 257. 9 b. “Qualified special education expenses” includes tuition 10 and fees at a participating nonpublic school, textbooks, fees 11 or payments for educational therapies including tutoring or 12 cognitive skills training, curriculum fees and materials for a 13 course of study for a specific subject matter or grade level, 14 the cost of paraprofessionals and assistants who are trained 15 in accordance with state law, standardized test fees, and fees 16 required by the department of education. “Qualified special 17 education expenses” does not include transportation costs 18 for the child, the cost of food or refreshments consumed by 19 the child, the cost of clothing for the child, or the cost 20 of disposable materials, including but not limited to paper, 21 notebooks, pencils, pens, and art supplies. 22 7. A person who makes a false claim for the purpose of 23 obtaining a special education scholarship provided for in 24 this section or who knowingly receives the scholarship or 25 makes a payment from an account within the special education 26 scholarship fund without being legally entitled to it is 27 guilty of a fraudulent practice. The false claim for a 28 special education scholarship or a payment from an account 29 shall be disallowed and if amounts from the scholarship have 30 been disbursed from the applicable account in the special 31 education scholarship fund, the department of management shall 32 initiate legal proceedings to recover such amounts. A parent 33 or guardian who violates this subsection is prohibited from 34 participating in the special education scholarship program in 35 -4- LSB 5238YH (3) 85 md/sc 4/ 8

H.F. 2126 the future. 1 8. When a special education scholarship recipient ceases 2 to be eligible for a special education scholarship under this 3 section and has a positive balance in the child’s account in 4 the special education scholarship fund, the moneys in a child’s 5 account shall be transferred by the department of management 6 for deposit in the general fund of the state. 7 9. This section shall not be construed to authorize the 8 state or any political subdivision of the state to exercise 9 authority over any nonpublic school or construed to require 10 a nonpublic school to modify its admissions or educational 11 program in order to receive payment from a parent or guardian 12 using funds from a child’s account in the special education 13 scholarship fund. A participating nonpublic school that 14 accepts payment from a parent or guardian using funds from 15 a child’s account in the special education scholarship fund 16 is not an agent of this state or other political subdivision 17 of this state. Rules adopted to implement this section that 18 impose an undue burden on a nonpublic school are invalid. 19 Sec. 3. Section 422.7, Code 2014, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 51. Subtract, to the extent included, 22 the amount of any special education scholarship under section 23 256B.16 received during the tax year by a child for whom the 24 taxpayer is the parent or guardian authorized to spend such 25 scholarship amounts for qualified special education expenses. 26 Sec. 4. APPLICABILITY. This Act applies to school budget 27 years and fiscal years beginning on or after July 1, 2015. 28 Sec. 5. APPLICABILITY. The section of this Act enacting 29 section 422.7, subsection 51, applies to tax years beginning on 30 or after January 1, 2015. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill provides special education scholarships for 35 -5- LSB 5238YH (3) 85 md/sc 5/ 8

H.F. 2126 certain children requiring special education that are attending 1 a participating nonpublic school and establishes a special 2 education scholarship fund. 3 Under the bill, children requiring special education and 4 attending a participating nonpublic school, as defined in the 5 bill, are eligible to receive a special education scholarship 6 for school years beginning on or after July 1, 2015. By 7 January 31 preceding the school year for which the special 8 education scholarship is requested, the parent or guardian 9 of the child requiring special education must submit an 10 application to the division of special education indicating 11 that the parent or guardian intends to enroll the child in a 12 participating nonpublic school. 13 The bill requires that by March 1 preceding the school year 14 for which the special education scholarship is requested, the 15 division of special education must notify the department of 16 management of the number of children in each school district 17 designated for the following school year to receive a special 18 education scholarship. Special education scholarships may 19 only be approved for one school year and applications must be 20 submitted for special education scholarships in subsequent 21 school years. 22 The amount of each special education scholarship is equal 23 to the product of the regular program state cost per pupil in 24 the same school year times the weighting the child requiring 25 special education would have been assigned under Code section 26 256B.9 if the child was enrolled in the child’s district of 27 residence. 28 The bill creates a special education scholarship fund in 29 the state treasury under the control of the department of 30 management consisting of moneys appropriated to the department 31 for the purpose of providing special education scholarships. 32 For the fiscal year commencing July 1, 2015, and each 33 succeeding fiscal year, there is appropriated from the general 34 fund of the state to the department of management for deposit 35 -6- LSB 5238YH (3) 85 md/sc 6/ 8

H.F. 2126 in the fund the amount necessary to pay all special education 1 scholarships approved for that fiscal year. For each child 2 requiring special education that is approved for a special 3 education scholarship, the department of management must 4 establish an account for that child in the special education 5 scholarship fund. The amount of the child’s special education 6 scholarship is deposited into the child’s account on July 1 and 7 such amount is available for use by parents and guardians for 8 the payment of qualified special education expenses, as defined 9 in the bill, incurred by the parent or guardian for the child 10 during that fiscal year. 11 The bill authorizes the director of the department of 12 management to contract with a private financial management firm 13 to manage the special education scholarship fund, and requires 14 the director, in collaboration with the treasurer of state, to 15 provide for the disbursement of special education scholarships 16 in the form of an electronic debit card or checks that are 17 payable directly from the child’s account within the fund. 18 The bill provides that when a special education scholarship 19 recipient ceases to be eligible for a special education 20 scholarship under the bill and has a positive balance in the 21 child’s account in the special education scholarship fund, 22 the moneys in a child’s account shall be transferred by the 23 department of management for deposit in the general fund of the 24 state. 25 The bill provides that a person who makes a false claim 26 for the purpose of obtaining a special education scholarship 27 or who knowingly receives the scholarship or makes a payment 28 from an account within the special education scholarship fund 29 without being legally entitled to it is guilty of a fraudulent 30 practice and is subject to a criminal penalty. The bill allows 31 the department of management to initiate legal proceedings to 32 recover scholarships and amounts improperly awarded or paid 33 from accounts under the bill. 34 The bill provides that moneys from a special education 35 -7- LSB 5238YH (3) 85 md/sc 7/ 8