Iowa Passes the Nation’s Most Expansive and Inclusive ESA Program

Families in Iowa have even more to celebrate during National School Choice Week, as Governor Reynolds signed HF 68, called the Students First Act, into law today. The bill creates a universal education savings account (ESA) program that all students in the state can access by FY 2026 and allows all state education dollars to follow the student to the best school for them. It was sponsored by Speaker Pro Tem John Wills, an ALEC Board of Directors member, and led through the opposite chamber by Senator Amy Sinclair.

Prior to signing the bill, Governor Reynolds released a press statement saying, “Parents, not the government, can now choose the education setting best suited to their child regardless of their income or zip code. With this bill, Iowa has affirmed that educational freedom belongs to all, not just those who can afford it.”

Iowa joins Arizona as the two states with universal school choice. Last year, Arizona expanded their ESA program to include every student in the state and allow 90% of state education dollars to follow them. This effort was led by now Speaker Ben Toma, who received ALEC’s Legislator of the Year Award last year.

West Virginia’s Hope Scholarship Program could also become universal in 2024 if less than 5% of eligible students are enrolled in the program (currently, over 90% of students in the state are eligible to participate). Iowa’s new ESA closely resembles the West Virginia program, with the exception being that Iowa guarantees universal eligibility by 2026. ALEC’s model policy, The Hope Scholarship Act, is also closely based on West Virginia’s ESA but makes all students eligible to participate on day one.

Governor Reynolds has made universal school choice a top priority, despite a similar measure failing in the Iowa House of Representatives last year. Following its defeat, Governor Reynolds went on offense and endorsed the primary opponents of four incumbent Republican lawmakers who opposed the bill last year. In a sign of where the voters of Iowa stand on the issue, all four of Governor Reynolds endorsed candidates won their races.

HF 68 becomes the first bill to expand school choice across the finish line this year, with the Iowa legislature sending it to the Governor’s desk just 15 days after the first day of session. Several other state legislatures, including Florida, Arkansas, Ohio, Virginia, Utah, and Oklahoma, are considering measures to create new education savings programs for their constituents as well.

The key provisions of HF 68 include:

  • A phased-in approach to eligibility:
    • FY 2024 – Students that were enrolled in their public school for the previous school year are eligible, in addition to incoming kindergartners. Students enrolled in a private school during the previous year area eligible only if their family income is below 300% of the federal poverty limit.
    • FY 2025 – Eligibility is the same as FY 2024, except students enrolled in a private school during the previous school year are eligible if their family income does not exceed 400% of the federal poverty limit.
    • FY 2026 – All students in the state are eligible.
  • Annual ESA funding is equal to the state cost per pupil plus an annual growth factor.
  • All unused ESA funds can be used in future school years.
  • Additional funds are provided to the public school district when a student leaves for a private school, partially offsetting the funding losses experienced by the public school.

With HF 68 being signed into law, Iowa now owns the distinction of having the country’s best ESA program – making this a National School Choice Week to remember for all Iowa families.

In Depth: Education

An excellent education has long been recognized as key to the American Dream. Unfortunately, the current monopolistic and expensive K-12 education system is failing our students, leaving them unprepared for college, careers, or life. Similarly, our higher education system is leaving students with higher debt burdens and fewer career guarantees…

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