Iowa governor’s bill would reduce public school funding by millions, analysis says

DES MOINES — Gov. Kim Reynolds’ proposal to create scholarships for private school tuition would cost the state’s 300-plus public school districts $2.1 million, a fraction of the more than $3 billion the state devotes each year to K-12 public education, according to a nonpartisan state analysis.

Critics of the proposal and public school advocates have warned the governor’s proposal amounts to a defunding of public schools and caution the negative impact could be greater than the Legislative Services Agency’s estimate.

Under Reynolds’ proposal, taxpayer-funded private school tuition scholarships would be made available to students in public schools that have been identified by a federal program as low-performing and in need of substantial assistance. In Iowa, that’s 34 schools.

An analysis from the Iowa Legislative Services Agency, a nonpartisan organization that analyzes legislation for its potential impacts, projects the scholarships would cause public schools to lose $2.1 million in state aid and property taxes the first year; $3.1 million the second year; and $3.8 million the third year.

But other elements of her proposal could mean millions more lost to some urban districts under changes to open enrollment and how the number of students is counted.

“The governor has made investing in education a priority, increasing overall spending on preK-12 every single year,” Reynolds spokesman Pat Garrett said in a statement. “The report from LSA shows that the student first scholarships are very narrow in scope, and the true financial impact is far lower than what opponents of the bill have claimed.”

The Legislative Services Agency analysis is based on a projection that 3.5 percent of eligible students would apply for and receive scholarships in the state budget year that ends in 2023; 5 percent in the 2024 budget year; and 6.5 percentin the 2025 budget year.


The agency projected 345 scholarships would be awarded in the first year, 520 in the second and 735 in the third.

Reynolds’ proposal does not limit the number of scholarships that could be awarded.

Melissa Peterson, the government relations specialist for the statewide teachers union, warned the estimate could prove low, and, without a cap, the cost of the program could be much higher.

“Responsible governance dictates we prepare for the greatest impact allowed by the legislation — not an uncodified assumption,” Peterson said in a statement. “If legislators only wanted a small number of students to participate or wanted to limit the amount of money appropriated to the program, they should have included a specific appropriation in the legislation. They deliberately did not.”

Rep. Ras Smith of Waterloo, the top Democrat on the House Education Committee, said lawmakers should be focused on other types of education funding efforts.

“In the middle of a pandemic, the Legislature should be working together to invest more in public schools to keep students learning safe,” Smith said in a statement.

“Using vouchers to shift tax dollars from public schools to private schools is a bad idea,” he said. “It will take away resources from kids who need it most and close more rural schools. Public money should be going to public schools.”

Enrollment Change

The legislation also proposes a new way of calculating each district’s enrollment by averaging counts on April 1 and Oct. 1.

The impact, according to the Legislative Services Agency analysis, is that districts with declining enrollment will see a positive fiscal impact, and districts with increasing enrollment will see a negative fiscal impact.

When applied retroactively to this school year, the proposal would have resulted in $21.7 million less in state aid to public schools. Future years would have a similar fiscal impact, according to the agency’s analysis.

Diversity Change

Reynolds’ proposal also calls for ending diversity policies in which some districts will not allow students to open-enroll in another district so the district can maintain diversity in its student population.


Only five districts across the state have such policies, and each would lose funds if more students are allowed to leave the district via open enrollment.

Using recent years’ open enrollment requests, the Legislative Services Agency estimated the Davenport school district would lose more than $783,000; Waterloo, $421,000; and Des Moines, $1.5 million.

School officials say those figures, too, could be higher because, if the law changes, more students may apply for open enrollment than have in previous years.

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