Senate File 252 - Introduced




                                 SENATE FILE       
                                 BY  BERTRAND

                                      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    providing an income tax exemption, making appropriations,
  5    providing penalties, and including 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 256.7, Code 2015, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  33.  Adopt rules relating to applications
  1  4 for an education savings grant pursuant to section 257.11B,
  1  5 including application processing timelines and information
  1  6 required to be submitted by a parent or guardian.
  1  7    Sec. 2.  NEW SECTION.  257.11B  Education savings grant
  1  8 program.
  1  9    1.  Pupils eligible to enroll in grades kindergarten through
  1 10 twelve and attending a nonpublic school or receiving competent
  1 11 private instruction under chapter 299A shall be eligible to
  1 12 receive an education savings grant in the manner provided in
  1 13 this section for school years beginning on or after July 1,
  1 14 2016.  Education savings grants shall be made available to
  1 15 parents and guardians in the manner authorized under subsection
  1 16 4, paragraph "c", for the payment of qualified educational
  1 17 expenses as provided in this section.
  1 18    2.  a.  (1)  By January 31 preceding the school year for
  1 19 which the education savings grant is requested, the parent
  1 20 or guardian of the pupil requesting to receive an education
  1 21 savings grant shall submit an application to the department of
  1 22 education, on application forms developed by the department,
  1 23 indicating that the parent or guardian intends to enroll the
  1 24 pupil in a nonpublic school or provide competent private
  1 25 instruction for the pupil under chapter 299A.
  1 26    (2)  In addition to such information deemed appropriate by
  1 27 the department of education, the application shall require
  1 28 certification from the nonpublic school of the pupil's
  1 29 enrollment for the following school year or a statement
  1 30 indicating the parent or guardian's intent to provide or
  1 31 arrange for competent private instruction for the pupil for the
  1 32 following school year.
  1 33    b.  By March 1 preceding the school year for which the
  1 34 education savings grant is requested, the department of
  1 35 education shall notify the department of management of the
  2  1 number of pupils in each school district designated for the
  2  2 following school year to receive an education savings grant
  2  3 and the amount of the education savings grant for each pupil.
  2  4 The department of education shall also notify the parent
  2  5 or guardian of such pupils who are approved to receive an
  2  6 education savings grant.
  2  7    c.  Education savings grants shall only be approved for one
  2  8 school year and applications must be submitted under paragraph
  2  9 "a" for education savings grants in subsequent school years.
  2 10    3.  a.  The department of management shall assign each pupil
  2 11 an education savings grant in an amount equal to the statewide
  2 12 average regular program state foundation aid per pupil in the
  2 13 same school year.
  2 14    b.  The department of management shall on July 1 following
  2 15 the determination of the amount of the education savings grant
  2 16 for each approved pupil transfer such amounts to the pupil's
  2 17 account in the education savings grant fund established under
  2 18 subsection 4.  Such amount shall be available to the pupil's
  2 19 parent or guardian in the manner authorized under subsection
  2 20 4, paragraph "c", for the payment of qualified educational
  2 21 expenses incurred by such persons for the pupil during that
  2 22 school year.
  2 23    4.  An education savings grant fund is created in the state
  2 24 treasury under the control of the department of management
  2 25 consisting of moneys appropriated to the department for the
  2 26 purpose of providing education savings grants under this
  2 27 section.  For the fiscal year commencing July 1, 2016, and
  2 28 each succeeding fiscal year, there is appropriated from the
  2 29 general fund of the state to the department of management to be
  2 30 credited to the fund the amount necessary to pay all education
  2 31 savings grants approved for that fiscal year.  The director of
  2 32 the department of management has all powers necessary to carry
  2 33 out and effectuate the purposes, objectives, and provisions of
  2 34 this section pertaining to the fund, including the power to do
  2 35 all of the following:
  3  1    a.  Make and enter into contracts necessary for the
  3  2 administration of the fund.
  3  3    b.  Procure insurance against any loss in connection with the
  3  4 assets of the fund or require a surety bond.
  3  5    c.  Contract with a private financial management firm to
  3  6 manage the fund, in collaboration with the treasurer of state,
  3  7 including providing for the disbursement of education savings
  3  8 grants in the form of an electronic debit card or checks that
  3  9 are payable directly from the pupil's account within the fund.
  3 10    d.  Conduct audits or other review necessary to properly
  3 11 administer the program.
  3 12    e.  Adopt rules for the administration of the fund and
  3 13 accounts within the fund.
  3 14    5.  a.  For each pupil approved for an education savings
  3 15 grant, the department shall establish an account for that pupil
  3 16 in the education savings grant fund.  The amount of the pupil's
  3 17 education savings grant determined under subsection 3 shall be
  3 18 deposited into the pupil's account on July 1, and such amount
  3 19 shall be immediately available for the payment of qualified
  3 20 educational expenses incurred by the parent or guardian for
  3 21 the pupil during that fiscal year using the payment method
  3 22 authorized under subsection 4, paragraph "c".
  3 23    b.  A nonpublic school or other entity that accepts payment
  3 24 from a parent or guardian using funds from a pupil's account in
  3 25 the education savings grant fund shall not refund, rebate, or
  3 26 share any portion of such payment with the parent, guardian, or
  3 27 pupil.
  3 28    c.  Moneys remaining in a pupil's account upon conclusion
  3 29 of the fiscal year shall remain in the pupil's account in the
  3 30 education savings grant fund for the payment of qualified
  3 31 educational expenses in future fiscal years or for the payment
  3 32 of higher education costs as provided under subsection 8.
  3 33    6.  a.  For purposes of this section, "qualified educational
  3 34 expenses" includes tuition and fees at a nonpublic school,
  3 35 textbooks, fees or payments for educational therapies,
  4  1 including tutoring or cognitive skills training, curriculum
  4  2 fees and materials for a course of study for a specific subject
  4  3 matter or grade level, tuition or fees for nonpublic online
  4  4 education programs, education materials and services for pupils
  4  5 with disabilities, including the cost of paraprofessionals
  4  6 and assistants who are trained in accordance with state law,
  4  7 standardized test fees, fees required by the department not to
  4  8 exceed for each grant recipient five percent of the total grant
  4  9 amount in any fiscal year, higher education costs, as defined
  4 10 in section 12D.1, excluding room and board expenses, and other
  4 11 expenses incurred by the parent or guardian that are directly
  4 12 related to the education of the pupil at a nonpublic school,
  4 13 including a nonpublic school accredited by an independent
  4 14 accrediting agency approved by the department of education, or
  4 15 directly related to providing competent private instruction
  4 16 for the pupil under chapter 299A.  The cost of one computer or
  4 17 other portable computing device shall be allowed as a qualified
  4 18 educational expense for a pupil if such a purchase has not been
  4 19 made using funds from that pupil's account in either of the two
  4 20 immediately preceding fiscal years.
  4 21    b.  "Qualified educational expenses" does not include
  4 22 transportation costs for the pupil, the cost of food or
  4 23 refreshments consumed by the pupil, the cost of clothing for
  4 24 the pupil, or the cost of disposable materials, including
  4 25 but not limited to paper, notebooks, pencils, pens, and art
  4 26 supplies.
  4 27    c.  "Qualified educational expenses" does not include
  4 28 tuition, as defined in section 422.12, at a nonpublic
  4 29 school where the tuition charged per student, prior to any
  4 30 scholarships or other reductions, exceeds the regular program
  4 31 state cost per pupil for the same school year.
  4 32    7.  A person who makes a false claim for the purpose of
  4 33 obtaining an education savings grant provided for in this
  4 34 section or who knowingly receives the grant or makes a payment
  4 35 from an account within the education savings grant fund
  5  1 without being legally entitled to it is guilty of a fraudulent
  5  2 practice.  The false claim for an education savings grant or a
  5  3 payment from an account shall be disallowed and if amounts from
  5  4 the grant have been disbursed from the applicable account in
  5  5 the education savings grant fund, the department of management
  5  6 shall initiate legal proceedings to recover such amounts. A
  5  7 parent or guardian, or a pupil for purposes of subsection 8,
  5  8 who commits a fraudulent practice under this subsection is
  5  9 prohibited from participating in the education savings grant
  5 10 program in the future.
  5 11    8.  a.  For each pupil with a positive balance in the
  5 12 pupil's account in the education savings grant fund upon
  5 13 graduation from high school or completion of an equivalent
  5 14 level of competent private instruction under chapter 299A, the
  5 15 department of management shall maintain the account in the
  5 16 fund until the pupil is twenty=three years of age. Following
  5 17 graduation from high school until the pupil is twenty=three
  5 18 years of age, moneys in the pupil's account may be used for
  5 19 higher education costs, as defined in section 12D.1, subsection
  5 20 2, incurred by the pupil while attending an institution of
  5 21 higher education under the control of the state board of
  5 22 regents, a community college located in this state, or a
  5 23 private college or university located in this state. Payments
  5 24 from a pupil's account for higher education costs shall be
  5 25 made in the same manner as payments for qualified educational
  5 26 expenses under subsection 5. Moneys in a pupil's account when
  5 27 the pupil turns twenty=three years of age shall be transferred
  5 28 by the department for deposit in the general fund of the state.
  5 29    b.  Notwithstanding the age limitation in paragraph "a",
  5 30 if the pupil with a positive balance in the pupil's account
  5 31 in the education savings grant fund upon graduation from high
  5 32 school or completion of an equivalent level of competent
  5 33 private instruction under chapter 299A serves on federal active
  5 34 duty, other than training, and is discharged under honorable
  5 35 conditions, the limitation date otherwise applicable under
  6  1 paragraph "a" shall be extended by one year for each year of
  6  2 federal active duty service by the pupil, but not to a date
  6  3 after the pupil's twenty=seventh birthday.
  6  4    9.  This section shall not be construed to authorize the
  6  5 state or any political subdivision of the state to exercise
  6  6 authority over any nonpublic school or pupil receiving
  6  7 competent private instruction under chapter 299A or construed
  6  8 to require a nonpublic school to modify its admissions or
  6  9 educational program in order to receive payment from a parent
  6 10 or guardian using funds from a pupil's account in the education
  6 11 savings grant fund. A nonpublic school or entity providing
  6 12 competent private instruction under chapter 299A that accepts
  6 13 payment from a parent or guardian using funds from a pupil's
  6 14 account in the education savings grant fund is not an agent of
  6 15 this state or of a political subdivision of this state. Rules
  6 16 adopted by the department to implement this section that impose
  6 17 an undue burden on a nonpublic school or entity providing
  6 18 competent private instruction under chapter 299A are invalid.
  6 19    Sec. 3.  Section 422.7, Code 2015, is amended by adding the
  6 20 following new subsection:
  6 21    NEW SUBSECTION.  51.  Subtract, to the extent included, the
  6 22 amount of an education savings grant under section 257.11B
  6 23 received by the taxpayer for payment of qualified educational
  6 24 expenses.
  6 25    Sec. 4.  APPLICABILITY.  This Act applies to school budget
  6 26 years and fiscal years beginning on or after July 1, 2016.
  6 27    Sec. 5.  APPLICABILITY.  The section of this Act enacting
  6 28 section 422.7, subsection 51, applies to tax years beginning on
  6 29 or after January 1, 2016.
  6 30                           EXPLANATION
  6 31 The inclusion of this explanation does not constitute agreement with
  6 32 the explanation's substance by the members of the general assembly.
  6 33    This bill provides education savings grants for pupils
  6 34 attending a nonpublic school or receiving competent private
  6 35 instruction and establishes an education savings grant fund.
  7  1 Under the bill, pupils eligible to enroll in grades
  7  2 kindergarten through 12 and attending a nonpublic school or
  7  3 receiving competent private instruction under Code chapter
  7  4 299A are eligible to receive an education savings grant for
  7  5 school years beginning on or after July 1, 2016.  By January 31
  7  6 preceding the school year for which the education savings grant
  7  7 is requested, the parent or guardian of the pupil requesting to
  7  8 receive an education savings grant must submit an application
  7  9 to the department of education indicating that the parent or
  7 10 guardian intends to enroll the pupil in a nonpublic school or
  7 11 provide competent private instruction for the pupil.
  7 12    The bill requires that by March 1 preceding the school
  7 13 year for which the education savings grant is requested,
  7 14 the department of education must notify the department of
  7 15 management of the number of pupils in each school district
  7 16 designated for the following school year to receive an
  7 17 education savings grant and the amount of the education
  7 18 savings grant for each pupil.  Education savings grants must
  7 19 be approved for each school year and applications must be
  7 20 submitted each year.
  7 21    The amount of each education savings grant is equal to the
  7 22 statewide average regular program state foundation aid per
  7 23 pupil in the same school year.
  7 24    The bill creates an education savings grant fund in the state
  7 25 treasury under the control of the department of management
  7 26 consisting of moneys appropriated to the department for the
  7 27 purpose of providing education savings grants.  For the fiscal
  7 28 year commencing July 1, 2016, and each succeeding fiscal year,
  7 29 there is appropriated from the general fund of the state to the
  7 30 department of management for deposit in the fund the amount
  7 31 necessary to pay all education savings grants approved for
  7 32 that fiscal year.  For each pupil approved for an education
  7 33 savings grant, the department of management must establish an
  7 34 account for that pupil in the education savings grant fund.
  7 35 The amount of the pupil's education savings grant is deposited
  8  1 into the pupil's account on July 1 and such amount is available
  8  2 for use by parents and guardians for the payment of qualified
  8  3 educational expenses, as defined in the bill, incurred by the
  8  4 parent or guardian for the pupil during that fiscal year. The
  8  5 bill specifies that "qualified educational expenses" does not
  8  6 include tuition at a nonpublic school where the tuition charged
  8  7 per student, prior to any scholarships or other reductions,
  8  8 exceeds the regular program state cost per pupil for the same
  8  9 school year.
  8 10    The bill authorizes the department of education to
  8 11 contract with a private financial management firm to manage
  8 12 the education savings grant fund, in collaboration with the
  8 13 treasurer of state, including providing for the disbursement
  8 14 of education savings grants in the form of an electronic debit
  8 15 card or checks that are payable directly from the pupil's
  8 16 account within the fund.
  8 17    The bill provides that moneys remaining in a pupil's account
  8 18 upon the conclusion of the fiscal year shall remain in the
  8 19 pupil's account in the education savings grant fund for the
  8 20 payment of qualified educational expenses in future fiscal
  8 21 years or for higher education costs as authorized in the bill.
  8 22    Under the bill, for each pupil with a positive balance in
  8 23 the pupil's account in the education savings grant fund upon
  8 24 graduation from high school or completion of an equivalent
  8 25 level of competent private instruction under Code chapter
  8 26 299A, the department of management is required to maintain the
  8 27 account in the fund until the pupil reaches an age specified in
  8 28 the bill.  Until the pupil reaches the age limitation, moneys
  8 29 in the pupil's account may be used by the pupil for higher
  8 30 education costs, as defined in Code section 12D.1.  Moneys in a
  8 31 pupil's account when the pupil reaches the age limitation are
  8 32 transferred by the department of management for deposit in the
  8 33 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 in 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.
  9  7    The bill provides that an education savings grant received
  9  8 by a taxpayer is not taxable income under Code section 422.7,
  9  9 subsection 51. This provision of the bill applies to tax years
  9 10 beginning on or after January 1, 2016.
  9 11    The bill applies to school budget years and fiscal years
  9 12 beginning on or after July 1, 2016.
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