HSB 203 (LSB 2327YC (5) 86)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON JORGENSEN)

A BILL FOR

An Act providing education savings grants for pupils attending a nonpublic school, 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 256.7, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  33.  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.  a.  The following pupils shall be eligible to receive an education savings grant in the manner provided in this section:
   (1)  For the school budget year beginning July 1, 2017, pupils eligible to enroll in kindergarten who are attending a nonpublic school for that budget year.
   (2)  For each school budget year beginning on or after July 1, 2018, pupils eligible to enroll in the grade levels eligible for an education savings grant in the immediately preceding school budget year and pupils eligible to enroll in the grade level that is one grade level higher than the highest grade level that was eligible for an education savings grant in the immediately preceding budget year, but not higher than grade twelve, who are attending a nonpublic school for that budget year.
   b.  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, indicating that the parent or guardian intends to enroll the pupil in a nonpublic school.
   (2)  In addition to such information deemed appropriate by the department of education, the application shall require certification from the nonpublic 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. 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 per application, and applications must be submitted under paragraph “a” 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 statewide average state foundation aid 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 for the purpose of providing education savings grants under this section. For the fiscal year commencing July 1, 2017, 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 in 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 in 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 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.  A nonpublic school or other entity 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, unless subject to the transfer required under subsection 8.
   6.  a.  For purposes of this section, “qualified educational expenses” includes tuition and fees at a nonpublic 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 not to exceed for each grant recipient five percent of the total grant amount in any fiscal year, higher education expenses, as defined in section 12D.1, resulting from the pupil’s participation in a program under chapter 261E, 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 a nonpublic school, including a nonpublic school accredited by an independent accrediting agency approved by the department of education. The cost of one computer or other portable computing device shall be allowed as a qualified educational expense for a pupil if such a purchase has not been made using funds from that pupil’s account in either of the two immediately preceding fiscal years. “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.
   b.  For purposes of this section, “nonpublic school” means the same as defined in section 285.16.
   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 in the education savings grant fund without being legally entitled to it is guilty of a fraudulent practice. The false claim for an education savings grant or a payment from an account shall be disallowed and 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 violates this subsection is prohibited from participating in the education savings grant program in the future.
   8.  For each pupil with a positive balance in the pupil’s account in the education savings grant fund upon graduation from high school or upon termination of the pupil’s enrollment in the nonpublic school, moneys in the pupil’s account shall be transferred by the department for deposit in the general fund of the state.
   9.  A 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 other political subdivision of this state.
    Sec. 3.  Section 422.7, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  51.  Subtract, to the extent included, the amount of any education savings grant under section 257.11B received during the tax year by a taxpayer authorized to spend such grant amounts for qualified educational expenses.
    Sec. 4.  APPLICABILITY.  This Act applies to school budget years and fiscal years beginning on or after July 1, 2017.
    Sec. 5.  APPLICABILITY.  The provision of this Act amending section 422.7 applies to tax years beginning on or after January 1, 2017.
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 pupils attending a nonpublic school and establishes an education savings grant fund.
   Under the bill, for the school budget year beginning July 1, 2017, pupils eligible to enroll in kindergarten who are attending a nonpublic school for that budget year are eligible to receive an education savings grant. For each succeeding budget year, an additional grade level is added until all grade levels from kindergarten through 12 are eligible in the budget year beginning July 1, 2029. 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 a nonpublic school.
   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 per application, and applications must be submitted for education savings grants in subsequent school years. 
   The amount of each education savings grant is equal to the statewide average state foundation aid 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 for the purpose of providing education savings grants. For the fiscal year commencing July 1, 2017, and each succeeding fiscal year, there is appropriated 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, as defined in the bill, incurred by the parent or guardian for the pupil during that fiscal year.
   The bill defines “nonpublic school” to mean those nonpublic schools accredited by the department of education and nonpublic institutions which comply with state board of education standards for providing special education programs.
   The bill authorizes the department of education 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 within the education savings grant fund for the payment of qualified educational expenses in future fiscal years.
   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 or upon termination of the pupil’s enrollment in the nonpublic school, moneys in the pupil’s account 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 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 and amounts improperly awarded or paid from accounts under the bill.
   The bill provides that moneys from an education savings grant under the bill are not taxable income under Code chapter 422.
   The bill applies to school budget years and fiscal years beginning on or after July 1, 2017.
   The provision of the bill amending Code section 422.7 applies to tax years beginning on or after January 1, 2017.