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Reynolds signs law creating tax-funded accounts, expanding school choice in Iowa

Gov. Kim Reynolds signs the Students First Act in the Capitol rotunda.
Madeleine C King
Gov. Kim Reynolds signs the Students First Act in the Capitol rotunda.

Gov. Kim Reynolds signed the bill into law Tuesday. Once fully implemented, 42,000 private school students could receive state funding at a cost of $345 million per year.

Gov. Kim Reynolds has signed into law her signature school choice legislation. The bill, introduced just two weeks ago in her Condition of the State address, would create tax-funded Education Savings Accounts that would become available to K-12 students statewide with no income limits.

The money deposited in the accounts could be spent on educational expenses such as tuition and fees at private and religious schools. The law would give Iowa one of the broadest ESA laws in the country, just as similar proposals advance in states such as Utah and Florida.

In less than 24 hours, the bill was brought up for debate in both chambers, passed and signed into law. At a signing ceremony held Tuesday morning in the Capitol rotunda, Reynolds said her plan sets a different standard for Iowa education.

"We’re rejecting the idea that the answer to improving education is simply pumping more money into the same system year after year without making significant changes," Reynolds said, surrounded by supporters, school choice advocates and private school students. "And we’re  putting an end to the notion that competition is a zero sum game."

Opponents of the law have criticized Reynolds' plan to shift hundreds of millions of dollars in education funding to religious schools and selective private systems. Reynolds her priority is dedicating state funding to follow students, regardless of their income level or the schools they go to.

"It isn't about the money. It's not even about public schools versus private schools," Reynolds said. "It truly is about giving every student the best opportunity to find their place in the world and a foundation for success in the future."

Signing the bill into law sets up a crash course for the Iowa Department of Education, the agency tasked with getting the program up and running.

Families that want to receive an ESA for next fall must apply to receive a state-funded account by the end of June. The department will put up a link Tuesday, Reynolds said, for families to sign up for updates on how to request a state-funded account. Also, a request for bids will go out to find a private contractor to administer the program.

ESA plan passes after marathon debate

Iowa's new school choice law (HF 68) passed in the House after more than eight hours of debate by a vote of 55-45 with nine Republicans joining all House Democrats voting against it.

The Senate followed after midnight, advancing the bill to the governor’s desk by a vote of 31-18. Three Republican senators voted with Democrats against the bill.

Rep. John Wills, R-Spirit Lake, does not expect a large migration of students from public to private schools, but said the state should support parents who want to make that switch.

“This bill is about putting parents in charge of their students’ education,” Wills said. “This bill is about making sure that parents have the ability to determine where their children go to school rather than where their ZIP code is.”

Rep. John Wills, R-Spirit Lake, watches lawmakers debate HF 68 ahead of its passage.
Madeleine C King
Rep. John Wills, R-Spirit Lake, watches lawmakers debate HF 68 ahead of its passage.

Wills said the bill is meant for families who may want a faith-based education for their children or an academic program not offered at their local schools.

He added that the legislation is also Republicans’ response to conservative parents who, in recent years, have claimed that public schools advance a liberal agenda in the way they teach race and history or by holding books in the library some parents find obscene.

Gov. Kim Reynolds held a closed meeting last spring with parents from Linn-Mar schools who were upset with a policy that allows students in seventh grade and older to keep their gender support plans private.

Wills said that policy is one justification for a vast expansion of state funding for private schools in Iowa.

“Why would a parent want to want to choose an Educational Savings Account? Well, maybe they don't trust the public schools anymore,” Wills said. “This is a school refusing to tell parents about their children. Maybe that's why parents choose to go someplace other than public school.”

Under the school choice bill, starting next fall, families would be able to apply for Education Savings Accounts, or ESAs, worth $7,598 that they could use to pay for educational expenses such as private school tuition.

A fiscal analysis prepared by the nonpartisan Legislative Services Agency estimates that, in the first year of the program, 14,068 children would receive Education Savings Accounts, including 4,841 transferring from public to private schools. The program would cost $106.9 million in that year.

By the fourth year, around 42,000 students would receive ESAs at a total cost of $345 million per year. The vast majority of students would have started and stayed in private school systems.

Those numbers align with previous estimates released by the governor’s office.

Democrats have criticized Republicans over the cost of the plan, following multiple years when the public school funding increase approved by GOP lawmakers fell short of what advocates said was necessary to keep up with increasing costs.

“Until we are willing to provide adequate funding for the vast majority of our public school students, we should not be creating a private, exclusive school entitlement program with unknown costs and unlimited funding — a blank check,” said Sen. Molly Donahue, D-Cedar Rapids, a teacher for more than 30 years in Cedar Rapids schools.

Rep. Steven Holt, R-Denison, said state funding for K-12 education should not stop at public schools.

“We must not simply fund the status quo,” Holt said. “If we are to improve education, it is past time to fund our students not the education establishment. We can support public education and public teachers while also embracing positive change.”

Clearing procedural roadblocks

Democrats accused Republican leaders of violating legislative norms to pass the bill more quickly.

Rep. Tracy Ehlert, D-Cedar Rapids, argues against Reynolds' Education Savings Accounts proposal.
Madeleine C King
Rep. Tracy Ehlert, D-Cedar Rapids, argues against Reynolds' Education Savings Accounts proposal.

The Senate GOP used an amendment procedure to block any proposed changes from Democrats. In the House, Republican lawmakers voted to bypass the Appropriations Committee which normally reviews bills that impact state spending. House Minority Leader Jennifer Konfrst, D-Windsor Heights, said the maneuvers set a bad precedent for a major piece of legislation.

“We shouldn’t be passing legislation or rules that circumvent the rules or process,” Konfrst said. “To the 39 new members of this chamber, I am so sorry that your first vote is one that circumvents the process and allows less oversight of incredibly expensive legislation.”

The fiscal study by the LSA noted that there are many costs that still cannot be estimated. The bill says the Iowa Department of Education may contract with an outside company to administer the ESA program, but it is unknown how much that will cost.

Rep. Wills said he is comfortable increasing spending for the ESA program because it has been a legislative priority of Republicans who expanded their majorities in the fall elections.

“The bottom line is, this is a priority of the Republican caucus,” Wills said on IPR’s River to River. “This is a priority for the governor, this is a priority for the Senate and the House. We want to put parents back in the driver's seat and we're willing to pay for that.”

The fiscal study of the school choice bill estimates that around 12% of the students who receive ESAs would come from public schools. The remaining 88% would be existing private school students or students who join private schools in kindergarten.

This story was last updated on 1/24/24 at 1:15pm after Gov. Kim Reynolds signed the school choice bill into law.

Grant Gerlock is a reporter covering Des Moines and central Iowa