Education Saving Accounts explained

By Anne Marie Amacher
The Catholic Messenger

DAVENPORT — A proposed Educational Savings Account (ESA) initiative is expected to go to the Iowa Legislature this year. More than 100 parents from Catholic, Lutheran and other Christian schools in the Scott County area attended a meeting Jan. 29 at Assumption High School to learn more about the initiative.

Anne Marie Amacher
Eric Goranson of Iowa Association of Christian Schools talks about the proposed Educational Savings Accounts (ESAs) during a meeting Jan. 29 at Assumption High School in Davenport.

Tom Chapman, executive director of the Iowa Catholic Conference, gave the first presentation. He covered textbook and technology funding for non-public schools and reviewed the history of transportation options. He noted that the free, 4-year-old preschool program begun in 2007-2008 has worked well in many places and benefited many Catholic schools.

He reminded families of a tuition tax credit that is 25 percent of the first $1,000 spent, so most Catholic school parents would get a $250 tax credit. The tax credit is also available to public school parents to help offset various fees, including sports.

He also spoke about the School Tuition Organi­zation (STO) law, approved in 2006, which allows donors to contribute to scholarships to nonpublic schools. Donors receive a 65 percent state income tax credit. Since 2006, $80 million in grants have been given to students to attend non-public schools in Iowa.

Various organizations strive to raise the STO cap for additional scholarships. The cap was raised to $12 million in 2014. Twelve STOs represent about 100 Catholic schools and around 70 Christian schools, Chapman said.

Eric Goranson of the Iowa Association of Christian Schools explained how Educational Savings Accounts would work. A dollar amount equal to state per-pupil spending would be deposited into a special savings account. Parents would use the savings account to pay tuition and other fees the state approves of. Parents involved in homeschooling and virtual schooling could use ESAs, also. “With ESAs it lets the parents choose the options,” Goranson said.

The Iowa Department of Management would administer the program and fraud protection would be built in. Vendors providing educational services would require state approval. Unused funds would be rolled over to the next year.

ESAs could also be applied toward tuition at an accredited two- or four-year Iowa college or university. If a student transfers to a public school or moves, leftover ESA funds would return to the state.
Goranson said one big question is whether ESAs would harm public schools. “No. Local funding remains at the local public schools.” Local option and property tax income for public schools will not be taken for ESAs. He noted that states offering vouchers or other forms of assistance for nonpublic education have not experienced a mass exodus of students. “Competition is beneficial.”

Achieving passage of ESAs involves a multi-prong approach, said Trish Wilger, executive director of Iowa Alliance for Choice in Education and Iowa Advocates for Choice in Education.

The alliance, formed in 2006, is a nonprofit, nonpartisan organization working for choice. The advocacy organization, formed in 2007, is a 501c4 that lobbies for choice. An Educational Opportunities PAC, formed in 2010, supports Iowa candidates who favor school choice. These groups work to advance the plan.

“The final way to achieve this is you,” she said. “You are the grassroots activists. Visit or contact your legislators. Ask them questions.” She encouraged participation in a March 3 rally for education choice at the capitol in Des Moines. The goal is to have 1,000 visitors present. People can visit in person with legislators, tour the capitol and attend a rally in the rotunda at noon.
In a question and answer session following the Jan. 29 presentations, one person asked how far the ESA proposal got in the last legislative session. Goranson said the initiative moved from a House subcommittee to the full committee with support. The Senate was less interested.

Another asked if nonpublic schools would raise tuition since the amount parents would receive per student typically would be higher than tuition fees. Goranson said he wouldn’t be surprised if tuition increased. He noted that if this money is available, it could possibly be used to raise teacher salaries.

Another individual asked about rules and strings attached to the proposed ESA. Chapman said he believes the proposal is solidly written to live out the mission of nonpublic schools. If changes are proposed that go against that mission, “we would work to kill the bill,” Goranson said.

Two groups that oppose the bill are public schools and teachers unions. They believe ESAs will take away from public school funding. Chapman noted that existing open enrollment in Iowa allows dollars to transfer from one public school district to another. “Public schools do not receive state per-pupil aid for nonpublic school students.There’s a lot of confusion on this point.”
A question was asked about where funding would come from if property and local option sales taxes are not diverted to ESAs. Chapman hopes new money from the state’s general fund would be used for ESAs.

Would there be a need for STOs if ESAs are approved? Yes, the speakers said. Some nonpublic schools in Iowa are already above the proposed ESA limit, so some families could still need additional assistance through STOs.

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