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February 2015 Brief: Volume 22, Number 5

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Educational Savings Accounts – We’re Tired of Waiting for Change


by Deborah D. Thornton



The Iowa City Community School District (ICCSD) is in the midst of a contentious program to institute educational “equality” in public schools, based on altering the percent of low-income children geographically assigned to each school. This especially affects the K-6 grade school children, who typically attend the school closest to their home. Because low-income and high-income families typically do not live next door to each other, most neighborhoods are homogenous. As a result, some schools have a significantly higher percentage of children at each end of the spectrum. The thought is that low-income children learn more, or better, when they are exposed to high-income children. The ICCSD program has been overturned by the U.S. Department of Agriculture and now rescinded by the school board.[1] The children are still waiting for change.


High-income parents who want their children to have what they perceive to be a “better” education have, for a very long time, self-selected either into a better neighborhood, i.e. one where the housing stock is more expensive, or completely out of the government school system by paying tuition personally at a private school. Generally, low-income parents do not have that option. They send their children to the school the government has decided is best for them, based upon their mailing address. They are still waiting for promised results.


The Iowa School Tuition Organization (STO) tax-credit program, where individual and private donors to one of the STOs receive a 65 percent tax credit on their Iowa state taxes for that donation, attempts to address this inequality. However, it has a $12 million per year cap for total donations, which is reached every year.[2] The family must make no more than 300 percent of the federal poverty guidelines to qualify. This STO program helps many, many low-income parents to send their children to private schools (approximately 10,500), and the cap should be increased to at least $20 million in tax credits. The state budget can easily absorb this amount. But it is not enough.


A better option is to provide K-12 Educational Savings Accounts (ESAs), where a specific amount of state tax money – that money which is intended to provide an education for that child – is “given” to the parents, who then choose the school they want their child to attend. This school can be public or private. The best known program is in Arizona. This program was originally for special needs students, but has now expanded into children in failing schools, children of active-duty military parents, and children adopted from foster care.[3] The amount provided in 2013-2014 was $5,300 per child, in a debit card format that could only be used for educational spending – whether school tuition or materials and supplies.


There was an ESA proposal before the Iowa Legislature last session, which passed the Iowa House Education sub-committee, but was blocked by the Democrat-controlled Iowa Senate. Introduced in the Senate by Jerry Behn (R-Boone), SF 2154 had 24 co-sponsors and would have provided about $5,850 per student.[4][5] This is about half of the total amount Iowa state government spends on education per child per year ($11,800+).


Similar legislation will be introduced this session. But the Iowa Senate is again expected to block it, on a strict party-line vote. The Iowa Democrats, supposedly the party of low-income people and “the children,” will not consider any legislation which is perceived as taking funds from their allies, the Iowa teachers’ union, whether or not it is “good” for the children. Other states which are considering ESA accounts this year include Florida, Kansas, Mississippi, Montana, and Oklahoma.


In the meantime, Governor Branstad has proposed the largest state budget ever for 2016-2017, over $7.3 billion dollars, and a 5 percent increase over this year’s budget. Education costs are over 55 percent of this spending, and if passed, will receive $326 million in new tax money over the next two years. The government schools have received an increase of about 4 percent per year for the last several years, and soon per student annual spending will reach $13,000. But, according to the teachers’ union and their Democrat allies – it’s still not enough.


The question is, “How much is enough?” Is it $15,000 per student? $20,000 per student? $25,000 per student? Or more? The exclusive private schools in Chicago’s wealthy suburbs, such as the Science and Arts Academy, the Rogers Park Montessori School, Northridge Prep School, and the Chicago Grammar School only charge from $9,325 to $18,000 – and many of them offer scholarships which bring that amount down significantly.[6]


If some of the best private schools in the country cost less than government schools, isn’t something wrong? The Iowa Legislature, both Democrats and Republicans, need to get serious about “helping the children.” Allowing the parents, not an arbitrary zip code, to decide where their child attends school would be a good first step. ESA legislation should be passed, this year – not next. Iowa children are tired of waiting for change that never happens.


[1] Holly Hines, “School Board Plans to Rescind Diversity Policy,” Iowa City Press-Citizen, January 8, 2015, <> accessed on January 18, 2015.
[2] “Iowa, School Tuition Organization Tax Credit,” The Friedman Foundation for Educational Choice, 2014, <> accessed on January 18, 2015.
[3] “Arizona Empowerment Scholarship Accounts,” The Friedman Foundation for Educational Choice, April 8, 2014, <> accessed January 18, 2015.
[4] “ESA Legislation Introduced in the Senate!” Iowa Association of Christian Schools, February 13, 2014, <> accessed January 18, 2015.
[5] “Legislation,” Iowa Alliance for Choice in Education, 2014, <> accessed January 18, 2015.
[6] “How Your Private School Stacks Up,” Chicago Magazine, November 2, 2011, <> accessed on January 18, 2015.


Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact her at


Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.




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