SF 2244 (LSB 6004XS (3) 91)

SENATE FILE 2244

BY  WEINER, DONAHUE, STAED, DREY, BLAKE, KNOX, TOWNSEND, ZIMMER, WINCKLER, QUIRMBACH, TRONE GARRIOTT, BENNETT, PETERSEN, DOTZLER, HARDMAN, and WAHLS

A BILL FOR

An Act relating to the education savings account program, including the establishment and requirements of qualified nonpublic schools.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 256.9, Code 2026, is amended by adding the following new subsections:
   NEW SUBSECTION.  80.  Notify each school district of resident students who have been approved to participate in the education savings account program no later than the date on which the parent or guardian of the student is notified of the student’s approval to participate in the program. Notifications under this subsection shall include the number of resident pupils approved to participate and the ages of the resident pupils but shall contain no other personal information relating to the resident pupils.
   NEW SUBSECTION.  81.  Make available to the public and submit to the general assembly a report relating to tuition and mandatory fee schedules of qualified nonpublic schools in section 257.11B, subsection 1, paragraph “0c”, subparagraph (9).
   NEW SUBSECTION.  82.  Require third-party entities and qualified firms of the education savings account program to submit annual reports including the total amount of education savings account funding spent by families on educational materials, as defined in section 257.11B, subsection 1, paragraph “b”, subparagraph (1), including a separate identification of the amount spent on educational materials sold directly by the reporting third-party entity or qualified firm, the total amount of education savings account funding spent by families on instructional services outside of qualified nonpublic schools, and a list of all claims submitted for reimbursement, including amounts approved for reimbursement. The department shall annually compile and provide such reports to the general assembly. Personal information regarding a student in an annual report submitted pursuant to this subsection shall be kept confidential as required under the federal Family Educational Rights and Privacy Act, 20 U.S.C. §1232g, and in the same manner as personal information in student records maintained, created, collected, or assembled by or for a school corporation or educational institution in accordance with section 22.7, subsection 1.
   NEW SUBSECTION.  83.  Require third-party administrators or vendors of the education savings account program to fully cooperate with the department and the office of auditor of state for performance audits of education savings account expenditures, including providing access to student eligibility verification, information necessary to evaluate compliance and detect potential fraud, and vendor information. The board shall require an annual independent audit, separate from the financial audit required under section 257.11B, to verify compliance with education savings account program requirements. Such audit shall constitute a public record under chapter 22.
   NEW SUBSECTION.  84.  Ensure that any contract with a third-party administrator or vendor related to the education savings account program meets all of the following requirements:
   a.  The contract is awarded through a competitive bidding process.
   b.  Contract terms, including fees and data security provisions, constitute a public record under chapter 22.
   c.  Fees must not exceed three percent of the total funds administered on behalf of education savings account participants and must not exceed direct educational costs.
   d.  Payments to vendors must be made in monthly or quarterly installments.
    Sec. 2.  Section 257.11B, subsection 1, paragraph b, subparagraph (1), Code 2026, is amended to read as follows:
   (1)  “Qualified educational expenses” includes tuition and fees at a qualified nonpublic school, textbooks, fees or payments for educational therapies, including tutoring or cognitive skills training, curriculum fees, software, and materials for a course of study for a specific subject matter or grade level, tuition or fees for nonpublic online education programs, tuition for vocational and life skills education approved by the department of education, education materials and services for pupils with disabilities from an accredited provider, including the cost of paraprofessionals and assistants who are trained in accordance with state law, standardized test fees, and advanced placement examinations or examinations related to postsecondary education admission or credentialing.
    Sec. 3.  Section 257.11B, subsection 1, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0c.  “Qualified nonpublic school” means a nonpublic school that complies with all of the following:
   (1)  The governing body of the nonpublic school adheres to the accountability and transparency requirements applicable to the boards of directors of school districts in the same manner as the boards of directors of school districts.
   (2)  The nonpublic school adheres to the data reporting requirements applicable to school districts in the same manner as a school district.
   (3)  The nonpublic school adheres to the accreditation standards applicable to school districts that are currently accredited by the department of education, including standards related to courses offered and taught by the nonpublic school, in the same manner as a school district.
   (4)  The nonpublic school adheres to the teacher employment and teacher licensing requirements applicable to school districts in the same manner as a school district.
   (5)  The nonpublic school annually reports to the department of education the number of residents who applied for admission for purposes of participation in the education savings account program and the number of resident students who were denied admission. The report must include the reason for each denial. Personal information regarding an applicant in a report submitted pursuant to this subparagraph shall be kept confidential as required under the federal Family Educational Rights and Privacy Act, 20 U.S.C. §1232g, and in the same manner as personal information in student records maintained, created, collected, or assembled by or for a school corporation or educational institution in accordance with section 22.7, subsection 1.
   (6)  The nonpublic school reports to the department of education the number of students participating in the education savings account program who withdraw from the nonpublic school and reenter a public school during the school year. The report must indicate whether the student’s return to a public school was voluntary or the result of removal by the nonpublic school. Personal information regarding a student in a report submitted pursuant to this subparagraph shall be kept confidential as required under the federal Family Educational Rights and Privacy Act, 20 U.S.C. §1232g, and in the same manner as personal information in student records maintained, created, collected, or assembled by or for a school corporation or educational institution in accordance with section 22.7, subsection 1.
   (7)  The nonpublic school refunds education savings account funds if a student participating in the education savings account program withdraws from the school prior to the end of the semester. The nonpublic school must report a student’s withdrawal in a manner determined by the department of education. The amount of the refund shall be prorated based on the number of school days the student was enrolled in the nonpublic school. The nonpublic school shall pay the amount of the refund to the pupil’s district of residence or, if the pupil has moved out of the state, shall remit the refund to the department of education for deposit in the general fund of the state.
   (8)  The nonpublic school does not increase tuition or mandatory fees for a school year by a rate greater than the state percent of growth rate applicable to school districts for that school year. The tuition and mandatory fees charged by the nonpublic school to a student participating in the education savings account program must not exceed one hundred twenty-five percent of the state cost per pupil funding amount for the applicable school year.
   (9)  The nonpublic school annually reports to the department of education the tuition and mandatory fee schedules for each grade level at each school that enrolls students participating in the education savings account program.
   (10)  The nonpublic school assumes full responsibility for providing and administering any transportation services, instructional services, or materials managed by public schools under chapter 285 for students enrolled in the nonpublic school and participating in the education savings account program.
    Sec. 4.  NEW SECTION.  268.8  Independent evaluation of the education savings account program.
   For the school year beginning July 1, 2026, and every five years thereafter, the university shall conduct an independent evaluation of the education savings account program in section 257.11B. The evaluation shall include academic outcomes and demographic characteristics of participating students, patterns of persistence and withdrawals, and participation trends for students who have never attended a public school.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the education savings account (ESA) program, including the establishment and requirements of qualified nonpublic schools. The education savings account program is a program that provides funds to pupils who attend nonpublic schools to pay for qualified educational expenses, including but not limited to tuition, tutoring or cognitive skill training fees, educational therapy costs, software expenses, and expenses related to course materials.
   The bill establishes a category of qualified nonpublic schools that must comply with public school standards of accountability and transparency, data reporting, accreditation standards, and teacher employment and licensing requirements.
   The bill amends the definition of “qualified education expense” to provide that only tuition and fees at a qualified nonpublic school are qualified educational expenses for purposes of the ESA program.
   The bill requires qualified nonpublic schools to report to the department of education the number of residents who applied for admission for purposes of participation in the ESA program and the number of resident students who were denied admission, including the reason for each denial; to report to the department the number of students participating in the ESA program who withdraw from the nonpublic school and reenter a public school during the school year, indicating whether the student’s return to a public school was voluntary; to refund ESA funds if a student participating in the ESA program withdraws from the school prior to the end of the semester; to not increase tuition or mandatory fees for a school year by a rate greater than the state percent of growth rate applicable to school districts for that school year; to annually report to the department the tuition and mandatory fee schedules for each grade level at each school that enrolls students participating in the ESA program; and to assume full responsibility for providing and administering any transportation services, instructional services, or materials managed by public schools for nonpublic school ESA participants.
   The bill requires the department of education to notify each school district of resident students who have been approved to participate in the ESA program no later than the date on which the parent or guardian of the student is notified of the student’s approval to participate in the program; to make available to the public and submit to the general assembly a report relating to tuition and mandatory fee schedules of qualified nonpublic schools; to require third-party entities and qualified firms of the ESA program to submit annual reports detailing ESA expenditures; to require third-party administrators or vendors of the ESA program to fully cooperate with the department and the office of auditor of state for performance audits of ESA expenditures; and ensure that any contract with a third-party administrator or vendor related to the ESA program meets the requirements in the bill.
   Lastly, the bill requires the university of northern Iowa to conduct an independent evaluation of the ESA program every five years.