S.F. 572 DIVISION I 1 TUITION AND TEXTBOOK TAX CREDIT 2 Section 1. Section 422.12, subsection 2, paragraph b, Code 3 2023, is amended to read as follows: 4 b. A tuition credit equal to twenty-five percent of the 5 first two thousand dollars which the taxpayer has paid to 6 others for each dependent in grades kindergarten through 7 twelve, for tuition and textbooks of each dependent who 8 is receiving private instruction or who is attending an 9 elementary or secondary school situated in Iowa, which school 10 is accredited or approved under section 256.11 , which is not 11 operated for profit, and which adheres to the provisions of 12 the federal Civil Rights Act of 1964 and chapter 216 . Amounts 13 paid from an account in the education savings account fund 14 under section 257.11B, as enacted by 2023 Iowa Acts, House File 15 68, section 7, shall not be eligible for the credit under this 16 paragraph. Notwithstanding any other provision, all other 17 credits allowed under this subsection shall be deducted before 18 the tuition credit under this paragraph. The department, when 19 conducting an audit of a taxpayer’s return, shall also audit 20 the tuition tax credit portion of the tax return. 21 Sec. 2. EFFECTIVE DATE. This division of this Act, being 22 deemed of immediate importance, takes effect upon enactment. 23 Sec. 3. RETROACTIVE APPLICABILITY. This division of this 24 Act applies retroactively to tax years beginning on or after 25 January 1, 2023. 26 DIVISION II 27 SCHOOL TUITION ORGANIZATION GRANTS 28 Sec. 4. Section 422.11S, subsection 6, paragraph c, 29 subparagraph (1), Code 2023, is amended to read as follows: 30 (1) Allocates at least ninety percent of its annual revenue 31 within three calendar years from January 1 of the calendar year 32 during which the revenues were received in tuition grants for 33 children to allow them to attend a qualified school of their 34 parents’ choice. 35 -1- LSB 2542SV (2) 90 md/jh 1/ 8

S.F. 572 Sec. 5. Section 422.11S, subsection 6, paragraph c, Code 1 2023, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (05) For eligible students participating 3 in the education savings account program under section 257.11B, 4 as enacted by 2023 Iowa Acts, House File 68, section 7, only 5 provides tuition grants in amounts not to exceed the tuition 6 amount for which the parent or guardian is responsible for 7 payment following application of amounts paid using moneys from 8 the student’s account in the education savings account fund. 9 Sec. 6. Section 422.11S, subsection 8, paragraph a, 10 subparagraph (2), Code 2023, is amended to read as follows: 11 (2) “Total approved tax credits” means for the 2006 calendar 12 year, two million five hundred thousand dollars, for the 13 2007 calendar year, five million dollars, for calendar years 14 beginning on or after January 1, 2008, but before January 1, 15 2012, seven million five hundred thousand dollars, for calendar 16 years beginning on or after January 1, 2012, but before January 17 1, 2014, eight million seven hundred fifty thousand dollars, 18 for calendar years beginning on or after January 1, 2014, but 19 before January 1, 2019, twelve million dollars, for calendar 20 years beginning on or after January 1, 2019, but before 21 January 1, 2020, thirteen million dollars, for calendar years 22 beginning on or after January 1, 2020, but before January 23 1, 2022, fifteen million dollars, and for calendar years 24 beginning on or after January 1, 2022, but before January 1, 25 2024, twenty million dollars , for the calendar year beginning 26 January 1, 2024, seventeen million dollars, and for calendar 27 years beginning on or after January 1, 2025, fourteen million 28 dollars . 29 Sec. 7. RETROACTIVE APPLICABILITY. The section of this 30 division of this Act amending section 422.11S, subsection 6, 31 paragraph “c”, subparagraph (1), applies retroactively to 32 contributions to a school tuition organization made on or after 33 January 1, 2022. 34 Sec. 8. APPLICABILITY. The section of this division of 35 -2- LSB 2542SV (2) 90 md/jh 2/ 8

S.F. 572 this Act enacting section 422.11S, subsection 6, paragraph “c”, 1 subparagraph (05), applies to tuition grants made for school 2 years beginning on or after July 1, 2023. 3 DIVISION III 4 EDUCATION SAVINGS ACCOUNTS —— ADMINISTRATION OF FUNDS 5 Sec. 9. Section 257.11B, subsection 6, paragraph c, as 6 enacted by 2023 Iowa Acts, House File 68, section 7, is amended 7 to read as follows: 8 c. Moneys remaining in a pupil’s individual account upon 9 conclusion of the fiscal year shall remain in the pupil’s 10 individual account for the payment of qualified educational 11 expenses in future consecutive fiscal years during which the 12 pupil participates in the program until the pupil becomes 13 ineligible under the program or until the remaining amounts are 14 transferred to the state general fund under subsection 8. If 15 moneys remain in a pupil’s individual account upon conclusion 16 of the fiscal year and the pupil does not participate in the 17 program during the immediately succeeding fiscal year, the 18 department of education or third-party entity shall close the 19 pupil’s account in the fund, and transfer any remaining moneys 20 in the account for deposit in the general fund of the state. 21 Sec. 10. Section 257.11B, subsection 7, as enacted by 2023 22 Iowa Acts, House File 68, section 7, is amended to read as 23 follows: 24 7. a. A person who makes a false claim for the purpose of 25 obtaining an education savings account payment or who knowingly 26 receives the payment or makes a payment from an individual 27 account within the fund without being legally entitled to do 28 so is guilty of a fraudulent practice under chapter 714. The 29 false claim for an education savings account or a payment from 30 an individual account shall be disallowed. The department of 31 education or third-party entity shall also close the pupil’s 32 individual account in the fund and transfer any remaining 33 moneys in the account for deposit in the general fund of the 34 state. If the improperly obtained amounts have been disbursed 35 -3- LSB 2542SV (2) 90 md/jh 3/ 8

S.F. 572 from the applicable individual account, the department of 1 education or third-party entity shall recover such amounts 2 from the parent or guardian, including by initiating legal 3 proceedings to recover such amounts, if necessary. A parent or 4 guardian who commits a fraudulent practice under this section 5 is prohibited from participating in the education savings 6 account program in the future. 7 b. (1) If, prior to the end of the required attendance 8 period of the school year, a pupil who receives an education 9 savings account payment withdraws from enrollment in the 10 nonpublic school or is expelled, the nonpublic school shall 11 notify the department of education or third-party entity in 12 writing of the pupil’s withdrawal or expulsion. 13 (2) Upon receipt of a notice of expulsion, the department 14 of education or third-party entity shall cease disbursements 15 of remaining moneys in the pupil’s account, close the pupil’s 16 account in the fund, and transfer any remaining moneys in the 17 account for deposit in the general fund of the state. 18 (3) Upon receipt of a notice of withdrawal and a 19 determination that the pupil did not enroll in a different 20 nonpublic school in this state for the remainder of the school 21 year, the department of education or third-party entity shall 22 cease disbursements of remaining moneys in the pupil’s account 23 in the fund, close the pupil’s account, and transfer any moneys 24 remaining in the pupil’s account for deposit in the general 25 fund of the state. 26 Sec. 11. EFFECTIVE DATE. This division of this Act, being 27 deemed of immediate importance, takes effect upon enactment. 28 Sec. 12. RETROACTIVE APPLICABILITY. This division of this 29 Act applies retroactively to January 24, 2023. 30 DIVISION IV 31 NONPUBLIC SCHOOL PUPIL TEXTBOOK SERVICES 32 Sec. 13. Section 301.1, subsections 2 and 3, Code 2023, are 33 amended by striking the subsections. 34 Sec. 14. EFFECTIVE DATE. This division of this Act takes 35 -4- LSB 2542SV (2) 90 md/jh 4/ 8

S.F. 572 effect July 1, 2025. 1 DIVISION V 2 EDUCATION SAVINGS ACCOUNTS —— CORRECTIONS 3 Sec. 15. Section 257.11B, subsection 2, paragraph a, 4 subparagraph (1), subparagraph division (c), as enacted by 2023 5 Iowa Acts, House File 68, section 7, is amended to read as 6 follows: 7 (c) A resident pupil who is eligible to enroll in grades one 8 through twelve and was enrolled in a nonpublic school for the 9 school year immediately preceding the school year for which the 10 education savings account payment is requested if the pupil’s 11 household has an annual income less than or equal to three 12 hundred percent of the most recently revised poverty income 13 guidelines published by the United States department of health 14 and human services. 15 Sec. 16. Section 257.46, subsection 3, Code 2023, as amended 16 by 2023 Iowa Acts, House File 68, section 16, is amended to 17 read as follows: 18 3. If any portion of the gifted and talented program budget 19 remains unexpended at the end of the budget year, the remainder 20 shall be carried over to the subsequent budget year and added 21 to the gifted and talented program budget for that year. At 22 the end of a fiscal year beginning on or after July 1, 2022, 23 the school district may use all or a portion of funds for 24 the purposes authorized under section 257.10, subsection 9, 25 paragraph “d” . 26 Sec. 17. EFFECTIVE DATE. This division of this Act, being 27 deemed of immediate importance, takes effect upon enactment. 28 Sec. 18. RETROACTIVE APPLICABILITY. This division of this 29 Act applies retroactively to January 24, 2023. 30 EXPLANATION 31 The inclusion of this explanation does not constitute agreement with 32 the explanation’s substance by the members of the general assembly. 33 This bill relates to certain education programs and tax 34 credits. 35 -5- LSB 2542SV (2) 90 md/jh 5/ 8

S.F. 572 DIVISION I —— TUITION AND TEXTBOOK TAX CREDIT. Code section 1 422.12(2)(b) provides an income tax tuition credit equal to 2 25 percent of the first $2,000 which the taxpayer has paid to 3 others for each dependent in grades kindergarten through 12, 4 for tuition and textbooks of each dependent who is receiving 5 private instruction or who is attending an elementary or 6 secondary school situated in Iowa meeting certain criteria. 7 The bill specifies that amounts paid from an account in the 8 education savings account fund under Code section 257.11B, as 9 enacted by 2023 Iowa Acts, House File 68, shall not be eligible 10 for the credit. 11 Division I takes effect upon enactment and applies 12 retroactively to tax years beginning on or after January 1, 13 2023. 14 DIVISION II —— SCHOOL TUITION ORGANIZATION GRANTS. 15 Code sections 422.11S and 422.33 provide a school tuition 16 organization tax credit against the individual income tax 17 and corporate income tax, respectively, for contributions 18 made by the taxpayer during the tax year to a school tuition 19 organization. The bill adds a requirement to the criteria for 20 a school tuition organization by specifying that for eligible 21 students participating in the education savings account program 22 under Code section 257.11B, the organization only provides 23 tuition grants in amounts not to exceed the tuition amount 24 for which the parent or guardian is responsible for payment 25 following application of amounts paid using moneys from the 26 student’s account in the education savings account fund. This 27 provision applies to tuition grants made for school years 28 beginning on or after July 1, 2023. 29 The bill requires school tuition organizations to allocate 30 90 percent of annual revenues as tuition grants within three 31 years from January 1 of the calendar year during which the 32 revenues were received. This provision applies retroactively 33 to contributions to a school tuition organization made on or 34 after January 1, 2022. 35 -6- LSB 2542SV (2) 90 md/jh 6/ 8

S.F. 572 The bill also reduces the total annual amount of available 1 school tuition organization tax credits for the calendar year 2 beginning January 1, 2024, from $20 million to $17 million, and 3 to $14 million for calendar years beginning on or after January 4 1, 2025. 5 DIVISION III —— EDUCATION SAVINGS ACCOUNTS —— ADMINISTRATION 6 OF FUNDS. Code section 257.11B, as enacted by 2023 Iowa Acts, 7 House File 68, section 7, specifies that moneys remaining in a 8 pupil’s individual account upon conclusion of the fiscal year 9 shall remain in the pupil’s individual account for the payment 10 of qualified educational expenses in future fiscal years during 11 which the pupil participates in the program until the pupil 12 becomes ineligible under the program or until the remaining 13 amounts are transferred to the state general fund as required 14 in that Code section. The bill provides that such remaining 15 moneys are available for future consecutive fiscal years during 16 which the pupil participates in the program. The bill further 17 provides that if moneys remain in a pupil’s individual account 18 upon conclusion of the fiscal year and the pupil does not 19 participate in the program during the immediately succeeding 20 fiscal year, the department of education or third-party entity 21 shall close the pupil’s account in the fund, and transfer any 22 remaining moneys in the account for deposit in the general fund 23 of the state. 24 The bill also amends the education savings account program 25 under Code section 257.11B by providing that if, prior to the 26 end of the required attendance period of the school year, 27 a pupil who receives an education savings account payment 28 withdraws from enrollment in the nonpublic school or is 29 expelled, the nonpublic school shall notify the department 30 of education or third-party entity in writing of the pupil’s 31 withdrawal or expulsion. Under the bill, upon receipt of a 32 notice of expulsion, the department of education or third-party 33 entity shall cease disbursements of remaining moneys in the 34 pupil’s account, close the pupil’s account in the fund, and 35 -7- LSB 2542SV (2) 90 md/jh 7/ 8

S.F. 572 transfer any remaining moneys in the account for deposit in 1 the general fund of the state. Additionally, upon receipt of 2 a notice of withdrawal and a determination that the pupil did 3 not enroll in a different nonpublic school in this state for 4 the remainder of the school year, the department of education 5 or third-party entity shall cease disbursements of remaining 6 moneys in the pupil’s account in the fund, close the pupil’s 7 account, and transfer any moneys remaining in the pupil’s 8 account for deposit in the general fund of the state. 9 Division III takes effect upon enactment and applies 10 retroactively to January 24, 2023. 11 DIVISION IV —— NONPUBLIC SCHOOL PUPIL TEXTBOOK SERVICES. 12 Code section 301.1 authorizes each school board to adopt 13 textbooks for the district, and to contract for and buy such 14 books and any and all other necessary school supplies at 15 contract prices, and to sell them to the pupils of their 16 respective districts at cost, loan such textbooks to such 17 pupils free, or rent them to pupils. In addition, Code section 18 301.1, subsections 2 and 3, provides that textbooks adopted 19 and purchased by a school district shall, to the extent funds 20 are appropriated by the general assembly, be made available to 21 pupils attending accredited nonpublic schools upon request of 22 the pupil or the pupil’s parent under comparable terms as made 23 available to pupils attending public schools. The bill strikes 24 those subsections of Code section 301.1 relating to a school 25 district making such textbooks available to pupils attending 26 nonpublic schools. 27 Division IV takes effect July 1, 2025. 28 DIVISION V —— EDUCATION SAVINGS ACCOUNTS —— CORRECTIONS. 29 Division V corrects errors and omissions in Code section 30 257.11B, as enacted by 2023 Iowa Acts, House File 68, section 31 7. 32 Division V takes effect upon enactment and applies 33 retroactively to January 24, 2023. 34 -8- LSB 2542SV (2) 90 md/jh 8/ 8