SF 453 (LSB 2568XS (4) 91)

SENATE FILE 453

BY  DONAHUE

A BILL FOR

An Act relating to school district and area education agency funding and education savings accounts, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
TRANSPORTATION

    Section 1.  Section 285.2, subsection 1, paragraph a, Code 2025, is amended to read as follows:
   a.  (1)  Boards Except as provided in subparagraph (2), boards of directors of school districts shall be required to provide transportation services to nonpublic school pupils as provided in section 285.1 when the general assembly appropriates funds to the department of education for the payment of claims for transportation costs submitted by the school district.
   (2)  Boards of directors of school districts shall not be required to provide transportation services to nonpublic school pupils of nonpublic schools that accept payments from individual accounts under section 257.11B.
    Sec. 2.  Section 285.3, subsection 1, Code 2025, is amended to read as follows:
   1.  a.  A Except as provided in paragraph “b”, a parent or legal guardian of a student attending an accredited nonpublic school, who furnishes transportation for the student pursuant to section 285.1, subsection 17, paragraph “c”, and who meets the requirements of subsection 2 of this section, is entitled to reimbursement equal to an amount calculated under the provisions of section 285.1, subsection 3. In addition, a parent or guardian who transports one or more family members more than four miles to their nonpublic school of attendance shall be entitled to one supplemental mileage payment per family, per claim period, equal to thirteen percent of the parental reimbursement for the claim period rounded to the nearest whole dollar.
   b.  A parent or guardian of a student attending a nonpublic school, who furnishes transportation described in paragraph “a”, is not entitled to reimbursement or a supplemental mileage payment under paragraph “a”, if the parent or guardian uses funds from a pupil’s individual account under section 257.11B to make a payment to a nonpublic school.
    Sec. 3.  APPLICABILITY.  This division of this Act applies to school budget years beginning on or after July 1, 2025.
DIVISION II
SCHOOL AID FORMULA FOR NONPUBLIC SCHOOL SHARED TIME

    Sec. 4.  Section 257.6, subsection 1, paragraph a, subparagraph (3), Code 2025, is amended to read as follows:
   (3)  Shared-time and part-time pupils of school age enrolled in public schools within the district, irrespective of the districts in which the pupils reside, in the proportion that the time for which they are enrolled or receive instruction for the school year is to the time that full-time pupils carrying a normal course schedule, at the same grade level, in the same school district, for the same school year, are enrolled and receive instruction. Tuition charges to the parent or guardian of a shared-time or part-time nonresident pupil shall be reduced by the amount of any increased state aid received by the district by the counting of the pupil unless the pupil is also enrolled in a nonpublic school that accepts funds from individual accounts under section 257.11B. This subparagraph applies to pupils enrolled in grades nine through twelve under section 299A.8 and to pupils from accredited nonpublic schools accessing classes or services on the accredited nonpublic school premises under section 256.12 or on the school district site, but excludes accredited nonpublic school pupils receiving classes or services funded entirely by federal grants or allocations.
DIVISION III
AREA EDUCATION AGENCIES MEDIA AND EDUCATION COSTS FOR NONPUBLIC STUDENTS

    Sec. 5.  Section 257.37, subsection 4, Code 2025, is amended to read as follows:
   4.  “Enrollment served” means the basic enrollment of all school districts within the boundaries of the area education agency plus the number of nonpublic school pupils served by the area education agency with media services or educational services, as applicable, other than nonpublic school pupils of nonpublic schools that accept funds from individual accounts under section 257.11B, and except that if a nonpublic school pupil or a pupil attending another district under a whole grade sharing agreement or open enrollment receives services through an area other than the area of the pupil’s residence, the pupil shall be deemed to be served by the area of the pupil’s residence, which shall by contractual arrangement reimburse the area through which the pupil actually receives services. Each school district shall include in the enrollment report submitted pursuant to section 257.6, subsection 1, the number of nonpublic school pupils within each school district for media and educational services served by the area. However, the school district shall not include in the enrollment report nonpublic school pupils receiving classes or services funded entirely by federal grants or allocations.
    Sec. 6.  Section 257.37, subsection 5, Code 2025, is amended to read as follows:
   5.  a.  If an area education agency does not serve nonpublic school pupils who attend nonpublic schools that do not accept funds from individual accounts under section 257.11B in a manner comparable to services provided public school pupils for media and educational services, as determined by the state board of education, the state board shall instruct the department of management to reduce the funds for media services and educational services within the area one time by an amount to compensate for such reduced services. The media services budget shall be reduced by an amount equal to the product of the cost per pupil in basic enrollment for the budget year for media services times the difference between the enrollment served and the basic enrollment recorded for the area. The educational services budget shall be reduced by an amount equal to the product of the cost per pupil in basic enrollment for the budget year for educational services times the difference between the enrollment served and the basic enrollment recorded for the area.
   b.  This subsection applies only to media and educational services which cannot be diverted for religious purposes.
   c.  Notwithstanding this subsection, an area education agency shall distribute to nonpublic schools that do not accept funds from individual accounts under section 257.11B media materials purchased wholly or partially with federal funds in a manner comparable to the distribution of such media materials to public schools as determined by the director of the department of education.
    Sec. 7.  Section 273.2, subsection 3, paragraph a, Code 2025, is amended to read as follows:
   a.  The area education agency shall furnish educational services and programs as provided in  section 273.1, this section, sections 273.3 through 273.8, and chapter 256B to pupils enrolled in public or nonpublic schools which are on the list of accredited schools pursuant to section 256.11, which request to receive such services, except to pupils as provided in subsection 15. The programs and services provided shall be at least commensurate with programs and services existing on July 1, 1974. The programs and services provided to pupils enrolled in nonpublic schools shall be comparable to programs and services provided to pupils enrolled in public schools within constitutional guidelines.
    Sec. 8.  Section 273.2, subsection 3, paragraph b, unnumbered paragraph 1, Code 2025, is amended to read as follows:
   The Except nonpublic schools that accept payments from parents or guardians with an account under section 257.11B, the area education agency may furnish evidence-based professional development services to public or nonpublic schools which are on the list of accredited schools pursuant to section 256.11 if any of the following requirements are satisfied:
    Sec. 9.  Section 273.2, subsection 5, paragraph a, Code 2025, is amended to read as follows:
   a.  The area education agency may furnish services under subsection 3 or 4 to public or nonpublic schools located within its boundaries, or within the boundaries of a contiguous area education agency, which are on the list of accredited schools pursuant to section 256.11, except for nonpublic schools that accept payments from accounts under section 257.11B.
    Sec. 10.  Section 273.2, subsection 6, paragraph d, Code 2025, is amended to read as follows:
   d.  Auxiliary services for nonpublic school pupils as provided in section 256.12. However, if auxiliary services are provided their funding shall be based on the type of service provided, except if the parent or guardian of a nonpublic school pupil uses funds from a pupil’s individual account under section 257.11B to make a payment to an accredited nonpublic school, no funding shall be provided to the nonpublic school pupil.
    Sec. 11.  Section 273.2, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  A nonpublic school pupil whose parent or guardian uses funds from the pupil’s individual account under section 257.11B to make a payment to an accredited nonpublic school, the nonpublic school pupil shall not be eligible to use educational services and programs provided under this section, unless the pupil pays the area education agency directly for the services and programs.
DIVISION IV
SCHOOL TUITION ORGANIZATION TAX CREDIT

    Sec. 12.  Section 422.11S, subsection 2, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  d.  The contribution is used by a qualified school that does not accept payments from a parent or guardian using funds from a pupil’s individual account under section 257.11B.
    Sec. 13.  APPLICABILITY.  This division of this Act applies to contributions made to a school tuition organization on or after July 1, 2025.
DIVISION V
SCHOOL TUITION AND TEXTBOOK TAX CREDIT

    Sec. 14.  Section 422.12, subsection 2, paragraph b, Code 2025, is amended to read as follows:
   b.  A tuition credit equal to twenty-five percent of the first two thousand dollars which the taxpayer has paid to others for each dependent in grades kindergarten through twelve, for tuition and textbooks of each dependent who is receiving private instruction or who is attending an elementary or secondary school situated in Iowa, which school is accredited or approved under section 256.11, which is not operated for profit, which is not accepting payments from a parent or guardian using funds from a pupil’s individual account under section 257.11B, and which adheres to the provisions of the federal Civil Rights Act of 1964 and chapter 216. Notwithstanding any other provision, all other credits allowed under this subsection shall be deducted before the tuition credit under this paragraph. The department, when conducting an audit of a taxpayer’s return, shall also audit the tuition tax credit portion of the tax return.
    Sec. 15.  APPLICABILITY.  This division of this Act applies to tuition and textbooks purchased for school budget years beginning on or after July 1, 2025.
DIVISION VI
CONCURRENT ENROLLMENT

    Sec. 16.  Section 261E.2, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  01.  “Accredited nonpublic school” means a nonpublic school that does not accept payments from a parent or guardian using funds from a pupil’s individual account under section 257.11B.
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 public school funding and education savings accounts (ESAs).
   DIVISION I —— TRANSPORTATION. The bill strikes the requirement that the board of directors of a school district provide transportation services to nonpublic school pupils when the general assembly appropriates funds to the department of education for the payment of claims for transportation costs, if the nonpublic school accepts payments using funds from an ESA. The bill also specifies parents and guardians of nonpublic school students are not entitled to reimbursement for transportation costs or supplemental mileage payments, if the parent or guardian utilizes an ESA for payments to a nonpublic school.
   The division applies to school budget years beginning on or after July 1, 2025.
   DIVISION II —— SCHOOL AID FORMULA FOR NONPUBLIC SCHOOL SHARED TIME. Under the bill, for shared-time and part-time pupils enrolled in a school district, the tuition charged to the parent or guardian by the school district is reduced by the amount of any increased state aid received by the district by counting the pupil in enrollment, unless the pupil attends a nonpublic school that accepts payments from accounts under Code section 257.11B.
   DIVISION III —— AREA EDUCATION AGENCIES MEDIA AND EDUCATION COSTS FOR NONPUBLIC STUDENTS. A nonpublic school pupil who attends a nonpublic school that accepts payments from accounts under Code section 257.11B shall not be considered part of the enrollment for purposes of “enrollment served” under Code section 257.37.
   The bill strikes provisions requiring area education agencies to provide educational, programming, and professional services to nonpublic schools that accept payments from parents or guardians using an ESA and to the pupils that are the subject of such payments.
   DIVISION IV —— SCHOOL TUITION ORGANIZATION TAX CREDIT —— REPEAL. The bill provides that contributions made to a student tuition organization (STO) that are used by a qualified school that accepts payments from a parent using funds from an ESA are not eligible to receive the STO tax credit. The provision applies to contributions made to a school tuition organization on or after July 1, 2025.
   DIVISION V —— SCHOOL TUITION AND TEXTBOOK TAX CREDIT. The bill modifies the tuition and textbook tax credit in Code section 422.12(b) that is equal to 25 percent of the first $2,000 the taxpayer has paid others for tuition and textbooks for each dependent receiving private instruction at an accredited nonpublic school that does not accept payments from ESA funds.
   The division applies to tuition and textbooks purchased for school budget years beginning on or after July 1, 2025.
   DIVISION VI —— CONCURRENT ENROLLMENT. The bill defines “accredited nonpublic school” for purposes of Code chapter 261E (senior year plus program) to mean a nonpublic school that does not accept payments from a parent or guardian using an ESA. By defining “accredited nonpublic school” in Code chapter 261E in this manner, a pupil who attends a nonpublic school that accepts ESA funds is not eligible for the senior year plus program under Code chapter 261E.