House File 2090 - Introduced




                                 HOUSE FILE       
                                 BY  HAGENOW, HIGHFILL, and
                                     COWNIE

                                      A BILL FOR

  1 An Act providing education savings grants for pupils attending
  2    a nonpublic school or receiving competent private
  3    instruction, establishing an education savings grant fund,
  4    making appropriations, providing penalties, and including
  5    applicability provisions.
  6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 12D.3, subsection 1, paragraph a, Code
  1  2 2014, is amended to read as follows:
  1  3    a.  Each participation agreement may require a participant
  1  4 to agree to invest a specific amount of money in the trust
  1  5 for a specific period of time for the benefit of a specific
  1  6 beneficiary. A participant shall not be required to make an
  1  7 annual contribution on behalf of a beneficiary. The maximum
  1  8 contribution that may be deducted for Iowa income tax purposes
  1  9 shall not exceed two thousand dollars per beneficiary per year
  1 10 adjusted annually to reflect increases in the consumer price
  1 11 index.  Contributions to an account that are moneys from an
  1 12 education savings grant under section 257.11B shall not be
  1 13 considered a contribution that may be deducted for Iowa income
  1 14 tax purposes. The treasurer of state shall set an account
  1 15 balance limit to maintain compliance with section 529 of the
  1 16 Internal Revenue Code. A contribution shall not be permitted
  1 17 to the extent it causes the aggregate balance of all accounts
  1 18 established for the same beneficiary to exceed the applicable
  1 19 account balance limit.
  1 20    Sec. 2.  Section 256.7, Code 2014, is amended by adding the
  1 21 following new subsection:
  1 22    NEW SUBSECTION.  33.  Adopt rules relating to applications
  1 23 for an education savings grant pursuant to section 257.11B,
  1 24 including application processing timelines and information
  1 25 required to be submitted by a parent or guardian.
  1 26    Sec. 3.  NEW SECTION.  257.11B  Education savings grant
  1 27 program.
  1 28    1.  Pupils eligible to enroll in grades kindergarten through
  1 29 twelve and attending a nonpublic school or receiving competent
  1 30 private instruction under chapter 299A shall be eligible to
  1 31 receive an education savings grant in the manner provided in
  1 32 this section for school years beginning on or after July 1,
  1 33 2015.  Education savings grants shall be made available to
  1 34 parents and guardians in the manner authorized under subsection
  1 35 4, paragraph "c", for the payment of qualified educational
  2  1 expenses as provided in this section.
  2  2    2.  a.  (1)  By January 31 preceding the school year for
  2  3 which the education savings grant is requested, the parent
  2  4 or guardian of the pupil requesting to receive an education
  2  5 savings grant shall submit an application to the department of
  2  6 education, on application forms developed by the department,
  2  7 indicating that the parent or guardian intends to enroll the
  2  8 pupil in a nonpublic school or provide competent private
  2  9 instruction for the pupil under chapter 299A.
  2 10    (2)  In addition to such information deemed appropriate by
  2 11 the department of education, the application shall require
  2 12 certification from the nonpublic school of the pupil's
  2 13 enrollment for the following school year or a statement
  2 14 indicating the parent or guardian's intent to provide or
  2 15 arrange for competent private instruction for the pupil for the
  2 16 following school year.
  2 17    b.  By March 1 preceding the school year for which the
  2 18 education savings grant is requested, the department of
  2 19 education shall notify the department of management of the
  2 20 number of pupils in each school district designated for the
  2 21 following school year to receive an education savings grant
  2 22 and the amount of the education savings grant for each pupil.
  2 23 The department of education shall also notify the parent
  2 24 or guardian of such pupils who are approved to receive an
  2 25 education savings grant.
  2 26    c.  Education savings grants shall only be approved for one
  2 27 school year and applications must be submitted under paragraph
  2 28 "a" for education savings grants in subsequent school years.
  2 29    3.  a.  The department of management shall assign each pupil
  2 30 an education savings grant in an amount equal to the statewide
  2 31 average state foundation aid per pupil in the same school year.
  2 32    b.  The department of management shall on July 1 following
  2 33 the determination of the amount of the education savings grant
  2 34 for each approved pupil transfer such amounts to the pupil's
  2 35 account in the education savings grant fund established under
  3  1 subsection 4.  Such amount shall be available to the pupil's
  3  2 parent or guardian in the manner authorized under subsection
  3  3 4, paragraph "c", for the payment of qualified educational
  3  4 expenses incurred by such persons for the pupil during that
  3  5 school year.
  3  6    4.  An education savings grant fund is created in the state
  3  7 treasury under the control of the department of management
  3  8 consisting of moneys appropriated to the department for the
  3  9 purpose of providing education savings grants under this
  3 10 section.  For the fiscal year commencing July 1, 2015, and
  3 11 each succeeding fiscal year, there is appropriated from the
  3 12 general fund of the state to the department of management to be
  3 13 credited to the fund the amount necessary to pay all education
  3 14 savings grants approved for that fiscal year.  The director of
  3 15 the department of management has all powers necessary to carry
  3 16 out and effectuate the purposes, objectives, and provisions of
  3 17 this section pertaining to the fund, including the power to do
  3 18 all of the following:
  3 19    a.  Make and enter into contracts necessary for the
  3 20 administration of the fund.
  3 21    b.  Procure insurance against any loss in connection with the
  3 22 assets of the fund or require a surety bond.
  3 23    c.  Contract with a private financial management firm to
  3 24 manage the fund, in collaboration with the treasurer of state,
  3 25 including providing for the disbursement of education savings
  3 26 grants in the form of an electronic debit card or checks that
  3 27 are payable directly from the pupil's account within the fund.
  3 28    d.  Conduct audits or other review necessary to properly
  3 29 administer the program.
  3 30    e.  Adopt rules pursuant to chapter 17A for the
  3 31 administration of the fund and accounts within the fund.
  3 32    5.  a.  For each pupil approved for an education savings
  3 33 grant, the department shall establish an account for that pupil
  3 34 in the education savings grant fund.  The amount of the pupil's
  3 35 education savings grant determined under subsection 3 shall be
  4  1 deposited into the pupil's account on July 1 and such amount
  4  2 shall be immediately available for the payment of qualified
  4  3 educational expenses incurred by the parent or guardian for
  4  4 the pupil during that fiscal year using the payment method
  4  5 authorized under subsection 4, paragraph "c".
  4  6    b.  A nonpublic school or other entity that accepts payment
  4  7 from a parent or guardian using funds from a pupil's account in
  4  8 the education savings grant fund shall not refund, rebate, or
  4  9 share any portion of such payment with the parent, guardian, or
  4 10 pupil.
  4 11    c.  Moneys remaining in a pupil's account upon conclusion
  4 12 of the fiscal year shall remain in the pupil's account within
  4 13 the education savings grant fund for the payment of qualified
  4 14 educational expenses in future fiscal years or for the payment
  4 15 of higher education costs under subsection 8.
  4 16    6.  For purposes of this section, "qualified educational
  4 17 expenses" includes tuition and fees at a nonpublic school,
  4 18 textbooks, fees or payments for educational therapies including
  4 19 tutoring or cognitive skills training, curriculum fees and
  4 20 materials for a course of study for a specific subject matter
  4 21 or grade level, tuition or fees for nonpublic online education
  4 22 programs, education materials and services for pupils with
  4 23 disabilities including the cost of paraprofessionals and
  4 24 assistants who are trained in accordance with state law,
  4 25 standardized test fees, fees required by the department
  4 26 not to exceed for each grant recipient five percent of the
  4 27 total grant amount in any fiscal year, contributions to an
  4 28 Iowa education savings plan trust account under chapter 12D,
  4 29 contributions to a Coverdell education savings account under 26
  4 30 U.S.C. {530, higher education expenses, as defined in section
  4 31 12D.1, excluding room and board expenses, and other expenses
  4 32 incurred by the parent or guardian that are directly related
  4 33 to the education of the pupil at a nonpublic school, including
  4 34 a nonpublic school accredited by an independent accrediting
  4 35 agency approved by the department of education, or directly
  5  1 related to providing competent private instruction for the
  5  2 pupil under chapter 299A.  The cost of one computer or other
  5  3 portable computing device shall be allowed as a qualified
  5  4 educational expense for a pupil if such a purchase has not been
  5  5 made using funds from that pupil's account in either of the
  5  6 two immediately preceding fiscal years.  "Qualified educational
  5  7 expenses" do not include transportation costs for the pupil, the
  5  8 cost of food or refreshments consumed by the pupil, the cost of
  5  9 clothing for the pupil, or the cost of disposable materials,
  5 10 including but not limited to paper, notebooks, pencils, pens,
  5 11 and art supplies.
  5 12    7.  A person who makes a false claim for the purpose of
  5 13 obtaining an education savings grant provided for in this
  5 14 section or who knowingly receives the grant or makes a payment
  5 15 from an account within the education savings grant fund
  5 16 without being legally entitled to it is guilty of a fraudulent
  5 17 practice.  The false claim for an education savings grant or a
  5 18 payment from an account shall be disallowed and if amounts from
  5 19 the grant have been disbursed from the applicable account in
  5 20 the education savings grant fund, the department of management
  5 21 shall initiate legal proceedings to recover such amounts. A
  5 22 parent or guardian, or a pupil for purposes of subsection 8,
  5 23 who violates this subsection is prohibited from participating
  5 24 in the education savings grant program in the future.
  5 25    8.  For each pupil with a positive balance in the pupil's
  5 26 account in the education savings grant fund upon graduation
  5 27 from high school or completion of an equivalent level of
  5 28 competent private instruction under chapter 299A, the
  5 29 department of management shall maintain the account in the
  5 30 fund until the pupil is twenty=five years of age. Following
  5 31 graduation from high school until the pupil is twenty=five
  5 32 years of age, moneys in the pupil's account may be used for
  5 33 higher education costs, as defined in section 12D.1, subsection
  5 34 2, incurred by the pupil while attending an institution of
  5 35 higher education under the control of the state board of
  6  1 regents, a community college located in this state, or a
  6  2 private college or university located in this state. Payments
  6  3 from a pupil's account for higher education costs shall be
  6  4 made in the same manner as payments for qualified educational
  6  5 expenses under subsection 5. Moneys in a pupil's account when
  6  6 the pupil turns twenty=five years of age shall be transferred
  6  7 by the department for deposit in the general fund of the state.
  6  8    9.  This section shall not be construed to authorize the
  6  9 state or any political subdivision of the state to exercise
  6 10 authority over any nonpublic school or pupil receiving
  6 11 competent private instruction under chapter 299A or construed
  6 12 to require a nonpublic school to modify its admissions or
  6 13 educational program in order to receive payment from a parent
  6 14 or guardian using funds from a pupil's account in the education
  6 15 savings grant fund. A nonpublic school or entity providing
  6 16 competent private instruction under chapter 299A, that accepts
  6 17 payment from a parent or guardian using funds from a pupil's
  6 18 account in the education savings grant fund is not an agent of
  6 19 this state or other political subdivision of this state. Rules
  6 20 adopted by the department to implement this section that impose
  6 21 an undue burden on a nonpublic school or entity providing
  6 22 competent private instruction under chapter 299A are invalid.
  6 23    Sec. 4.  Section 422.7, Code 2014, is amended by adding the
  6 24 following new subsection:
  6 25    NEW SUBSECTION.  51.  Subtract, to the extent included, the
  6 26 amount of any education savings grant under section 257.11B
  6 27 received during the tax year by pupils for whom the taxpayer is
  6 28 the parent or guardian authorized to spend such grant amounts
  6 29 for qualified educational expenses.
  6 30    Sec. 5.  APPLICABILITY.  This Act applies to school budget
  6 31 years and fiscal years beginning on or after July 1, 2015.
  6 32    Sec. 6.  APPLICABILITY.  The following provisions of this Act
  6 33 apply to tax years beginning on or after January 1, 2015:
  6 34    1.  The section of this Act amending section 12D.3.
  6 35    2.  The section of this Act amending section 422.7.
  7  1                           EXPLANATION
  7  2 The inclusion of this explanation does not constitute agreement with
  7  3 the explanation's substance by the members of the general assembly.
  7  4    This bill provides education savings grants for pupils
  7  5 attending a nonpublic school or receiving competent private
  7  6 instruction and establishes an education savings grant fund.
  7  7    Under the bill, pupils eligible to enroll in grades
  7  8 kindergarten through 12 and attending a nonpublic school or
  7  9 receiving competent private instruction under Code chapter
  7 10 299A are eligible to receive an education savings grant for
  7 11 school years beginning on or after July 1, 2015.  By January 31
  7 12 preceding the school year for which the education savings grant
  7 13 is requested, the parent or guardian of the pupil requesting to
  7 14 receive an education savings grant must submit an application
  7 15 to the department of education indicating that the parent or
  7 16 guardian intends to enroll the pupil in a nonpublic school or
  7 17 provide competent private instruction for the pupil.
  7 18    The bill requires that by March 1 preceding the school
  7 19 year for which the education savings grant is requested,
  7 20 the department of education must notify the department of
  7 21 management of the number of pupils in each school district
  7 22 designated for the following school year to receive an
  7 23 education savings grant and the amount of the education savings
  7 24 grant for each pupil.  Education savings grants may only be
  7 25 approved for one school year and applications must be submitted
  7 26 for education savings grants in subsequent school years.
  7 27    The amount of each education savings grant is equal to the
  7 28 statewide average state foundation aid per pupil in the same
  7 29 school year.
  7 30    The bill creates an education savings grant fund in the state
  7 31 treasury under the control of the department of management
  7 32 consisting of moneys appropriated to the department for the
  7 33 purpose of providing education savings grants.  For the fiscal
  7 34 year commencing July 1, 2015, and each succeeding fiscal year,
  7 35 there is appropriated from the general fund of the state to the
  8  1 department of management for deposit in the fund the amount
  8  2 necessary to pay all education savings grants approved for
  8  3 that fiscal year.  For each pupil approved for an education
  8  4 savings grant, the department of management must establish an
  8  5 account for that pupil in the education savings grant fund.
  8  6 The amount of the pupil's education savings grant is deposited
  8  7 into the pupil's account on July 1 and such amount is available
  8  8 for use by parents and guardians for the payment of qualified
  8  9 educational expenses, as defined in the bill, incurred by the
  8 10 parent or guardian for the pupil during that fiscal year.
  8 11    The bill authorizes the department of education to
  8 12 contract with a private financial management firm to manage
  8 13 the education savings grant fund, in collaboration with the
  8 14 treasurer of state, including providing for the disbursement
  8 15 of education savings grants in the form of an electronic debit
  8 16 card or checks that are payable directly from the pupil's
  8 17 account within the fund.
  8 18    The bill provides that moneys remaining in a pupil's account
  8 19 upon the conclusion of the fiscal year shall remain in the
  8 20 pupil's account within the education savings grant fund for
  8 21 the payment of qualified educational expenses in future fiscal
  8 22 years or for higher education costs as authorized in the bill.
  8 23    Under the bill, for each pupil with a positive balance in
  8 24 the pupil's account in the education savings grant fund upon
  8 25 graduation from high school or completion of an equivalent
  8 26 level of competent private instruction under Code chapter
  8 27 299A, the department of management is required to maintain the
  8 28 account in the fund until the pupil is 25 years old.  Until
  8 29 the pupil is 25 years old, moneys in the pupil's account may
  8 30 be used by the pupil for higher education costs, as defined
  8 31 in Code section 12D.1.  Moneys in a pupil's account when the
  8 32 pupil turns 25 years old are transferred by the department of
  8 33 management for deposit in the general fund of the state.
  8 34    The bill provides that a person who makes a false claim for
  8 35 the purpose of obtaining an education savings grant or who
  9  1 knowingly receives the grant or makes a payment from an account
  9  2 within the education savings grant fund without being legally
  9  3 entitled to it is guilty of a fraudulent practice and is
  9  4 subject to a criminal penalty.  The bill allows the department
  9  5 of management to initiate legal proceedings to recover grants
  9  6 and amounts improperly awarded or paid from accounts under the
  9  7 bill.
  9  8    The bill provides that moneys from an education savings
  9  9 grant under the bill are not taxable income under Code chapter
  9 10 422. In addition, the bill provides that contributions to an
  9 11 Iowa education savings plan trust account under Code chapter
  9 12 12D that are moneys from an education savings grant under the
  9 13 bill are not considered a contribution that may be deducted for
  9 14 Iowa income tax purposes.
  9 15    The bill applies to school budget years and fiscal years
  9 16 beginning on or after July 1, 2015.
  9 17    The provisions of the bill amending Code sections 12D.3 and
  9 18 422.7 apply to tax years beginning on or after January 1, 2015.
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