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House File 68 - IntroducedA Bill ForAn Act 1relating to education programs and funding by
2establishing an education savings account program, modifying
3certain school district categorical funding supplements,
4making appropriations, providing penalties, and including
5effective date and retroactive applicability provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2Short Title
3 Section 1. SHORT TITLE. This Act shall be known and may be
4cited as the “Students First Act”.
5DIVISION II
6Education Savings Account PROGRAM
7 Sec. 2. Section 256.9, Code 2023, is amended by adding the
8following new subsection:
9 NEW SUBSECTION. 66. Adopt rules relating to the
10administration of, and applications for, the education savings
11account program pursuant to section 257.11B, including but not
12limited to application processing timelines and information
13required to be submitted by a parent or guardian.
14 Sec. 3. Section 257.10, subsection 9, paragraph c,
15subparagraph (1), Code 2023, is amended to read as follows:
16(1) The unadjusted teacher salary supplement district cost
17is the teacher salary supplement district cost per pupil for
18each school district for a budget year multiplied by the sum
19of the budget enrollment for that school district plus the
20number of resident pupils in the school district that received
21an education savings account payment under section 257.11B for
22the base year.
23 Sec. 4. Section 257.10, subsection 10, paragraph c,
24subparagraph (1), Code 2023, is amended to read as follows:
25(1) The unadjusted professional development supplement
26district cost is the professional development supplement
27district cost per pupil for each school district for a budget
28year multiplied by the sum of the budget enrollment for that
29school district plus the number of resident pupils in the
30school district that received an education savings account
31payment under section 257.11B for the base year.
32 Sec. 5. Section 257.10, subsection 11, paragraph c,
33subparagraph (1), Code 2023, is amended to read as follows:
34(1) The unadjusted early intervention supplement district
35cost is the early intervention supplement district cost per
-1-1pupil for each school district for a budget year multiplied
2by the sum of the budget enrollment for that school district
3plus the number of resident pupils in the school district that
4received an education savings account payment under section
5257.11B for the base year.
6 Sec. 6. Section 257.10, subsection 12, paragraph c,
7subparagraph (1), Code 2023, is amended to read as follows:
8(1) The unadjusted teacher leadership supplement district
9cost is the teacher leadership supplement district cost per
10pupil for each school district for a budget year multiplied
11by the sum of the budget enrollment for that school district
12plus the number of resident pupils in the school district that
13received an education savings account payment under section
14257.11B for the base year.
15 Sec. 7. NEW SECTION. 257.11B Education savings account
16program.
171. For purposes of this section:
18a. “Nonpublic school” means the same as defined in section
19285.16.
20b. (1) “Qualified educational expenses” includes tuition
21and fees at a nonpublic school, textbooks, fees or payments for
22educational therapies, including tutoring or cognitive skills
23training, curriculum fees, software, and materials for a course
24of study for a specific subject matter or grade level, tuition
25or fees for nonpublic online education programs, tuition for
26vocational and life skills education approved by the department
27of education, education materials and services for pupils with
28disabilities from an accredited provider, including the cost of
29paraprofessionals and assistants who are trained in accordance
30with state law, standardized test fees, and advanced placement
31examinations or examinations related to postsecondary education
32admission or credentialing.
33(2) “Qualified educational expenses” shall be limited to
34the items described in subparagraph (1) and rules adopted
35by the department to implement this section and does not
-2-1include transportation costs for the pupil, the cost of food
2or refreshments consumed by the pupil, the cost of clothing
3for the pupil, or the cost of disposable materials, including
4but not limited to paper, notebooks, pencils, pens, and art
5supplies.
6c. “Resident” means the same as defined in section 282.1,
7subsection 2.
82. a. (1) For the school budget year beginning July
91, 2023, the following pupils who attend a nonpublic school
10for that school budget year shall be eligible to receive an
11education savings account payment:
12(a) A resident pupil who is eligible to enroll in
13kindergarten.
14(b) A resident pupil who is eligible to enroll in grades one
15through twelve and was not enrolled in a nonpublic school for
16the school year immediately preceding the school year for which
17the education savings account payment is requested.
18(c) A resident pupil who is eligible to enroll in grades
19one through twelve and was enrolled in a nonpublic school year
20immediately preceding the school year for which the education
21savings account payment is requested if the pupil’s household
22has an annual income less than or equal to three hundred
23percent of the most recently revised poverty income guidelines
24published by the United States department of health and human
25services.
26(2) For the school budget year beginning July 1, 2024, the
27following pupils who attend a nonpublic school for that school
28budget year shall be eligible to receive an education savings
29account payment:
30(a) A resident pupil who is eligible to enroll in
31kindergarten.
32(b) A resident pupil who is eligible to enroll in grades one
33through twelve and was not enrolled in a nonpublic school for
34the school year immediately preceding the school year for which
35the education savings account payment is requested.
-3- 1(c) A resident pupil who is eligible to enroll in grades one
2through twelve and was enrolled in a nonpublic school for the
3school year immediately preceding the school year for which the
4education savings account payment is requested if the pupil’s
5household has an annual income less than or equal to four
6hundred percent of the most recently revised poverty income
7guidelines published by the United States department of health
8and human services.
9(d) A resident pupil who received an education savings
10account payment in the immediately preceding school budget
11year.
12(3) For school budget years beginning on or after July
131, 2025, resident pupils eligible to enroll in kindergarten
14through grade twelve who attend a nonpublic school for the
15applicable school budget year shall be eligible to receive an
16education savings account payment.
17b. Education savings account payments shall be made
18available to parents and guardians in the manner authorized
19under subsection 5 for the payment of qualified educational
20expenses as provided in this section. Parents and guardians
21shall first use education savings account payments for all
22qualified educational expenses that are tuition and fees for
23which the parent or guardian is responsible for payment at the
24pupil’s nonpublic school prior to using the education savings
25account for other qualified educational expenses.
263. a. On or after January 1, but on or before June 30,
27preceding the school year for which the education savings
28account payment is requested, the parent or guardian of an
29eligible pupil may request an education savings account payment
30by submitting an application to the department of education.
31b. Within thirty days following submission of an
32application, the department of education or third-party entity
33shall notify the parent or guardian of each pupil approved
34for the following school year and specify the amount of the
35education savings account payment for the pupil, if known at
-4-1the time of the notice. As soon as practical following the
2processing of all applications, the department of education or
3third-party entity shall determine the number of pupils in each
4school district approved for the school budget year and provide
5such information to the department of management.
6c. Education savings account payments shall only be approved
7for one school year and applications must be submitted annually
8for payments in subsequent school years.
94. Each education savings account payment shall be equal to
10the regular program state cost per pupil for the same school
11budget year.
125. An education savings account fund is created in
13the state treasury under the control of the department of
14education consisting of moneys appropriated to the department
15of education for the purpose of providing education savings
16account payments under this section. For the fiscal year
17commencing July 1, 2023, and each succeeding fiscal year,
18there is appropriated from the general fund of the state
19to the department of education to be credited to the fund
20the amount necessary to pay all education savings account
21payments approved for that fiscal year. The director of the
22department of education has all powers necessary to carry out
23and effectuate the purposes, objectives, and provisions of this
24section pertaining to the fund, including the power to do all
25of the following:
26a. Make and enter into contracts with a third-party entity
27necessary for the administration of the program.
28b. Procure insurance against any loss in connection with the
29assets of the fund or require a surety bond.
30c. Contract with a qualified firm, including but not limited
31to the third-party entity under paragraph “a”, to allocate
32funds from each pupil’s account for the payment of qualified
33educational expenses by the pupil’s parent or guardian.
34d. Require the qualified firm under paragraph “c” to
35offer the department of education the capability of automated
-5-1clearinghouse transactions, electronic commerce transactions,
2reimbursement transactions, and debit card payments in order to
3meet the diverse needs of participating parents and guardians
4to pay for qualified educational expenses. The director of
5the department of education shall determine which transaction
6capabilities will be available to participating parents and
7guardians.
8e. Reduce the possibility of waste, fraud, and abuse,
9and ensure that any technology platform used for the program
10meets the state’s highest security requirements, including
11compliance.
12f. Conduct audits or other reviews necessary to properly
13administer the program.
14g. Adopt rules for the administration of the fund and
15accounts within the fund.
166. a. For each pupil approved for an education savings
17account payment, the department of education or third-party
18entity shall establish an individual account for that pupil
19in the education savings account fund. The amount of the
20pupil’s education savings account payment shall be deposited
21into the pupil’s individual account on July 15 or thirty days
22following submission of the application, whichever is later,
23and such amount shall be immediately available for the payment
24of qualified educational expenses incurred by the parent or
25guardian for the pupil during that fiscal year using a payment
26method authorized under subsection 5.
27b. A nonpublic school or other provider of qualified
28educational expenses that accepts payment from a parent or
29guardian using funds from a pupil’s individual account in the
30fund shall not refund, rebate, or share any portion of such
31payment with the parent, guardian, or pupil.
32c. Moneys remaining in a pupil’s individual account
33upon conclusion of the fiscal year shall remain in the
34pupil’s individual account for the payment of qualified
35educational expenses in future fiscal years during which the
-6-1pupil participates in the program until the pupil becomes
2ineligible under the program or until the remaining amounts are
3transferred to the state general fund under subsection 8.
47. A person who makes a false claim for the purpose of
5obtaining an education savings account payment or who knowingly
6receives the payment or makes a payment from an individual
7account within the fund without being legally entitled to do
8so is guilty of a fraudulent practice under chapter 714. The
9false claim for an education savings account or a payment from
10an individual account shall be disallowed. The department of
11education or third-party entity shall also close the pupil’s
12individual account in the fund and transfer any remaining
13moneys in the account for deposit in the general fund of the
14state. If the improperly obtained amounts have been disbursed
15from the applicable individual account, the department of
16education or third-party entity shall recover such amounts
17from the parent or guardian, including by initiating legal
18proceedings to recover such amounts, if necessary. A parent or
19guardian who commits a fraudulent practice under this section
20is prohibited from participating in the education savings
21account program in the future.
228. Moneys remaining in a pupil’s individual account when the
23pupil graduates from high school or turns twenty years of age,
24whichever occurs first, shall be transferred by the department
25of education for deposit in the general fund of the state.
269. a. A parent may appeal to the state board of education
27any administrative decision the department of education or
28third-party entity makes pursuant to this section, including
29but not limited to determinations of eligibility, allowable
30expenses, and removal from the program. The department or
31third-party entity shall notify the parent or guardian in
32writing of the appeal process at the same time the department
33notifies the parent or guardian of the administrative decision.
34The state board of education shall establish the appeals
35process consistent with chapter 17A and shall post such appeal
-7-1process information on the state board of education’s internet
2site.
3b. The state board of education shall refer cases of
4substantial misuse of education savings account program funds
5to the attorney general for the purpose of collection or for
6the purpose of a criminal investigation if the state board of
7education obtains evidence of fraudulent use of an account.
810. a. This section shall not be construed to authorize
9the state or any political subdivision of the state to exercise
10authority over any nonpublic school or construed to require a
11nonpublic school to modify its academic standards for admission
12or educational program in order to receive payment from a
13parent or guardian using funds from a pupil’s account in the
14education savings account fund.
15b. This section shall not be construed to expand the
16authority of the state or any political subdivision of the
17state to impose regulations upon any nonpublic school that are
18not necessary to implement this section.
19c. A nonpublic school that accepts payment from a parent or
20guardian using funds from a pupil’s account in the education
21savings account fund is not an agent of this state or of a
22political subdivision of this state.
23d. Rules adopted by the department of education to implement
24this section that impose an undue burden on a nonpublic school
25are invalid.
26e. A nonpublic school that accepts payment from a parent or
27guardian using funds from a pupil’s account in the education
28savings account fund shall be given the maximum freedom
29possible to provide for the educational needs of the school’s
30students, consistent with state and federal law.
3111. a. Each pupil participating in the education savings
32account program is required to take all applicable state and
33federally required student assessments and the results of
34those assessments shall be provided to the pupil’s parents or
35guardians and reported to the department of education.
-8- 1b. The department of education shall compile all such
2reported assessment results in order to analyze student
3proficiency and academic progress among those pupils
4participating in the program, including analysis of graduation
5rates, proficiency, and progress based on grade level,
6gender, race, and household income level. The results of the
7department’s analysis shall be included in the annual condition
8of education report.
9 Sec. 8. Section 422.7, Code 2023, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 44. Subtract, to the extent included, the
12amount of an education savings account payment under section
13257.11B received by the taxpayer for payment of qualified
14educational expenses.
15 Sec. 9. EMERGENCY RULES. The department of education
16may adopt emergency rules under section 17A.4, subsection 3,
17and section 17A.5, subsection 2, paragraph “b”, to implement
18the provisions of the section of this Act enacting section
19256.9, subsection 66, and section 257.11B, and the rules shall
20be effective immediately upon filing unless a later date is
21specified in the rules. Any rules adopted in accordance with
22this section shall also be published as a notice of intended
23action as provided in section 17A.4.
24 Sec. 10. EFFECTIVE DATE. This division of this Act, being
25deemed of immediate importance, takes effect upon enactment.
26 Sec. 11. RETROACTIVE APPLICABILITY.The following applies
27retroactively to tax years beginning on or after January 1,
282023:
29The section of this division of this Act enacting section
30422.7, subsection 44.
31DIVISION III
32SCHOOL DISTRICT CATEGORICAL FUNDING
33 Sec. 12. Section 257.10, subsection 9, paragraph d, Code
342023, is amended to read as follows:
35d. For the budget year beginning July 1, 2009, the use
-9-1of the funds calculated under this subsection shall comply
2with the requirements of chapter 284 and shall be distributed
3to teachers pursuant to section 284.3A. For the budget year
4beginning July 1, 2010, and succeeding budget years, the use
5of the funds calculated under this subsection or available for
6use as provided in subsection 10, paragraph “d”, subsection 12,
7paragraph “d”, or section 257.46, subsection 3, shall comply
8with the requirements of chapter 284 and shall be distributed
9to teachers pursuant to section 284.3A.
10 Sec. 13. Section 257.10, subsection 10, paragraph d, Code
112023, is amended to read as follows:
12d. The use of the funds calculated under this subsection
13and any amount designated for professional development purposes
14from the school district’s flexibility account under section
15298A.2, subsection 2, shall comply with the requirements of
16chapter 284. If all professional development requirements of
17chapter 284 are met and funds received under this subsection
18remain unexpended and unobligated at the end of a fiscal year
19beginning on or after July 1, 2017, the school district may
20transfer all or a portion of such unexpended and unobligated
21funds for deposit in the school district’s flexibility account
22established under section 298A.2, subsection 2. At the end
23of a fiscal year beginning on or after July 1, 2022, the
24school district may use all or a portion of funds under this
25subsection for the purposes authorized under subsection 9,
26paragraph “d”.
27 Sec. 14. Section 257.10, subsection 12, paragraph d, Code
282023, is amended to read as follows:
29d. For the budget year beginning July 1, 2014, and
30succeeding budget years, the use of the funds calculated under
31this subsection shall comply with the requirements of chapter
32284 and shall be distributed to teachers pursuant to section
33284.15. The funds shall be used only to increase the payment
34for a teacher assigned to a leadership role pursuant to a
35framework or comparable system approved pursuant to section
-10-1284.15; to increase the percentages of teachers assigned to
2leadership roles; to increase the minimum teacher starting
3salary to thirty-three thousand five hundred dollars; to
4cover the costs for the time mentor and lead teachers are not
5providing instruction to students in a classroom; for coverage
6of a classroom when an initial or career teacher is observing
7or co-teaching with a teacher assigned to a leadership role;
8for professional development time to learn best practices
9associated with the career pathways leadership process; and for
10other costs associated with a framework or comparable system
11approved by the department of education under section 284.15
12with the goals of improving instruction and elevating the
13quality of teaching and student learning. If all requirements
14for the school district for the use of funds calculated
15under this subsection are met and funds received under this
16subsection remain unexpended and unobligated at the end of a
17fiscal year beginning on or after July 1, 2020, the school
18district may transfer all or a portion of such unexpended
19and unobligated funds for deposit in the school district’s
20flexibility account established under section 298A.2,
21subsection 2. At the end of a fiscal year beginning on or after
22July 1, 2022, the school district may use all or a portion of
23funds under this subsection for the purposes authorized under
24subsection 9, paragraph “d”.
25 Sec. 15. Section 257.46, subsection 3, Code 2023, is amended
26to read as follows:
273. If any portion of the gifted and talented program budget
28remains unexpended at the end of the budget year, the remainder
29shall be carried over to the subsequent budget year and added
30to the gifted and talented program budget for that year. At
31the end of a fiscal year beginning on or after July 1, 2022,
32the school district may use all or a portion of funds for the
33purposes authorized under subsection 9, paragraph “d”.
34 Sec. 16. EFFECTIVE DATE. This division of this Act, being
35deemed of immediate importance, takes effect upon enactment.
-11-1EXPLANATION
2The inclusion of this explanation does not constitute agreement with
3the explanation’s substance by the members of the general assembly.
4This bill relates to education programs and funding by
5establishing an education savings account program and modifying
6certain school district categorical funding supplements.
7DIVISION I — SHORT TITLE. Division I provides that the bill
8shall be known and may be cited as the “Students First Act”.
9DIVISION II — EDUCATION SAVINGS ACCOUNT PROGRAM. Division
10II of the bill establishes an education savings account program
11for school budget years beginning on or after July 1, 2023, for
12the payment of qualified educational expenses incurred by the
13parent or guardian of an eligible pupil.
14For the school budget year beginning July 1, 2023, the
15following pupils who attend a nonpublic school for that school
16budget year shall be eligible to receive an education savings
17account payment: (1) a resident pupil who is eligible to
18enroll in kindergarten; (2) a resident pupil who is eligible
19to enroll in grades 1 through 12 and was not enrolled in a
20nonpublic school for the immediately preceding school year;
21(3) a resident pupil who is eligible to enroll in grades 1
22through 12 and was enrolled in a nonpublic school for the
23immediately preceding school year if the pupil’s household has
24an annual income less than or equal to 300 percent of the most
25recently revised poverty income guidelines. For the school
26budget year beginning July 1, 2024, the following pupils who
27attend a nonpublic school for that school budget year shall be
28eligible to receive an education savings account payment: (1)
29a resident pupil who is eligible to enroll in kindergarten;
30(2) a resident pupil who is eligible to enroll in grades 1
31through 12 and was not enrolled in a nonpublic school for the
32immediately preceding school year; (3) a resident pupil who
33is eligible to enroll in grades 1 through 12 and was enrolled
34in a nonpublic school for the immediately preceding school
35year if the pupil’s household has an annual income less than
-12-1or equal to 400 percent of the most recently revised poverty
2income guidelines; and (4) a resident pupil who received an
3education savings account payment in the immediately preceding
4school budget year. For school budget years beginning on or
5after July 1, 2025, resident pupils eligible to enroll in
6kindergarten through grade 12 who attend a nonpublic school for
7the applicable school budget year shall be eligible to receive
8an education savings account payment.
9On or after January 1, but on or before June 30 preceding
10the school year for which the education savings account payment
11is requested, the parent or guardian of an eligible pupil
12may request a payment by submitting an application to the
13department of education.
14Within 30 days following submission of an application, the
15department of education must notify the parent or guardian of
16each pupil approved for the following school year and specify
17the amount of the education savings account payment for the
18pupil, if known at the time of the notice. Education savings
19account payments shall only be approved for one school year and
20applications must be submitted each year.
21The bill creates an education savings account fund in
22the state treasury under the control of the department of
23education consisting of moneys appropriated to the department
24of education for the purpose of providing education savings
25account payments. For the fiscal year commencing July 1, 2023,
26and each succeeding fiscal year, the bill appropriates from the
27general fund of the state to the department of education for
28deposit in the fund the amount necessary to pay all education
29savings account payments approved for that fiscal year. For
30each pupil approved, the department of education must establish
31an individual account for that pupil in the fund. The amount
32of the pupil’s payment is deposited into the pupil’s account
33on July 15 or 30 days after submission of the application,
34whichever is later, and such amount is available for use by
35parents and guardians for the payment of qualified educational
-13-1expenses, as defined in the bill, incurred by the parent or
2guardian for the pupil during that fiscal year. The amount of
3the education savings account payment is equal to the regular
4program state cost per pupil for the same school budget year.
5The bill authorizes the department to contract with a
6third-party entity for administration of the program and
7includes applicable references to such a third-party entity.
8Parents and guardians shall first use education savings
9account payments for all qualified educational expenses that
10are tuition and fees for which the parent or guardian is
11responsible for payment at the pupil’s nonpublic school prior
12to using the education savings account for other qualified
13educational expenses.
14The bill provides that moneys remaining in a pupil’s account
15upon the conclusion of the fiscal year shall remain in the
16pupil’s account in the fund for the payment of qualified
17educational expenses in future fiscal years during which the
18pupil participates in the program until the pupil becomes
19ineligible or until the remaining amounts are required to be
20transferred to the general fund of the state under the bill.
21For each pupil with a positive balance in the pupil’s account
22in the fund upon graduation from high school or reaching
2320 years of age, whichever occurs first, the department of
24education is required to transfer such remaining moneys for
25deposit in the general fund of the state.
26The bill establishes procedures for parent or guardian
27appeals to the state board of education and provides that a
28person who makes a false claim for the purpose of obtaining an
29education savings account payment or who knowingly receives the
30payment or makes a payment from an account in the fund without
31being legally entitled to do so is guilty of a fraudulent
32practice and is subject to a criminal penalty. The bill
33directs the department of education to recover program payments
34and amounts improperly awarded or paid and requires the closure
35of the pupil’s account and transfer of all remaining moneys to
-14-1the general fund of the state.
2The bill requires the department of education to compile all
3state and federally required student assessment results for
4participating pupils in order to analyze student proficiency
5and academic progress among those pupils participating in the
6program, including analysis of graduation rates, proficiency,
7and progress based on grade level, gender, race, and household
8income level. The results of the department’s analysis shall
9be included in the annual condition of education report.
10The bill also modifies the calculation of the teacher
11salary supplement district cost, the professional development
12supplement district cost, the early intervention supplement
13district cost, and the teacher leadership supplement district
14cost under Code section 257.10. Under the bill, each such
15supplement amount shall be calculated, in part, by multiplying
16the applicable supplement district cost per pupil by the sum
17of the school district’s budget enrollment plus the number
18of resident pupils in the school district that received an
19education savings account payment under the bill for the base
20year.
21Division II of the bill takes effect upon enactment. The
22bill also authorizes the department of education to adopt
23emergency rules to implement the program.
24The bill provides that an education savings account payment
25received by a taxpayer is not taxable income for purposes
26of state individual income taxation. This provision of the
27bill applies retroactively to tax years beginning on or after
28January 1, 2023.
29DIVISION III — SCHOOL DISTRICT CATEGORICAL FUNDING.
30 Division III of the bill authorizes school districts to use all
31or a portion of funds at the end of any fiscal year beginning
32on or after July 1, 2022, from the professional development
33categorical supplement, the teacher leadership categorical
34supplement, or the gifted and talented program for teacher
35salary categorical supplement purposes under the salary system
-15-1requirements of Code section 284.3A.
2Division III of the bill takes effect upon enactment.
-16-md/jh
2establishing an education savings account program, modifying
3certain school district categorical funding supplements,
4making appropriations, providing penalties, and including
5effective date and retroactive applicability provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2Short Title
3 Section 1. SHORT TITLE. This Act shall be known and may be
4cited as the “Students First Act”.
5DIVISION II
6Education Savings Account PROGRAM
7 Sec. 2. Section 256.9, Code 2023, is amended by adding the
8following new subsection:
9 NEW SUBSECTION. 66. Adopt rules relating to the
10administration of, and applications for, the education savings
11account program pursuant to section 257.11B, including but not
12limited to application processing timelines and information
13required to be submitted by a parent or guardian.
14 Sec. 3. Section 257.10, subsection 9, paragraph c,
15subparagraph (1), Code 2023, is amended to read as follows:
16(1) The unadjusted teacher salary supplement district cost
17is the teacher salary supplement district cost per pupil for
18each school district for a budget year multiplied by the sum
19of the budget enrollment for that school district plus the
20number of resident pupils in the school district that received
21an education savings account payment under section 257.11B for
22the base year.
23 Sec. 4. Section 257.10, subsection 10, paragraph c,
24subparagraph (1), Code 2023, is amended to read as follows:
25(1) The unadjusted professional development supplement
26district cost is the professional development supplement
27district cost per pupil for each school district for a budget
28year multiplied by the sum of the budget enrollment for that
29school district plus the number of resident pupils in the
30school district that received an education savings account
31payment under section 257.11B for the base year.
32 Sec. 5. Section 257.10, subsection 11, paragraph c,
33subparagraph (1), Code 2023, is amended to read as follows:
34(1) The unadjusted early intervention supplement district
35cost is the early intervention supplement district cost per
-1-1pupil for each school district for a budget year multiplied
2by the sum of the budget enrollment for that school district
3plus the number of resident pupils in the school district that
4received an education savings account payment under section
5257.11B for the base year.
6 Sec. 6. Section 257.10, subsection 12, paragraph c,
7subparagraph (1), Code 2023, is amended to read as follows:
8(1) The unadjusted teacher leadership supplement district
9cost is the teacher leadership supplement district cost per
10pupil for each school district for a budget year multiplied
11by the sum of the budget enrollment for that school district
12plus the number of resident pupils in the school district that
13received an education savings account payment under section
14257.11B for the base year.
15 Sec. 7. NEW SECTION. 257.11B Education savings account
16program.
171. For purposes of this section:
18a. “Nonpublic school” means the same as defined in section
19285.16.
20b. (1) “Qualified educational expenses” includes tuition
21and fees at a nonpublic school, textbooks, fees or payments for
22educational therapies, including tutoring or cognitive skills
23training, curriculum fees, software, and materials for a course
24of study for a specific subject matter or grade level, tuition
25or fees for nonpublic online education programs, tuition for
26vocational and life skills education approved by the department
27of education, education materials and services for pupils with
28disabilities from an accredited provider, including the cost of
29paraprofessionals and assistants who are trained in accordance
30with state law, standardized test fees, and advanced placement
31examinations or examinations related to postsecondary education
32admission or credentialing.
33(2) “Qualified educational expenses” shall be limited to
34the items described in subparagraph (1) and rules adopted
35by the department to implement this section and does not
-2-1include transportation costs for the pupil, the cost of food
2or refreshments consumed by the pupil, the cost of clothing
3for the pupil, or the cost of disposable materials, including
4but not limited to paper, notebooks, pencils, pens, and art
5supplies.
6c. “Resident” means the same as defined in section 282.1,
7subsection 2.
82. a. (1) For the school budget year beginning July
91, 2023, the following pupils who attend a nonpublic school
10for that school budget year shall be eligible to receive an
11education savings account payment:
12(a) A resident pupil who is eligible to enroll in
13kindergarten.
14(b) A resident pupil who is eligible to enroll in grades one
15through twelve and was not enrolled in a nonpublic school for
16the school year immediately preceding the school year for which
17the education savings account payment is requested.
18(c) A resident pupil who is eligible to enroll in grades
19one through twelve and was enrolled in a nonpublic school year
20immediately preceding the school year for which the education
21savings account payment is requested if the pupil’s household
22has an annual income less than or equal to three hundred
23percent of the most recently revised poverty income guidelines
24published by the United States department of health and human
25services.
26(2) For the school budget year beginning July 1, 2024, the
27following pupils who attend a nonpublic school for that school
28budget year shall be eligible to receive an education savings
29account payment:
30(a) A resident pupil who is eligible to enroll in
31kindergarten.
32(b) A resident pupil who is eligible to enroll in grades one
33through twelve and was not enrolled in a nonpublic school for
34the school year immediately preceding the school year for which
35the education savings account payment is requested.
-3- 1(c) A resident pupil who is eligible to enroll in grades one
2through twelve and was enrolled in a nonpublic school for the
3school year immediately preceding the school year for which the
4education savings account payment is requested if the pupil’s
5household has an annual income less than or equal to four
6hundred percent of the most recently revised poverty income
7guidelines published by the United States department of health
8and human services.
9(d) A resident pupil who received an education savings
10account payment in the immediately preceding school budget
11year.
12(3) For school budget years beginning on or after July
131, 2025, resident pupils eligible to enroll in kindergarten
14through grade twelve who attend a nonpublic school for the
15applicable school budget year shall be eligible to receive an
16education savings account payment.
17b. Education savings account payments shall be made
18available to parents and guardians in the manner authorized
19under subsection 5 for the payment of qualified educational
20expenses as provided in this section. Parents and guardians
21shall first use education savings account payments for all
22qualified educational expenses that are tuition and fees for
23which the parent or guardian is responsible for payment at the
24pupil’s nonpublic school prior to using the education savings
25account for other qualified educational expenses.
263. a. On or after January 1, but on or before June 30,
27preceding the school year for which the education savings
28account payment is requested, the parent or guardian of an
29eligible pupil may request an education savings account payment
30by submitting an application to the department of education.
31b. Within thirty days following submission of an
32application, the department of education or third-party entity
33shall notify the parent or guardian of each pupil approved
34for the following school year and specify the amount of the
35education savings account payment for the pupil, if known at
-4-1the time of the notice. As soon as practical following the
2processing of all applications, the department of education or
3third-party entity shall determine the number of pupils in each
4school district approved for the school budget year and provide
5such information to the department of management.
6c. Education savings account payments shall only be approved
7for one school year and applications must be submitted annually
8for payments in subsequent school years.
94. Each education savings account payment shall be equal to
10the regular program state cost per pupil for the same school
11budget year.
125. An education savings account fund is created in
13the state treasury under the control of the department of
14education consisting of moneys appropriated to the department
15of education for the purpose of providing education savings
16account payments under this section. For the fiscal year
17commencing July 1, 2023, and each succeeding fiscal year,
18there is appropriated from the general fund of the state
19to the department of education to be credited to the fund
20the amount necessary to pay all education savings account
21payments approved for that fiscal year. The director of the
22department of education has all powers necessary to carry out
23and effectuate the purposes, objectives, and provisions of this
24section pertaining to the fund, including the power to do all
25of the following:
26a. Make and enter into contracts with a third-party entity
27necessary for the administration of the program.
28b. Procure insurance against any loss in connection with the
29assets of the fund or require a surety bond.
30c. Contract with a qualified firm, including but not limited
31to the third-party entity under paragraph “a”, to allocate
32funds from each pupil’s account for the payment of qualified
33educational expenses by the pupil’s parent or guardian.
34d. Require the qualified firm under paragraph “c” to
35offer the department of education the capability of automated
-5-1clearinghouse transactions, electronic commerce transactions,
2reimbursement transactions, and debit card payments in order to
3meet the diverse needs of participating parents and guardians
4to pay for qualified educational expenses. The director of
5the department of education shall determine which transaction
6capabilities will be available to participating parents and
7guardians.
8e. Reduce the possibility of waste, fraud, and abuse,
9and ensure that any technology platform used for the program
10meets the state’s highest security requirements, including
11compliance.
12f. Conduct audits or other reviews necessary to properly
13administer the program.
14g. Adopt rules for the administration of the fund and
15accounts within the fund.
166. a. For each pupil approved for an education savings
17account payment, the department of education or third-party
18entity shall establish an individual account for that pupil
19in the education savings account fund. The amount of the
20pupil’s education savings account payment shall be deposited
21into the pupil’s individual account on July 15 or thirty days
22following submission of the application, whichever is later,
23and such amount shall be immediately available for the payment
24of qualified educational expenses incurred by the parent or
25guardian for the pupil during that fiscal year using a payment
26method authorized under subsection 5.
27b. A nonpublic school or other provider of qualified
28educational expenses that accepts payment from a parent or
29guardian using funds from a pupil’s individual account in the
30fund shall not refund, rebate, or share any portion of such
31payment with the parent, guardian, or pupil.
32c. Moneys remaining in a pupil’s individual account
33upon conclusion of the fiscal year shall remain in the
34pupil’s individual account for the payment of qualified
35educational expenses in future fiscal years during which the
-6-1pupil participates in the program until the pupil becomes
2ineligible under the program or until the remaining amounts are
3transferred to the state general fund under subsection 8.
47. A person who makes a false claim for the purpose of
5obtaining an education savings account payment or who knowingly
6receives the payment or makes a payment from an individual
7account within the fund without being legally entitled to do
8so is guilty of a fraudulent practice under chapter 714. The
9false claim for an education savings account or a payment from
10an individual account shall be disallowed. The department of
11education or third-party entity shall also close the pupil’s
12individual account in the fund and transfer any remaining
13moneys in the account for deposit in the general fund of the
14state. If the improperly obtained amounts have been disbursed
15from the applicable individual account, the department of
16education or third-party entity shall recover such amounts
17from the parent or guardian, including by initiating legal
18proceedings to recover such amounts, if necessary. A parent or
19guardian who commits a fraudulent practice under this section
20is prohibited from participating in the education savings
21account program in the future.
228. Moneys remaining in a pupil’s individual account when the
23pupil graduates from high school or turns twenty years of age,
24whichever occurs first, shall be transferred by the department
25of education for deposit in the general fund of the state.
269. a. A parent may appeal to the state board of education
27any administrative decision the department of education or
28third-party entity makes pursuant to this section, including
29but not limited to determinations of eligibility, allowable
30expenses, and removal from the program. The department or
31third-party entity shall notify the parent or guardian in
32writing of the appeal process at the same time the department
33notifies the parent or guardian of the administrative decision.
34The state board of education shall establish the appeals
35process consistent with chapter 17A and shall post such appeal
-7-1process information on the state board of education’s internet
2site.
3b. The state board of education shall refer cases of
4substantial misuse of education savings account program funds
5to the attorney general for the purpose of collection or for
6the purpose of a criminal investigation if the state board of
7education obtains evidence of fraudulent use of an account.
810. a. This section shall not be construed to authorize
9the state or any political subdivision of the state to exercise
10authority over any nonpublic school or construed to require a
11nonpublic school to modify its academic standards for admission
12or educational program in order to receive payment from a
13parent or guardian using funds from a pupil’s account in the
14education savings account fund.
15b. This section shall not be construed to expand the
16authority of the state or any political subdivision of the
17state to impose regulations upon any nonpublic school that are
18not necessary to implement this section.
19c. A nonpublic school that accepts payment from a parent or
20guardian using funds from a pupil’s account in the education
21savings account fund is not an agent of this state or of a
22political subdivision of this state.
23d. Rules adopted by the department of education to implement
24this section that impose an undue burden on a nonpublic school
25are invalid.
26e. A nonpublic school that accepts payment from a parent or
27guardian using funds from a pupil’s account in the education
28savings account fund shall be given the maximum freedom
29possible to provide for the educational needs of the school’s
30students, consistent with state and federal law.
3111. a. Each pupil participating in the education savings
32account program is required to take all applicable state and
33federally required student assessments and the results of
34those assessments shall be provided to the pupil’s parents or
35guardians and reported to the department of education.
-8- 1b. The department of education shall compile all such
2reported assessment results in order to analyze student
3proficiency and academic progress among those pupils
4participating in the program, including analysis of graduation
5rates, proficiency, and progress based on grade level,
6gender, race, and household income level. The results of the
7department’s analysis shall be included in the annual condition
8of education report.
9 Sec. 8. Section 422.7, Code 2023, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 44. Subtract, to the extent included, the
12amount of an education savings account payment under section
13257.11B received by the taxpayer for payment of qualified
14educational expenses.
15 Sec. 9. EMERGENCY RULES. The department of education
16may adopt emergency rules under section 17A.4, subsection 3,
17and section 17A.5, subsection 2, paragraph “b”, to implement
18the provisions of the section of this Act enacting section
19256.9, subsection 66, and section 257.11B, and the rules shall
20be effective immediately upon filing unless a later date is
21specified in the rules. Any rules adopted in accordance with
22this section shall also be published as a notice of intended
23action as provided in section 17A.4.
24 Sec. 10. EFFECTIVE DATE. This division of this Act, being
25deemed of immediate importance, takes effect upon enactment.
26 Sec. 11. RETROACTIVE APPLICABILITY.The following applies
27retroactively to tax years beginning on or after January 1,
282023:
29The section of this division of this Act enacting section
30422.7, subsection 44.
31DIVISION III
32SCHOOL DISTRICT CATEGORICAL FUNDING
33 Sec. 12. Section 257.10, subsection 9, paragraph d, Code
342023, is amended to read as follows:
35d. For the budget year beginning July 1, 2009, the use
-9-1of the funds calculated under this subsection shall comply
2with the requirements of chapter 284 and shall be distributed
3to teachers pursuant to section 284.3A. For the budget year
4beginning July 1, 2010, and succeeding budget years, the use
5of the funds calculated under this subsection or available for
6use as provided in subsection 10, paragraph “d”, subsection 12,
7paragraph “d”, or section 257.46, subsection 3, shall comply
8with the requirements of chapter 284 and shall be distributed
9to teachers pursuant to section 284.3A.
10 Sec. 13. Section 257.10, subsection 10, paragraph d, Code
112023, is amended to read as follows:
12d. The use of the funds calculated under this subsection
13and any amount designated for professional development purposes
14from the school district’s flexibility account under section
15298A.2, subsection 2, shall comply with the requirements of
16chapter 284. If all professional development requirements of
17chapter 284 are met and funds received under this subsection
18remain unexpended and unobligated at the end of a fiscal year
19beginning on or after July 1, 2017, the school district may
20transfer all or a portion of such unexpended and unobligated
21funds for deposit in the school district’s flexibility account
22established under section 298A.2, subsection 2. At the end
23of a fiscal year beginning on or after July 1, 2022, the
24school district may use all or a portion of funds under this
25subsection for the purposes authorized under subsection 9,
26paragraph “d”.
27 Sec. 14. Section 257.10, subsection 12, paragraph d, Code
282023, is amended to read as follows:
29d. For the budget year beginning July 1, 2014, and
30succeeding budget years, the use of the funds calculated under
31this subsection shall comply with the requirements of chapter
32284 and shall be distributed to teachers pursuant to section
33284.15. The funds shall be used only to increase the payment
34for a teacher assigned to a leadership role pursuant to a
35framework or comparable system approved pursuant to section
-10-1284.15; to increase the percentages of teachers assigned to
2leadership roles; to increase the minimum teacher starting
3salary to thirty-three thousand five hundred dollars; to
4cover the costs for the time mentor and lead teachers are not
5providing instruction to students in a classroom; for coverage
6of a classroom when an initial or career teacher is observing
7or co-teaching with a teacher assigned to a leadership role;
8for professional development time to learn best practices
9associated with the career pathways leadership process; and for
10other costs associated with a framework or comparable system
11approved by the department of education under section 284.15
12with the goals of improving instruction and elevating the
13quality of teaching and student learning. If all requirements
14for the school district for the use of funds calculated
15under this subsection are met and funds received under this
16subsection remain unexpended and unobligated at the end of a
17fiscal year beginning on or after July 1, 2020, the school
18district may transfer all or a portion of such unexpended
19and unobligated funds for deposit in the school district’s
20flexibility account established under section 298A.2,
21subsection 2. At the end of a fiscal year beginning on or after
22July 1, 2022, the school district may use all or a portion of
23funds under this subsection for the purposes authorized under
24subsection 9, paragraph “d”.
25 Sec. 15. Section 257.46, subsection 3, Code 2023, is amended
26to read as follows:
273. If any portion of the gifted and talented program budget
28remains unexpended at the end of the budget year, the remainder
29shall be carried over to the subsequent budget year and added
30to the gifted and talented program budget for that year. At
31the end of a fiscal year beginning on or after July 1, 2022,
32the school district may use all or a portion of funds for the
33purposes authorized under subsection 9, paragraph “d”.
34 Sec. 16. EFFECTIVE DATE. This division of this Act, being
35deemed of immediate importance, takes effect upon enactment.
-11-1EXPLANATION
2The inclusion of this explanation does not constitute agreement with
3the explanation’s substance by the members of the general assembly.
4This bill relates to education programs and funding by
5establishing an education savings account program and modifying
6certain school district categorical funding supplements.
7DIVISION I — SHORT TITLE. Division I provides that the bill
8shall be known and may be cited as the “Students First Act”.
9DIVISION II — EDUCATION SAVINGS ACCOUNT PROGRAM. Division
10II of the bill establishes an education savings account program
11for school budget years beginning on or after July 1, 2023, for
12the payment of qualified educational expenses incurred by the
13parent or guardian of an eligible pupil.
14For the school budget year beginning July 1, 2023, the
15following pupils who attend a nonpublic school for that school
16budget year shall be eligible to receive an education savings
17account payment: (1) a resident pupil who is eligible to
18enroll in kindergarten; (2) a resident pupil who is eligible
19to enroll in grades 1 through 12 and was not enrolled in a
20nonpublic school for the immediately preceding school year;
21(3) a resident pupil who is eligible to enroll in grades 1
22through 12 and was enrolled in a nonpublic school for the
23immediately preceding school year if the pupil’s household has
24an annual income less than or equal to 300 percent of the most
25recently revised poverty income guidelines. For the school
26budget year beginning July 1, 2024, the following pupils who
27attend a nonpublic school for that school budget year shall be
28eligible to receive an education savings account payment: (1)
29a resident pupil who is eligible to enroll in kindergarten;
30(2) a resident pupil who is eligible to enroll in grades 1
31through 12 and was not enrolled in a nonpublic school for the
32immediately preceding school year; (3) a resident pupil who
33is eligible to enroll in grades 1 through 12 and was enrolled
34in a nonpublic school for the immediately preceding school
35year if the pupil’s household has an annual income less than
-12-1or equal to 400 percent of the most recently revised poverty
2income guidelines; and (4) a resident pupil who received an
3education savings account payment in the immediately preceding
4school budget year. For school budget years beginning on or
5after July 1, 2025, resident pupils eligible to enroll in
6kindergarten through grade 12 who attend a nonpublic school for
7the applicable school budget year shall be eligible to receive
8an education savings account payment.
9On or after January 1, but on or before June 30 preceding
10the school year for which the education savings account payment
11is requested, the parent or guardian of an eligible pupil
12may request a payment by submitting an application to the
13department of education.
14Within 30 days following submission of an application, the
15department of education must notify the parent or guardian of
16each pupil approved for the following school year and specify
17the amount of the education savings account payment for the
18pupil, if known at the time of the notice. Education savings
19account payments shall only be approved for one school year and
20applications must be submitted each year.
21The bill creates an education savings account fund in
22the state treasury under the control of the department of
23education consisting of moneys appropriated to the department
24of education for the purpose of providing education savings
25account payments. For the fiscal year commencing July 1, 2023,
26and each succeeding fiscal year, the bill appropriates from the
27general fund of the state to the department of education for
28deposit in the fund the amount necessary to pay all education
29savings account payments approved for that fiscal year. For
30each pupil approved, the department of education must establish
31an individual account for that pupil in the fund. The amount
32of the pupil’s payment is deposited into the pupil’s account
33on July 15 or 30 days after submission of the application,
34whichever is later, and such amount is available for use by
35parents and guardians for the payment of qualified educational
-13-1expenses, as defined in the bill, incurred by the parent or
2guardian for the pupil during that fiscal year. The amount of
3the education savings account payment is equal to the regular
4program state cost per pupil for the same school budget year.
5The bill authorizes the department to contract with a
6third-party entity for administration of the program and
7includes applicable references to such a third-party entity.
8Parents and guardians shall first use education savings
9account payments for all qualified educational expenses that
10are tuition and fees for which the parent or guardian is
11responsible for payment at the pupil’s nonpublic school prior
12to using the education savings account for other qualified
13educational expenses.
14The bill provides that moneys remaining in a pupil’s account
15upon the conclusion of the fiscal year shall remain in the
16pupil’s account in the fund for the payment of qualified
17educational expenses in future fiscal years during which the
18pupil participates in the program until the pupil becomes
19ineligible or until the remaining amounts are required to be
20transferred to the general fund of the state under the bill.
21For each pupil with a positive balance in the pupil’s account
22in the fund upon graduation from high school or reaching
2320 years of age, whichever occurs first, the department of
24education is required to transfer such remaining moneys for
25deposit in the general fund of the state.
26The bill establishes procedures for parent or guardian
27appeals to the state board of education and provides that a
28person who makes a false claim for the purpose of obtaining an
29education savings account payment or who knowingly receives the
30payment or makes a payment from an account in the fund without
31being legally entitled to do so is guilty of a fraudulent
32practice and is subject to a criminal penalty. The bill
33directs the department of education to recover program payments
34and amounts improperly awarded or paid and requires the closure
35of the pupil’s account and transfer of all remaining moneys to
-14-1the general fund of the state.
2The bill requires the department of education to compile all
3state and federally required student assessment results for
4participating pupils in order to analyze student proficiency
5and academic progress among those pupils participating in the
6program, including analysis of graduation rates, proficiency,
7and progress based on grade level, gender, race, and household
8income level. The results of the department’s analysis shall
9be included in the annual condition of education report.
10The bill also modifies the calculation of the teacher
11salary supplement district cost, the professional development
12supplement district cost, the early intervention supplement
13district cost, and the teacher leadership supplement district
14cost under Code section 257.10. Under the bill, each such
15supplement amount shall be calculated, in part, by multiplying
16the applicable supplement district cost per pupil by the sum
17of the school district’s budget enrollment plus the number
18of resident pupils in the school district that received an
19education savings account payment under the bill for the base
20year.
21Division II of the bill takes effect upon enactment. The
22bill also authorizes the department of education to adopt
23emergency rules to implement the program.
24The bill provides that an education savings account payment
25received by a taxpayer is not taxable income for purposes
26of state individual income taxation. This provision of the
27bill applies retroactively to tax years beginning on or after
28January 1, 2023.
29DIVISION III — SCHOOL DISTRICT CATEGORICAL FUNDING.
30 Division III of the bill authorizes school districts to use all
31or a portion of funds at the end of any fiscal year beginning
32on or after July 1, 2022, from the professional development
33categorical supplement, the teacher leadership categorical
34supplement, or the gifted and talented program for teacher
35salary categorical supplement purposes under the salary system
-15-1requirements of Code section 284.3A.
2Division III of the bill takes effect upon enactment.
-16-md/jh