H.F. 2015 Section 1. Section 256.7, Code 2016, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 33. Adopt rules relating to applications 3 for a military family scholarship 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 Military family scholarship 7 program. 8 1. a. (1) The following pupils shall be eligible to 9 receive a military family scholarship in the manner provided in 10 this section: 11 (a) A dependent child of a qualified military person or 12 qualified veteran eligible to enroll in kindergarten through 13 grade twelve who resides in this state and is attending 14 a nonpublic school during the budget year for which the 15 scholarship is requested. 16 (b) A surviving child who is receiving dependency and 17 indemnity compensation pursuant to 38 U.S.C. §1301 et seq., as 18 certified by the United States department of veterans affairs, 19 who resides in this state and is attending a nonpublic school 20 during the budget year for which the scholarship is requested. 21 (2) For purposes of this section, unless the context 22 otherwise requires: 23 (a) “Dependent child” means an individual who was claimed by 24 a qualified military person or qualified veteran as a dependent 25 on the qualified military person’s or qualified veteran’s 26 internal revenue tax filing for the previous tax year. 27 (b) “Nonpublic school” means those nonpublic schools 28 accredited by the department of education as provided in 29 section 256.11 and nonpublic institutions that comply with 30 state board of education standards for providing special 31 education programs. 32 (c) “Qualified educational expenses” includes tuition and 33 fees at a nonpublic school, textbooks, fees or payments for 34 educational therapies including tutoring or cognitive skills 35 -1- LSB 5115YH (3) 86 md/sc 1/ 10

H.F. 2015 training, curriculum fees and materials for a course of study 1 for a specific subject matter or grade level, tuition or fees 2 for nonpublic online education programs, education materials 3 and services for pupils with disabilities including the cost of 4 paraprofessionals and assistants who are trained in accordance 5 with state law, and other expenses incurred by the parent or 6 guardian that are directly related to the education of the 7 pupil at a nonpublic school, including a nonpublic school 8 accredited by an independent accrediting agency approved by 9 the department of education. “Qualified educational expenses” 10 do not include transportation costs for the pupil, the cost 11 of food or refreshments consumed by the pupil, the cost of 12 clothing for the pupil, or the cost of disposable materials, 13 including but not limited to paper, notebooks, pencils, pens, 14 and art supplies. 15 (d) “Qualified military person” means a person on active 16 duty in the military service of the United States who is 17 stationed in this state or at the Rock Island arsenal. 18 (e) “Qualified veteran” means a veteran as defined in 19 section 35.1 and who is a person who is domiciled in this 20 state, or has resided in this state for at least one year 21 or sufficient time to have filed an Iowa tax return in the 22 preceding twelve months. 23 b. Military family scholarships shall be made available to 24 parents and guardians in the manner authorized under subsection 25 4, paragraph “c” , for the payment of qualified educational 26 expenses as provided in this section. 27 2. a. (1) By January 31 preceding the school year for 28 which the military family scholarship is requested, the 29 parent or guardian of the pupil requesting to receive a 30 military family scholarship shall submit an application to the 31 department of education, on application forms developed by the 32 department, indicating that the parent or guardian intends to 33 enroll the pupil in a nonpublic school. 34 (2) In addition to such information deemed appropriate by 35 -2- LSB 5115YH (3) 86 md/sc 2/ 10

H.F. 2015 the department of education, the application shall require 1 certification from the nonpublic school of the pupil’s 2 enrollment for the following school year. 3 b. By March 1 preceding the school year for which the 4 military family scholarship is requested, the department of 5 education shall notify the department of management of the 6 number of pupils in each school district designated for the 7 following school year to receive a military family scholarship. 8 The department of education shall also notify the parent or 9 guardian of such pupils who are approved to receive a military 10 family scholarship. 11 c. Military family scholarships shall only be approved 12 for one school year per application, and applications must be 13 submitted under paragraph “a” for military family scholarships 14 in subsequent school years. 15 3. a. The department of management shall assign each 16 pupil a military family scholarship in an amount equal to the 17 lesser of the regular program state cost per pupil and the 18 annual tuition at the nonpublic school that the pupil will be 19 attending in the same school year for which the scholarship is 20 requested. 21 b. The department of management shall on July 1 following 22 the determination of the amount of the military family 23 scholarship for each approved pupil transfer such amounts to 24 the pupil’s account in the military family scholarship fund 25 established under subsection 4. Such amount shall be available 26 to the pupil’s parent or guardian in the manner authorized 27 under subsection 4, paragraph “c” , for the payment of qualified 28 educational expenses incurred by such persons for the pupil 29 during that school year. 30 4. A military family scholarship fund is created in 31 the state treasury under the control of the department of 32 management consisting of moneys appropriated to the department 33 for the purpose of providing military family scholarships 34 under this section. For the fiscal year commencing July 1, 35 -3- LSB 5115YH (3) 86 md/sc 3/ 10

H.F. 2015 2017, and each succeeding fiscal year, there is appropriated 1 from the general fund of the state to the department of 2 management to be credited to the fund the amount necessary to 3 pay all military family scholarships approved for that fiscal 4 year. The director of the department of management has all 5 powers necessary to carry out and effectuate the purposes, 6 objectives, and provisions of this section pertaining to the 7 fund, including the power to do all of the following: 8 a. Make and enter into contracts necessary for the 9 administration of the fund. 10 b. Procure insurance against any loss in connection with the 11 assets of the fund or require a surety bond. 12 c. Contract with a private financial management firm to 13 manage the fund, in collaboration with the treasurer of state, 14 including providing for the disbursement of military family 15 scholarships in the form of an electronic debit card or checks 16 that are payable directly from the pupil’s account in the fund. 17 d. Conduct audits or other review necessary to properly 18 administer the program. 19 e. Adopt rules pursuant to chapter 17A for the 20 administration of the fund and accounts in the fund. 21 5. a. For each pupil approved for a military family 22 scholarship, the department shall establish an account for that 23 pupil in the military family scholarship fund. The amount 24 of the pupil’s military family scholarship determined under 25 subsection 3 shall be deposited into the pupil’s account on 26 July 1 and such amount shall be immediately available for the 27 payment of qualified educational expenses incurred by the 28 parent or guardian for the pupil during that fiscal year using 29 the payment method authorized under subsection 4, paragraph 30 “c” . 31 b. A nonpublic school or other entity that accepts payment 32 from a parent or guardian using funds from a pupil’s account in 33 the military family scholarship fund shall not refund, rebate, 34 or share any portion of such payment with the parent, guardian, 35 -4- LSB 5115YH (3) 86 md/sc 4/ 10

H.F. 2015 or pupil. 1 c. Moneys remaining in a pupil’s account upon conclusion 2 of the fiscal year shall remain in the pupil’s account in the 3 military family scholarship fund for the payment of qualified 4 educational expenses in future fiscal years, unless subject to 5 the transfer required under subsection 7. 6 6. A person who makes a false claim for the purpose of 7 obtaining a military family scholarship provided for in this 8 section or who knowingly receives the scholarship or makes a 9 payment from an account in the military family scholarship fund 10 without being legally entitled to it is guilty of a fraudulent 11 practice. The false claim for a military family scholarship or 12 a payment from an account shall be disallowed and if amounts 13 from the scholarship have been disbursed from the applicable 14 account in the military family scholarship fund, the department 15 of management shall initiate legal proceedings to recover such 16 amounts. A parent or guardian, or a pupil for purposes of 17 subsection 7, who violates this subsection 6 is prohibited from 18 participating in the military family scholarship program in the 19 future. 20 7. For each pupil with a positive balance in the pupil’s 21 account in the military family scholarship fund upon graduation 22 from high school or upon termination of the pupil’s enrollment 23 in the nonpublic school, moneys in the pupil’s account shall be 24 transferred by the department for deposit in the general fund 25 of the state. 26 8. a. If a pupil fails to meet the academic growth 27 standards established by the state board of education under 28 paragraph “b” for two consecutive school years for which 29 the student has received a military family scholarship under 30 this section, the pupil shall not be eligible for a military 31 family scholarship for future school years unless the pupil is 32 enrolled in an alternative options education program adopted 33 by the school district where the pupil resides under section 34 280.19A. If the pupil meets the academic growth standards 35 -5- LSB 5115YH (3) 86 md/sc 5/ 10

H.F. 2015 established by the state board of education for two consecutive 1 school years while enrolled in the alternative options 2 education program, the pupil shall again be eligible for the 3 military family scholarship while attending an accredited 4 nonpublic school. 5 b. The state board of education shall adopt standards for 6 determining satisfactory academic performance and growth of 7 pupils in kindergarten through grade twelve who are receiving 8 military family scholarships. Such academic growth standards 9 shall include minimum levels of proficiency in the areas of 10 math, science, literacy, and social studies. 11 9. Except as necessary to implement the military family 12 scholarship program, this section shall not be construed to 13 authorize the state or any political subdivision of the state 14 to exercise authority over any nonpublic school or be construed 15 to require a nonpublic school to modify its admissions 16 educational program in order to receive payment from a parent 17 or guardian using funds from a pupil’s account in the military 18 family scholarship fund. A nonpublic school that accepts 19 payment from a parent or guardian using funds from a pupil’s 20 account in the military family scholarship fund is not an agent 21 of this state or of a political subdivision of this state. 22 Sec. 3. Section 422.7, Code 2016, is amended by adding the 23 following new subsection: 24 NEW SUBSECTION . 51. Subtract, to the extent included, the 25 amount of any military family scholarship under section 257.11B 26 received during the tax year by a taxpayer authorized to spend 27 such scholarship amounts for qualified educational expenses. 28 Sec. 4. APPLICABILITY. This Act applies to school budget 29 years and fiscal years beginning on or after July 1, 2017. 30 Sec. 5. APPLICABILITY. The provision of this Act amending 31 section 422.7 applies to tax years beginning on or after 32 January 1, 2017. 33 EXPLANATION 34 The inclusion of this explanation does not constitute agreement with 35 -6- LSB 5115YH (3) 86 md/sc 6/ 10

H.F. 2015 the explanation’s substance by the members of the general assembly. 1 This bill provides military family scholarships for pupils 2 attending a nonpublic school and establishes a military family 3 scholarship fund. 4 Under the bill, the following pupils are eligible to receive 5 a military family scholarship: (1) a dependent child of a 6 qualified military person or qualified veteran, as defined in 7 the bill, eligible to enroll in kindergarten through grade 12 8 who resides in this state and who is attending a nonpublic 9 school during the budget year for which the scholarship is 10 requested; (2) a surviving child who is receiving dependency 11 and indemnity compensation and who resides in this state and is 12 attending a nonpublic school during the budget year for which 13 the scholarship is requested. By January 31 preceding the 14 school year for which the scholarship is requested, the parent 15 or guardian of the pupil requesting to receive a scholarship 16 must submit an application to the department of education 17 indicating that the parent or guardian intends to enroll the 18 pupil in a nonpublic school. 19 The bill requires that by March 1 preceding the school 20 year for which the military family scholarship is requested, 21 the department of education must notify the department of 22 management of the number of pupils in each school district 23 designated for the following school year to receive a military 24 family scholarship and the amount of the military family 25 scholarship for each pupil. Military family scholarships may 26 only be approved for one school year per application, and 27 applications must be submitted for military family scholarships 28 in subsequent school years. 29 The amount of each military family scholarship is equal to 30 the lesser of the regular program state cost per pupil and the 31 annual tuition at the nonpublic school that the pupil will be 32 attending in the same school year for which the scholarship is 33 requested. 34 The bill creates a military family scholarship fund in 35 -7- LSB 5115YH (3) 86 md/sc 7/ 10

H.F. 2015 the state treasury under the control of the department of 1 management consisting of moneys appropriated to the department 2 for the purpose of providing military family scholarships. For 3 the fiscal year commencing July 1, 2017, and each succeeding 4 fiscal year, there is appropriated from the general fund of the 5 state to the department of management for deposit in the fund 6 the amount necessary to pay all military family scholarships 7 approved for that fiscal year. For each pupil approved for 8 a military family scholarship, the department of management 9 must establish an account for that pupil in the military family 10 scholarship fund. The amount of the pupil’s military family 11 scholarship is deposited into the pupil’s account on July 1 12 and such amount is available for use by parents and guardians 13 for the payment of qualified educational expenses, as defined 14 in the bill, incurred by the parent or guardian for the pupil 15 during that fiscal year. 16 The bill defines “nonpublic school” to mean those nonpublic 17 schools accredited by the Iowa department of education 18 and nonpublic institutions that comply with state board of 19 education standards for providing special education programs. 20 The bill authorizes the department of education to contract 21 with a private financial management firm to manage the military 22 family scholarship fund, in collaboration with the treasurer 23 of state, including providing for the disbursement of military 24 family scholarships in the form of an electronic debit card 25 or checks that are payable directly from the pupil’s account 26 within the fund. 27 The bill provides that moneys remaining in a pupil’s account 28 upon the conclusion of the fiscal year shall remain in the 29 pupil’s account within the military family scholarship fund for 30 the payment of qualified educational expenses in future fiscal 31 years. 32 Under the bill, for each pupil with a positive balance in the 33 pupil’s account in the military family scholarship fund upon 34 graduation from high school or upon termination of the pupil’s 35 -8- LSB 5115YH (3) 86 md/sc 8/ 10

H.F. 2015 enrollment in the nonpublic school, moneys in the pupil’s 1 account are transferred by the department of management for 2 deposit in the general fund of the state. 3 The bill provides that a person who makes a false claim 4 for the purpose of obtaining a military family scholarship 5 or who knowingly receives the scholarship or makes a payment 6 from an account within the military family scholarship fund 7 without being legally entitled to it is guilty of a fraudulent 8 practice and is subject to a criminal penalty. The bill allows 9 the department of management to initiate legal proceedings to 10 recover scholarships and amounts improperly awarded or paid 11 from accounts under the bill. 12 The bill authorizes the state board of education to adopt 13 standards for determining satisfactory academic performance 14 and growth of pupils in kindergarten through grade 12 who are 15 receiving military family scholarships. If a pupil fails to 16 meet the academic growth standards established by the state 17 board of education for two consecutive school years for which 18 the student has received a military family scholarship, the 19 pupil shall not be eligible for a military family scholarship 20 for future school years until the pupil has demonstrated 21 satisfactory academic performance in an alternative options 22 education program. 23 The bill provides that, except as necessary to implement 24 the military family scholarship program, the bill is not to be 25 construed to authorize the state or any political subdivision 26 of the state to exercise authority over any nonpublic school 27 or be construed to require a nonpublic school to modify its 28 admissions educational program in order to receive payment 29 from a parent or guardian using funds from a pupil’s account 30 in the military family scholarship fund. In addition, 31 a nonpublic school that accepts payment from a parent or 32 guardian using funds from a pupil’s account in the military 33 family scholarship fund is not an agent of this state or of a 34 political subdivision of this state. 35 -9- LSB 5115YH (3) 86 md/sc 9/ 10