S.F. 2206 DIVISION I 1 SHORT TITLE 2 Section 1. SHORT TITLE. This Act shall be known and may be 3 cited as the “Iowa Student Opportunity Act”. 4 DIVISION II 5 EDUCATION SAVINGS GRANTS 6 Sec. 2. Section 8.6, Code 2020, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 17. To adopt rules relating to the 9 administration of and applications for the education savings 10 grant program pursuant to section 257.11B, including but not 11 limited to application processing timelines and information 12 required to be submitted by a parent or guardian. 13 Sec. 3. NEW SECTION . 257.11B Education savings grant 14 program. 15 1. a. For the school budget year beginning July 1, 2021, 16 and each succeeding school budget year, the following resident 17 pupils who are attending a nonpublic school, as defined 18 in section 285.16, located in this state and who maintain 19 enrollment for the entirety of the required attendance period 20 of the school year shall be eligible to receive an education 21 savings grant in the manner provided in this section: 22 (1) A pupil eligible to enroll in grade one through grade 23 twelve if the pupil has attended a public school identified for 24 comprehensive support and improvement under the federal Every 25 Student Succeeds Act, Pub. L. No. 114-95, for the equivalent of 26 the two semesters immediately preceding the school budget year 27 for which the education savings grant is requested and if the 28 pupil is not otherwise ineligible under this section. 29 (2) A pupil who received an education savings grant for 30 the immediately preceding school budget year, who is eligible 31 to enroll in grade one through grade twelve, and who is not 32 otherwise ineligible under this section. 33 b. Education savings grants shall be made available to 34 parents and guardians in the manner authorized under subsection 35 -1- LSB 5515XS (6) 88 md/jh 1/ 11

S.F. 2206 4, paragraph “c” , for the payment of qualified grant expenses as 1 provided in this section. 2 c. For purposes of this subsection, “resident” means the 3 same as defined in section 282.1. 4 2. a. (1) By January 31 preceding the school year for 5 which the education savings grant is requested, the parent 6 or guardian of the pupil requesting to receive an education 7 savings grant shall submit an application to the department of 8 management, on application forms developed by the department of 9 management, indicating that the parent or guardian intends to 10 enroll the pupil in a nonpublic school for the entirety of the 11 school year. 12 (2) In addition to such information deemed appropriate by 13 the department of management, the application shall require 14 certification from the nonpublic school of the pupil’s 15 enrollment for the following school year. 16 b. By March 1 preceding the school year for which the 17 education savings grant is requested, the department of 18 management shall notify the parent or guardian of each pupil 19 approved for the following school year to receive an education 20 savings grant and the amount of the education savings grant for 21 the pupil. 22 c. Education savings grants shall only be approved for one 23 school year and applications must be submitted annually for 24 education savings grants in subsequent school years. 25 3. The department of management shall assign each pupil an 26 education savings grant in an amount equal to sixty percent of 27 the regular program state cost per pupil for the same school 28 budget year. 29 4. An education savings grant fund is created in the state 30 treasury under the control of the department of management 31 consisting of moneys appropriated to the department of 32 management for the purpose of providing education savings 33 grants under this section. For the fiscal year commencing July 34 1, 2021, and each succeeding fiscal year, there is appropriated 35 -2- LSB 5515XS (6) 88 md/jh 2/ 11

S.F. 2206 from the general fund of the state to the department of 1 management to be credited to the fund the amount necessary 2 to pay all education savings grants approved for that fiscal 3 year. The director of the department of management has all 4 powers necessary to carry out and effectuate the purposes, 5 objectives, and provisions of this section pertaining to the 6 fund, including the power to do all of the following: 7 a. Make and enter into contracts necessary for the 8 administration of the fund. 9 b. Procure insurance against any loss in connection with the 10 assets of the fund or require a surety bond. 11 c. Contract with a private financial management firm to 12 manage the fund, in collaboration with the treasurer of state, 13 including providing for the disbursement of education savings 14 grants in the form of an electronic debit card or checks that 15 are payable directly from the pupil’s account within the fund. 16 d. Conduct audits or other review necessary to properly 17 administer the program. 18 e. Adopt rules for the administration of the fund and 19 accounts within the fund. 20 5. a. For each pupil approved for an education savings 21 grant, the department of management shall establish an account 22 for that pupil in the education savings grant fund. The amount 23 of the pupil’s education savings grant shall be deposited 24 into the pupil’s account on July 1, and such amount shall 25 be immediately available for the payment of qualified grant 26 expenses incurred by the parent or guardian for the pupil 27 during that fiscal year using the payment method authorized 28 under subsection 4, paragraph “c” . 29 b. A nonpublic school that accepts payment from a parent or 30 guardian using funds from a pupil’s account in the education 31 savings grant fund shall not refund, rebate, or share any 32 portion of such payment with the parent, guardian, or pupil. 33 c. Moneys remaining in an eligible pupil’s account upon 34 conclusion of the fiscal year shall remain in the eligible 35 -3- LSB 5515XS (6) 88 md/jh 3/ 11

S.F. 2206 pupil’s account in the education savings grant fund for the 1 payment of qualified grant expenses in future fiscal years 2 during which the pupil participates in the program or for the 3 payment of higher education costs that are qualified education 4 expenses as provided under subsection 8. 5 6. a. For purposes of this section, “qualified grant 6 expenses” includes tuition and fees at a nonpublic school, 7 textbooks, fees or payments for educational therapies, 8 including tutoring or cognitive skills training, curriculum 9 fees and materials for a course of study for a specific subject 10 matter or grade level, tuition or fees for nonpublic online 11 education programs, education materials and services for pupils 12 with disabilities, including the cost of paraprofessionals 13 and assistants who are trained in accordance with state law, 14 standardized test fees, qualified education expenses, as 15 defined in section 12D.1, excluding room and board expenses, 16 and other expenses incurred by the parent or guardian that 17 are directly related to the education of the pupil at a 18 nonpublic school, including a nonpublic school accredited by 19 an independent accrediting agency approved by the department 20 of education. 21 b. “Qualified grant expenses” does not include 22 transportation costs for the pupil, the cost of food or 23 refreshments consumed by the pupil, the cost of clothing for 24 the pupil, or the cost of disposable materials, including 25 but not limited to paper, notebooks, pencils, pens, and art 26 supplies. 27 7. a. A person who makes a false claim for the purpose 28 of obtaining an education savings grant provided for in this 29 section or who knowingly receives the grant or makes a payment 30 from an account within the education savings grant fund without 31 being legally entitled to do so is guilty of a fraudulent 32 practice under chapter 714. The false claim for an education 33 savings grant or a payment from an account shall be disallowed. 34 The department of management shall also close the pupil’s 35 -4- LSB 5515XS (6) 88 md/jh 4/ 11

S.F. 2206 account in the education savings grant fund and transfer any 1 remaining moneys in the account for deposit in the general 2 fund of the state. If the improperly obtained amounts from 3 the grant have been disbursed from the applicable account in 4 the education savings grant fund, the department of management 5 shall recover such amounts from the parent or guardian, or from 6 the pupil for purposes of subsection 8, including by initiating 7 legal proceedings to recover such amounts, if necessary. A 8 parent or guardian, or a pupil for purposes of subsection 9 8, who commits a fraudulent practice under this section is 10 prohibited from participating in the education savings grant 11 program in the future. 12 b. If, prior to the end of the required attendance period 13 of the school year, a pupil who receives an education savings 14 grant withdraws from enrollment in the nonpublic school or is 15 expelled, the nonpublic school shall notify the department of 16 management in writing of the pupil’s withdrawal or expulsion, 17 and the pupil’s parent or guardian shall notify the department 18 of management of the pupil’s withdrawal or expulsion from the 19 nonpublic school. A pupil’s expulsion from the nonpublic 20 school prior to the end of the required attendance period for 21 the school year shall invalidate the pupil’s eligibility for 22 the education savings grant for the school budget year. A 23 pupil’s withdrawal from a nonpublic school prior to the end 24 of the required attendance period of the school year shall 25 invalidate the pupil’s eligibility for the education savings 26 grant for the school budget year unless the withdrawal is 27 the result of a change in residence of the pupil and the 28 pupil, following written notice by the parent or guardian and 29 certification by the new nonpublic school to the department of 30 management, enrolls in a different nonpublic school in this 31 state for the remainder of the school year. 32 c. (1) Upon receipt of a notice of expulsion under 33 paragraph “b” , the department of management shall close 34 the pupil’s account in the education savings grant fund and 35 -5- LSB 5515XS (6) 88 md/jh 5/ 11

S.F. 2206 transfer any remaining moneys in the account for deposit in 1 the general fund of the state. In addition, if amounts from 2 the grant for the school budget year during which the pupil 3 is expelled have been disbursed from the expelled pupil’s 4 account in the education savings grant fund, the department 5 of management shall recover such amounts from the parent or 6 guardian, including by initiating legal proceedings to recover 7 such amounts, if necessary. 8 (2) Upon receipt of a notice of withdrawal under paragraph 9 “b” and a determination that the pupil’s withdrawal was not the 10 result of a change in residence, the department of management 11 shall cease disbursements of remaining moneys in the pupil’s 12 account in the education savings grant fund and maintain the 13 pupil’s account if and until such time that the pupil uses the 14 funds for qualified education expenses under subsection 8. 15 In addition, if amounts from the grant for the school budget 16 year during which the withdrawal occurs have been disbursed 17 from the pupil’s account in the education savings grant fund, 18 the department of management shall recover such amounts from 19 the parent or guardian to the extent the amount disbursed 20 exceeds the amount of the grant proportionate to the remaining 21 portion of the school year following the withdrawal, including 22 by initiating legal proceedings to recover such amounts, if 23 necessary. 24 (3) Upon receipt of a notice of withdrawal under paragraph 25 “b” and a determination that the withdrawal was the result of 26 a change in residence but that the pupil did not enroll in 27 a different nonpublic school in this state for the remainder 28 of the school year, the department of management shall cease 29 disbursements of remaining moneys in the pupil’s account in 30 the education savings grant fund and maintain the pupil’s 31 account if and until such time that the pupil uses the funds 32 for qualified education expenses under subsection 8. 33 (4) If a pupil’s eligibility is invalidated under the 34 provisions of paragraph “b” , the pupil shall be ineligible for 35 -6- LSB 5515XS (6) 88 md/jh 6/ 11

S.F. 2206 an education savings grant for the following school budget year 1 under subsection 1, paragraph “a” , subparagraph (2). 2 8. For each pupil with a positive balance in the pupil’s 3 account in the education savings grant fund upon graduation 4 from high school, the department of management shall maintain 5 the account in the fund until the pupil is twenty-five years of 6 age. Following graduation from high school until the pupil is 7 twenty-five years of age, moneys in the pupil’s account may be 8 used for qualified education expenses, as defined in section 9 12D.1, incurred by the pupil while attending an institution 10 of higher education under the control of the state board of 11 regents, a community college located in this state, or a 12 private college or university located in this state. Payments 13 from a pupil’s account for qualified education expenses shall 14 be made in the same manner as payments for qualified grant 15 expenses under subsection 5. Moneys in a pupil’s account when 16 the pupil turns twenty-five years of age shall be transferred 17 by the department of management for deposit in the general fund 18 of the state. 19 9. This section shall not be construed to authorize the 20 state or any political subdivision of the state to exercise 21 authority over any nonpublic school or construed to require a 22 nonpublic school to modify its academic standards for admission 23 or educational program in order to receive payment from a 24 parent or guardian using funds from a pupil’s account in the 25 education savings grant fund. A nonpublic school that accepts 26 payment from a parent or guardian using funds from a pupil’s 27 account in the education savings grant fund is not an agent 28 of this state or of a political subdivision of this state. 29 Rules adopted by the department of management to implement this 30 section that impose an undue burden on a nonpublic school are 31 invalid. 32 Sec. 4. Section 422.7, Code 2020, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 48. Subtract, to the extent included, the 35 -7- LSB 5515XS (6) 88 md/jh 7/ 11

S.F. 2206 amount of an education savings grant under section 257.11B 1 received by the taxpayer for payment of qualified grant 2 expenses. 3 Sec. 5. APPLICABILITY. The following applies to school 4 budget years and fiscal years beginning on or after July 1, 5 2021: 6 The section of this division of this Act enacting section 7 257.11B. 8 Sec. 6. APPLICABILITY. The following applies to tax years 9 beginning on or after January 1, 2021: 10 The section of this division of this Act enacting section 11 422.7, subsection 48. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 This bill establishes an education savings grant program for 16 certain pupils attending a nonpublic school. 17 Division I of the bill provides that the Act shall be known 18 and may be cited as the “Iowa Student Opportunity Act”. 19 Under Division II of the bill, the following pupils who 20 attend a nonpublic school in this state and who maintain 21 enrollment for the entirety of the required attendance period 22 of the school year are eligible to receive an education savings 23 grant: (1) a pupil eligible to enroll in grade 1 through grade 24 12 if the pupil has attended a public school identified for 25 comprehensive support and improvement under federal law for 26 the equivalent of the two immediately preceding semesters; or 27 (2) a pupil who received an education savings grant for the 28 immediately preceding school budget year and who is eligible 29 to enroll in grade 1 through grade 12. By January 31 preceding 30 the school year for which the education savings grant is 31 requested, the parent or guardian of the pupil requesting to 32 receive an education savings grant must submit an application 33 to the department of management indicating that the parent or 34 guardian intends to enroll the pupil in a nonpublic school for 35 -8- LSB 5515XS (6) 88 md/jh 8/ 11

S.F. 2206 the entirety of the school year. 1 The bill requires that by March 1 preceding the school 2 year for which the education savings grant is requested, the 3 department of management must notify the parent or guardian of 4 each pupil approved for the following school year to receive an 5 education savings grant and the amount of the education savings 6 grant for the pupil, as specified in the bill. Education 7 savings grants must be approved for each school year and 8 applications must be submitted each year. 9 The bill creates an education savings grant fund in 10 the state treasury under the control of the department of 11 management consisting of moneys appropriated to the department 12 of management for the purpose of providing education savings 13 grants. For the fiscal year commencing July 1, 2021, and each 14 succeeding fiscal year, there is appropriated from the general 15 fund of the state to the department of management for deposit 16 in the fund the amount necessary to pay all education savings 17 grants approved for that fiscal year. For each pupil approved 18 for an education savings grant, the department of management 19 must establish an account for that pupil in the education 20 savings grant fund. The amount of the pupil’s education 21 savings grant is deposited into the pupil’s account on July 1 22 and such amount is available for use by parents and guardians 23 for the payment of qualified grant expenses, as defined in the 24 bill, incurred by the parent or guardian for the pupil during 25 that fiscal year. 26 The bill authorizes the department of management to 27 contract with a private financial management firm to manage 28 the education savings grant fund, in collaboration with the 29 treasurer of state, including providing for the disbursement 30 of education savings grants in the form of an electronic debit 31 card or checks that are payable directly from the pupil’s 32 account within the fund. 33 The bill provides that moneys remaining in an eligible 34 pupil’s account upon the conclusion of the fiscal year shall 35 -9- LSB 5515XS (6) 88 md/jh 9/ 11

S.F. 2206 remain in the eligible pupil’s account in the education savings 1 grant fund for the payment of qualified grant expenses in 2 future fiscal years during which the pupil participates in 3 the program or for higher education costs that are qualified 4 education expenses as authorized in the bill. 5 Under the bill, for each pupil with a positive balance in 6 the pupil’s account in the education savings grant fund upon 7 graduation from high school, the department of management is 8 required to maintain the account in the fund until the pupil 9 reaches an age specified in the bill. Until the pupil reaches 10 the age limitation, moneys in the pupil’s account may be used 11 by the pupil for qualified education expenses, as defined in 12 Code section 12D.1. Moneys in a pupil’s account when the pupil 13 reaches the age limitation are transferred by the department of 14 management for deposit in the general fund of the state. 15 The bill provides that a person who makes a false claim for 16 the purpose of obtaining an education savings grant or who 17 knowingly receives the grant or makes a payment from an account 18 in the education savings grant fund without being legally 19 entitled to do so is guilty of a fraudulent practice and is 20 subject to a criminal penalty. The bill directs the department 21 of management to recover grants and amounts improperly awarded 22 or paid and requires the closure of the pupil’s account and 23 transfer of all remaining moneys to the general fund of the 24 state. The bill also establishes requirements and procedures 25 for parents or guardians and for the department of management 26 when a pupil receiving an education savings grant withdraws 27 or is expelled from the nonpublic school prior to the end of 28 the required attendance period of the school year, including 29 requirements for disposition of the pupil’s account within the 30 education savings grant fund and recovery of grant funds. 31 The bill provides that an education savings grant received 32 by a taxpayer is not taxable income for purposes of state 33 individual income taxation. This provision of the bill applies 34 to tax years beginning on or after January 1, 2021. 35 -10- LSB 5515XS (6) 88 md/jh 10/ 11