Senate File 323 - Introduced SENATE FILE 323 BY BEHN , BOETTGER , JOHNSON , ZAUN , HOUSER , KAPUCIAN , GREINER , CHAPMAN , CHELGREN , SORENSON , BERTRAND , ERNST , ANDERSON , FEENSTRA , SINCLAIR , and ROZENBOOM A BILL FOR An Act providing education savings grants for pupils attending 1 a nonpublic school or receiving competent private 2 instruction, establishing an education savings grant fund, 3 making appropriations, providing penalties, and including 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2006XS (7) 85 md/sc

S.F. 323 Section 1. Section 256.7, Code 2013, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 33. Adopt rules relating to applications 3 for an education savings grant pursuant to section 257.11B, 4 including application processing timelines and information 5 required to be submitted by a parent or guardian. 6 Sec. 2. NEW SECTION . 257.11B Education savings grant 7 program. 8 1. Pupils eligible to enroll in grades kindergarten through 9 twelve and attending a nonpublic school or receiving competent 10 private instruction under chapter 299A shall be eligible to 11 receive an education savings grant in the manner provided in 12 this section for school years beginning on or after July 1, 13 2014. Education savings grants shall be made available to 14 parents and guardians in the manner authorized under subsection 15 4, paragraph “c” , for the payment of qualified education 16 expenses as provided in this section. 17 2. a. (1) By January 31 preceding the school year for 18 which the education savings grant is requested, the parent 19 or guardian of the pupil requesting to receive an education 20 savings grant shall submit an application to the department of 21 education, on application forms developed by the department, 22 indicating that the parent or guardian intends to enroll the 23 pupil in a nonpublic school or provide competent private 24 instruction for the pupil under chapter 299A. 25 (2) In addition to such information deemed appropriate by 26 the department of education, the application shall require 27 certification from the nonpublic school of the pupil’s 28 enrollment for the following school year or a statement 29 indicating the parent or guardian’s intent to provide or 30 arrange for competent private instruction for the pupil for the 31 following school year. 32 b. By March 1 preceding the school year for which the 33 education savings grant is requested, the department of 34 education shall notify the department of management of the 35 -1- LSB 2006XS (7) 85 md/sc 1/ 8

S.F. 323 number of pupils in each school district designated for the 1 following school year to receive an education savings grant 2 and the amount of the education savings grant for each pupil. 3 The department of education shall also notify the parent 4 or guardian of such pupils who are approved to receive an 5 education savings grant. 6 c. Education savings grants shall only be approved for one 7 school year and applications must be submitted under paragraph 8 “a” for education savings grants in subsequent school years. 9 3. a. The department of management shall assign each pupil 10 an education savings grant in an amount equal to the statewide 11 average state foundation aid per pupil in the same school year. 12 b. The department of management shall on July 1 following 13 the determination of the amount of the education savings grant 14 for each approved pupil transfer such amounts to the pupil’s 15 account in the education savings grant fund established under 16 subsection 4. Such amount shall be available to the pupil’s 17 parent or guardian in the manner authorized under subsection 18 4, paragraph “c” , for the payment of qualified educational 19 expenses incurred by such persons for the pupil during that 20 school year. 21 4. An education savings grant fund is created in the state 22 treasury under the control of the department of management 23 consisting of moneys appropriated to the department for the 24 purpose of providing education savings grants under this 25 section. For the fiscal year commencing July 1, 2014, and 26 each succeeding fiscal year, there is appropriated from the 27 general fund of the state to the department of management to be 28 credited to the fund the amount necessary to pay all education 29 savings grants approved for that fiscal year. The director of 30 the department of management has all powers necessary to carry 31 out and effectuate the purposes, objectives, and provisions of 32 this section pertaining to the fund, including the power to do 33 all of the following: 34 a. Make and enter into contracts necessary for the 35 -2- LSB 2006XS (7) 85 md/sc 2/ 8

S.F. 323 administration of the fund. 1 b. Procure insurance against any loss in connection with the 2 assets of the fund or require a surety bond. 3 c. Contract with a private financial management firm to 4 manage the fund, in collaboration with the treasurer of state, 5 including providing for the disbursement of education savings 6 grants in the form of an electronic debit card or checks that 7 are payable directly from the pupil’s account within the fund. 8 d. Conduct audits or other review necessary to properly 9 administer the program. 10 e. Adopt rules pursuant to chapter 17A for the 11 administration of the fund and accounts within the fund. 12 5. a. For each pupil approved for an education savings 13 grant, the department shall establish an account for that 14 pupil in the education savings grant fund. The amount of the 15 pupil’s education savings grant determined under subsection 16 3 shall be deposited into the pupil’s account on July 1 and 17 such amount shall be immediately available for the payment of 18 qualified education expenses incurred by the parent or guardian 19 for the pupil during that fiscal year using the payment method 20 authorized under subsection 4, paragraph “c” . 21 b. A nonpublic school or other entity that accepts payment 22 from a parent or guardian using funds from a pupil’s account in 23 the education savings grant fund shall not refund, rebate, or 24 share any portion of such payment with the parent, guardian, or 25 pupil. 26 c. Moneys remaining in a pupil’s account upon conclusion 27 of the fiscal year shall remain in the pupil’s account within 28 the education savings grant fund for the payment of qualified 29 educational expenses in future fiscal years or for the payment 30 of higher education costs under subsection 8. 31 6. For purposes of this section, “qualified educational 32 expense” includes tuition and fees at a nonpublic school, 33 textbooks, fees or payments for tutoring or cognitive skills 34 training, curriculum materials, tuition or fees for nonpublic 35 -3- LSB 2006XS (7) 85 md/sc 3/ 8

S.F. 323 online education programs, education materials and services for 1 pupils with disabilities, standardized test fees, fees required 2 by the department not to exceed for each grant recipient five 3 percent of the total grant amount in any fiscal year, and other 4 expenses incurred by the parent or guardian that are directly 5 related to the education of the pupil at a nonpublic school, 6 including a nonpublic school accredited by an independent 7 accrediting agency approved by the department of education, or 8 directly related to providing competent private instruction 9 for the pupil under chapter 299A. The cost of one computer or 10 other portable computing device shall be allowed as a qualified 11 educational expense for a pupil if such a purchase has not been 12 made using funds from that pupil’s account in either of the 13 two immediately preceding fiscal years. “Qualified educational 14 expenses” do not include transportation costs for the pupil, the 15 cost of food or refreshments consumed by the pupil, the cost 16 of clothing for the pupil, or the cost of disposable materials 17 including but not limited to paper, notebooks, pencils, pens, 18 and art supplies. 19 7. A person who makes a false claim for the purpose of 20 obtaining an education savings grant provided for in this 21 section or who knowingly receives the grant or makes a payment 22 from an account within the education savings grant fund 23 without being legally entitled to it is guilty of a fraudulent 24 practice. The false claim for an education savings grant or a 25 payment from an account shall be disallowed and if amounts from 26 the grant have been disbursed from the applicable account in 27 the education savings grant fund, the department of management 28 shall initiate legal proceedings to recover such amounts. A 29 parent or guardian, or a pupil for purposes of subsection 8, 30 who violates this subsection is prohibited from participating 31 in the education savings grant program in the future. 32 8. For each pupil with a positive balance in the pupil’s 33 account in the education savings grant fund upon graduation 34 from high school or completion of an equivalent level of 35 -4- LSB 2006XS (7) 85 md/sc 4/ 8

S.F. 323 competent private instruction under chapter 299A, the 1 department of management shall maintain such account in the 2 fund until the pupil is twenty-five years of age. Following 3 graduation from high school until the pupil is twenty-five 4 years of age, moneys in the pupil’s account may be used for 5 higher education costs, as defined in section 12D.1, subsection 6 2, incurred by the pupil while attending an institution of 7 higher education under the control of the state board of 8 regents, a community college located in this state, or a 9 private college or university located in this state. Payments 10 from a pupil’s account for higher education costs shall be 11 made in the same manner as payments for qualified educational 12 expenses under subsection 5. Moneys in a pupil’s account when 13 the pupil turns twenty-five years of age shall be transferred 14 by the department for deposit in the general fund of the state. 15 9. This section shall not be construed to authorize this 16 state or any political subdivision of this state to exercise 17 authority over any nonpublic school or pupil receiving 18 competent private instruction under chapter 299A or construed 19 to require a nonpublic school to modify its admissions or 20 educational program in order to receive payment from a parent 21 or guardian using funds from a pupil’s account in the education 22 savings grant fund. A nonpublic school or entity providing 23 competent private instruction under chapter 299A, that accepts 24 payment from a parent or guardian using funds from a pupil’s 25 account in the education savings grant fund is not an agent of 26 this state or other political subdivision of this state. Rules 27 adopted by the department to implement this section that impose 28 an undue burden on a nonpublic school or entity providing 29 competent private instruction under chapter 299A are invalid. 30 Sec. 3. APPLICABILITY. This Act applies to school budget 31 years and fiscal years beginning on or after July 1, 2014. 32 EXPLANATION 33 This bill provides education savings grants for pupils 34 attending a nonpublic school or receiving competent private 35 -5- LSB 2006XS (7) 85 md/sc 5/ 8

S.F. 323 instruction and establishes an education savings grant fund. 1 Under the bill, pupils eligible to enroll in grades 2 kindergarten through 12 and attending a nonpublic school or 3 receiving competent private instruction under Code chapter 4 299A are eligible to receive an education savings grant for 5 school years beginning on or after July 1, 2014. By January 31 6 preceding the school year for which the education savings grant 7 is requested, the parent or guardian of the pupil requesting to 8 receive an education savings grant must submit an application 9 to the department of education indicating that the parent or 10 guardian intends to enroll the pupil in a nonpublic school or 11 provide competent private instruction for the pupil. 12 The bill requires that by March 1 preceding the school 13 year for which the education savings grant is requested, 14 the department of education must notify the department of 15 management of the number of pupils in each school district 16 designated for the following school year to receive an 17 education savings grant and the amount of the education savings 18 grant for each pupil. Education savings grants may only be 19 approved for one school year and applications must be submitted 20 for education savings grants in subsequent school years. 21 The amount of each education savings grant is equal to the 22 statewide average state foundation aid per pupil in the same 23 school year. 24 The bill creates an education savings grant fund in the state 25 treasury under the control of the department of management 26 consisting of moneys appropriated to the department for the 27 purpose of providing education savings grants. For the fiscal 28 year commencing July 1, 2014, and each succeeding fiscal year, 29 there is appropriated from the general fund of the state to the 30 department of management for deposit in the fund the amount 31 necessary to pay all education savings grants approved for that 32 fiscal year. For each pupil approved for an education savings 33 grant, the department of management must establish an account 34 for that pupil in the education savings grant fund. The amount 35 -6- LSB 2006XS (7) 85 md/sc 6/ 8

S.F. 323 of the pupil’s education savings grant is deposited into the 1 pupil’s account on July 1 and such amount is available for use 2 by parents and guardians for the payment of qualified education 3 expenses, as defined in the bill, incurred by the parent or 4 guardian for the pupil during that fiscal year. 5 The bill authorizes the department of education to 6 contract with a private financial management firm to manage 7 the education savings grant fund, in collaboration with the 8 treasurer of state, including providing for the disbursement 9 of education savings grants in the form of an electronic debit 10 card or checks that are payable directly from the pupil’s 11 account within the fund. 12 The bill provides that moneys remaining in a pupil’s account 13 upon the conclusion of the fiscal year shall remain in the 14 pupil’s account within the education savings grant fund for 15 the payment of qualified educational expenses in future fiscal 16 years or for higher education costs as authorized in the bill. 17 Under the bill, for each pupil with a positive balance in 18 the pupil’s account in the education savings grant fund upon 19 graduation from high school or completion of an equivalent 20 level of competent private instruction under Code chapter 21 299A, the department of management is required to maintain the 22 account in the fund until the pupil is 25 years old. Until 23 the pupil is 25 years old, moneys in the pupil’s account may 24 be used by the pupil for higher education costs, as defined 25 in Code section 12D.1. Moneys in a pupil’s account when the 26 pupil turns 25 years old are transferred by the department of 27 management for deposit in the general fund of the state. 28 The bill provides that a person who makes a false claim for 29 the purpose of obtaining an education savings grant or who 30 knowingly receives the grant or makes a payment from an account 31 within the education savings grant fund without being legally 32 entitled to it is guilty of a fraudulent practice and is 33 subject to a criminal penalty. The bill allows the department 34 of management to initiate legal proceedings to recover grants 35 -7- LSB 2006XS (7) 85 md/sc 7/ 8