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Senate File 2091 - IntroducedA Bill ForAn Act 1providing education savings grants for pupils attending
2a nonpublic school or receiving competent private
3instruction, establishing an education savings grant fund,
4providing an income tax exemption, making appropriations,
5providing penalties, and including applicability provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1   Section 1.  Section 256.7, Code 2018, is amended by adding
2the following new subsection:
3   NEW SUBSECTION.  33.  Adopt rules relating to applications
4for an education savings grant pursuant to section 257.11B,
5including application processing timelines and information
6required to be submitted by a parent or guardian.
7   Sec. 2.  NEW SECTION.  257.11B  Education savings grant
8program.
   91.  a.  For the school budget year beginning July 1, 2019,
10and each succeeding school budget year, the following resident
11pupils who are attending a nonpublic school, as defined
12in section 285.16, or who are receiving competent private
13instruction under chapter 299A shall be eligible to receive an
14education savings grant in the manner provided in this section:
   15(1)  A pupil eligible to enroll in kindergarten.
   16(2)  A pupil eligible to enroll in grade one through grade
17twelve if the pupil has attended a public school for the
18equivalent of the two immediately preceding semesters for which
19the educational savings grant is requested and if the pupil is
20not otherwise ineligible under this section.
   21(3)  A pupil who received an education savings grant for
22the immediately preceding school budget year, who is eligible
23to enroll in grade one through grade twelve, and who is not
24otherwise ineligible under this section.
   25b.  Education savings grants shall be made available to
26requesting parents and guardians of an eligible pupil each
27school budget year for the duration of the education savings
28grant period and in the manner authorized under subsection
294, paragraph “c”, for the payment of qualified educational
30expenses as provided in this section.
   31c.  For purposes of this subsection, “resident” means the
32same as defined in section 282.1.
   332.  a.  (1)  By January 31 preceding the school year for
34which the education savings grant is first requested or the
35school year following expiration of a previous education
-1-1savings grant period, the parent or guardian of the pupil
2requesting to receive an education savings grant shall submit
3an application to the department of education, on application
4forms developed by the department, indicating that the parent
5or guardian intends to enroll the pupil in a nonpublic school
6or place the pupil under competent private instruction as
7provided for in chapter 299A.
   8(2)  In addition to such information deemed appropriate by
9the department of education, the application shall require
10certification from the nonpublic school of the pupil’s
11enrollment for the following school year or a statement
12indicating the parent or guardian’s intent to place the pupil
13under competent private instruction for the following school
14year.
   15b.  An application from the parent or guardian of an
16eligible pupil shall be approved for the duration of the
17education savings grant period. Upon submission of a valid
18application from the parent or guardian of an eligible pupil,
19the department of education shall enter into a contract with
20the parent or guardian requiring provision and funding of the
21education savings grant for each school budget year of the
22education savings grant period for which the pupil remains
23eligible under the requirements of this section. The education
24savings grant period is five years or the number of years until
25completion of the school year during which the pupil graduates
26from high school or completes an equivalent level of competent
27private instruction under chapter 299A, whichever is less,
28provided that the parent or guardian may terminate the contract
29at any time.
   30c.  By March 1 preceding each school year, the department
31of education shall notify the department of management of the
32number of pupils designated for the following school year
33to receive an education savings grant and the amount of the
34education savings grant for each pupil. The department of
35education shall also notify the parent or guardian of such
-2-1pupils who are approved to receive an education savings grant.
   23.  a.   The department of management shall assign each
3pupil an education savings grant in an amount equal to the
4difference between eighty-seven and five-tenths percent of the
5regular program state cost per pupil and the statewide average
6foundation property tax per pupil for the same school year.
   7b.  The department of management shall on July 1 following
8the determination of the amount of the education savings grant
9for each approved pupil transfer such amounts to the pupil’s
10account in the education savings grant fund established under
11subsection 4. Such amount shall be available to the pupil’s
12parent or guardian in the manner authorized under subsection
134, paragraph “c”, for the payment of qualified educational
14expenses incurred by such persons for the pupil during that
15school year or in a future school year pursuant to subsection
165, paragraph “c”.
   174.  An education savings grant fund is created in the state
18treasury under the control of the department of management
19consisting of moneys appropriated to the department of
20management for the purpose of providing education savings
21grants under this section. For the fiscal year commencing July
221, 2019, and each succeeding fiscal year, there is appropriated
23from the general fund of the state to the department of
24management to be credited to the fund the amount necessary
25to pay all education savings grants approved for that fiscal
26year. The director of the department of management has all
27powers necessary to carry out and effectuate the purposes,
28objectives, and provisions of this section pertaining to the
29fund, including the power to do all of the following:
   30a.  Make and enter into contracts necessary for the
31administration of the fund.
   32b.  Procure insurance against any loss in connection with the
33assets of the fund or require a surety bond.
   34c.  Contract with a private financial management firm to
35manage the fund, in collaboration with the treasurer of state,
-3-1including providing for the disbursement of education savings
2grants in the form of an electronic debit card or checks that
3are payable directly from the pupil’s account within the fund.
   4d.  Conduct audits or other review necessary to properly
5administer the program.
   6e.  Adopt rules for the administration of the fund and
7accounts within the fund.
   85.  a.  For each pupil approved for an education savings
9grant, the department of management shall establish an account
10for that pupil in the education savings grant fund. The amount
11of the pupil’s education savings grant shall be deposited
12into the pupil’s account on July 1, and such amount shall be
13immediately available for the payment of qualified educational
14expenses incurred by the parent or guardian for the pupil
15during that fiscal year using the payment method authorized
16under subsection 4, paragraph “c”.
   17b.  A nonpublic school or a provider of competent private
18instruction under chapter 299A that accepts payment from a
19parent or guardian using funds from a pupil’s account in the
20education savings grant fund shall not refund, rebate, or share
21any portion of such payment with the parent, guardian, or
22pupil.
   23c.  Moneys remaining in a pupil’s account upon conclusion
24of the fiscal year shall remain in the pupil’s account in the
25education savings grant fund for the payment of qualified
26educational expenses in future fiscal years during which the
27pupil participates in the program or for the payment of higher
28education costs as provided under subsection 8.
   296.  a.  For purposes of this section, “qualified educational
30expenses”
includes tuition and fees at a nonpublic school,
31textbooks, fees or payments for educational therapies,
32including tutoring or cognitive skills training, curriculum
33fees and materials for a course of study for a specific subject
34matter or grade level, tuition or fees for nonpublic online
35education programs, education materials and services for pupils
-4-1with disabilities, including the cost of paraprofessionals
2and assistants who are trained in accordance with state law,
3standardized test fees, fees required by the department not to
4exceed for each grant recipient five percent of the total grant
5amount in any fiscal year, higher education costs, as defined
6in section 12D.1, excluding room and board expenses, and other
7expenses incurred by the parent or guardian that are directly
8related to the education of the pupil at a nonpublic school,
9including a nonpublic school accredited by an independent
10accrediting agency approved by the department of education, or
11directly related to providing competent private instruction
12for the pupil under chapter 299A. The cost of one computer or
13other portable computing device shall be allowed as a qualified
14educational expense for a pupil if such a purchase has not been
15made using funds from that pupil’s account in either of the two
16immediately preceding fiscal years.
   17b.  “Qualified educational expenses” does not include
18transportation costs for the pupil, the cost of food or
19refreshments consumed by the pupil, the cost of clothing for
20the pupil, or the cost of disposable materials, including
21but not limited to paper, notebooks, pencils, pens, and art
22supplies.
   237.  A person who makes a false claim for the purpose
24of obtaining an education savings grant provided for in
25this section or who knowingly receives the grant or makes a
26payment from an account within the education savings grant
27fund without being legally entitled to do so is guilty of a
28fraudulent practice under chapter 714. The false claim for an
29education savings grant or a payment from an account shall be
30disallowed. If amounts from the grant have been disbursed from
31the applicable account in the education savings grant fund, the
32department of management shall initiate legal proceedings to
33recover such amounts. A parent or guardian, or a pupil for
34purposes of subsection 8, who commits a fraudulent practice
35under this section is prohibited from participating in the
-5-1education savings grant program in the future.
   28.  a.  For each pupil with a positive balance in the
3pupil’s account in the education savings grant fund upon
4graduation from high school or completion of an equivalent
5level of competent private instruction under chapter 299A, the
6department of management shall maintain the account in the
7fund until the pupil is twenty-three years of age. Following
8graduation from high school until the pupil is twenty-three
9years of age, moneys in the pupil’s account may be used
10for higher education costs, as defined in section 12D.1,
11incurred by the pupil while attending an institution of higher
12education under the control of the state board of regents, a
13community college located in this state, or a private college
14or university located in this state. Payments from a pupil’s
15account for higher education costs shall be made in the same
16manner as payments for qualified educational expenses under
17subsection 5. Moneys in a pupil’s account when the pupil
18turns twenty-three years of age shall be transferred by the
19department of management for deposit in the general fund of the
20state.
   21b.  Notwithstanding the age limitation in paragraph “a”,
22if the pupil with a positive balance in the pupil’s account
23in the education savings grant fund upon graduation from high
24school or completion of an equivalent level of competent
25private instruction under chapter 299A serves on federal active
26duty, other than training, and is discharged under honorable
27conditions, the limitation date otherwise applicable under
28paragraph “a” shall be extended by one year for each year of
29federal active duty service by the pupil, but not to a date
30after the pupil’s twenty-seventh birthday.
   319.  This section shall not be construed to authorize the
32state or any political subdivision of the state to exercise
33authority over any nonpublic school or provider of competent
34private instruction under chapter 299A or construed to require
35a nonpublic school or provider of competent private instruction
-6-1under chapter 299A to modify its academic standards for
2admission or educational program in order to receive payment
3from a parent or guardian using funds from a pupil’s account
4in the education savings grant fund. A nonpublic school or
5provider of competent private instruction under chapter 299A
6that accepts payment from a parent or guardian using funds
7from a pupil’s account in the education savings grant fund is
8not an agent of this state or of a political subdivision of
9this state. Rules adopted by the department to implement this
10section that impose an undue burden on a nonpublic school or
11provider of competent private instruction under chapter 299A
12are invalid.
13   Sec. 3.  Section 422.7, Code 2018, is amended by adding the
14following new subsection:
15   NEW SUBSECTION.  51.  Subtract, to the extent included, the
16amount of an education savings grant under section 257.11B
17received by the taxpayer for payment of qualified educational
18expenses.
19   Sec. 4.  APPLICABILITY.  The following apply to school budget
20years and fiscal years beginning on or after July 1, 2019:
   211.  The section of this Act amending section 256.7.
   222.  The section of this Act enacting section 257.11B.
23   Sec. 5.  APPLICABILITY.  The following applies to tax years
24beginning on or after January 1, 2019:
   25The section of this Act enacting section 422.7, subsection
2651.
27EXPLANATION
28The inclusion of this explanation does not constitute agreement with
29the explanation’s substance by the members of the general assembly.
   30This bill establishes an education savings grant program
31for pupils attending a nonpublic school or receiving competent
32private instruction and establishes an education savings grant
33fund.
   34For the school budget year beginning July 1, 2019,
35and each succeeding school budget year, resident pupils
-7-1who are attending a nonpublic school or who are receiving
2competent private instruction are eligible to receive an
3education savings grant if the pupil is eligible to enroll in
4kindergarten, is eligible to enroll in grade 1 through grade 12
5and has attended a public school for the equivalent of the two
6immediately preceding semesters, or if the pupil received an
7education savings grant for the immediately preceding school
8budget year. By January 31 preceding the school year for which
9the education savings grant is first requested or the school
10year following expiration of a previous education savings grant
11period, the parent or guardian of the pupil requesting to
12receive an education savings grant must submit an application
13to the department of education indicating that the parent or
14guardian intends to enroll the pupil in a nonpublic school or
15place the pupil under competent private instruction.
   16The bill requires that by March 1 preceding each school
17year, the department of education must notify the department
18of management of the number of pupils designated for the
19following school year to receive an education savings grant and
20the amount of the education savings grant for each pupil. An
21application from the parent or guardian of an eligible pupil
22shall be approved for the duration of the education savings
23grant period and the department of education shall enter into a
24contract with the parent or guardian requiring provision and
25funding of the education savings grant for each school budget
26year of the education savings grant period for which the pupil
27remains eligible. The education savings grant period is five
28years or the number of years until completion of the school
29year during which the pupil graduates from high school or
30completes an equivalent level of competent private instruction,
31whichever is less, provided that the parent or guardian may
32terminate the contract at any time.
   33The amount of each education savings grant is equal to the
34difference between 87.5 percent of the regular program state
35cost per pupil and the statewide average foundation property
-8-1tax per pupil in the same school year.
   2The bill creates an education savings grant fund in
3the state treasury under the control of the department of
4management consisting of moneys appropriated to the department
5of management for the purpose of providing education savings
6grants. For the fiscal year commencing July 1, 2019, and each
7succeeding fiscal year, there is appropriated from the general
8fund of the state to the department of management for deposit
9in the fund the amount necessary to pay all education savings
10grants approved for that fiscal year. For each pupil approved
11for an education savings grant, the department of management
12must establish an account for that pupil in the education
13savings grant fund. The amount of the pupil’s education
14savings grant is deposited into the pupil’s account on July 1
15and such amount is available for use by parents and guardians
16for the payment of qualified educational expenses, as defined
17in the bill, incurred by the parent or guardian for the pupil
18during that fiscal year or in a future fiscal year as provided
19in the bill.
   20The bill authorizes the department of education to
21contract with a private financial management firm to manage
22the education savings grant fund, in collaboration with the
23treasurer of state, including providing for the disbursement
24of education savings grants in the form of an electronic debit
25card or checks that are payable directly from the pupil’s
26account within the fund.
   27The bill provides that moneys remaining in a pupil’s account
28upon the conclusion of the fiscal year shall remain in the
29pupil’s account in the education savings grant fund for the
30payment of qualified educational expenses in future fiscal
31years during which the pupil participates in the program or for
32higher education costs as authorized in the bill.
   33Under the bill, for each pupil with a positive balance in
34the pupil’s account in the education savings grant fund upon
35graduation from high school or completion of an equivalent
-9-1level of competent private instruction under Code chapter
2299A, the department of management is required to maintain the
3account in the fund until the pupil reaches an age specified in
4the bill. Until the pupil reaches the age limitation, moneys
5in the pupil’s account may be used by the pupil for higher
6education costs, as defined in Code section 12D.1. Moneys in a
7pupil’s account when the pupil reaches the age limitation are
8transferred by the department of management for deposit in the
9general fund of the state.
   10The bill provides that a person who makes a false claim for
11the purpose of obtaining an education savings grant or who
12knowingly receives the grant or makes a payment from an account
13in the education savings grant fund without being legally
14entitled to do so is guilty of a fraudulent practice and is
15subject to a criminal penalty. The bill allows the department
16of management to initiate legal proceedings to recover grants
17and amounts improperly awarded or paid.
   18The bill provides that an education savings grant received
19by a taxpayer is not taxable income for purposes of state
20individual income taxation. This provision of the bill applies
21to tax years beginning on or after January 1, 2019.
   22The sections of the bill amending Code section 256.7 and
23enacting Code section 257.11B apply to school budget years and
24fiscal years beginning on or after July 1, 2019.
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