The school year may have just ended, but it’s already time to think about the next one if you’re interested in state-provided funds for nonpublic school tuition.  The application window for Students First Education Savings Accounts is May 31 to June 30 for the 2023-2024 school year.

Governor Kim Reynolds signed the Students First Act into law on Jan 24; it makes state funding available to K-12 students in Iowa through education savings accounts (ESAs), which may be used by eligible families to cover tuition, fees, and other qualified education expenses at accredited nonpublic schools in Iowa.

Applications can be submitted at educateiowa.gov.

For the upcoming 2023-2024 school year, Students First ESAs are available to all entering kindergarten students; all students enrolled in a public school or are home schooled; and a student enrolled in an accredited nonpublic school with a household income at or below 300% of the 2023 Federal Poverty Guidelines (eg. $90,000 for a family of four).

Household income limits on students already enrolled in accredited nonpublic schools will lift for school year 2024-2025, and be eliminated by school year 2025-2026, at which time all students will be eligible for ESAs.

Parents who choose to enroll their eligible children in an accredited nonpublic school will receive an amount equal to the per pupil funding allocated to public school districts for the same budget school year.  The per student funding for the 2023-2024 school year will be $7,635; half of the funds will be available for use in Fall 2023 semester, and the remaining half will be available for use in the Spring 2024 semester.

In terms of what this means for our readership area, all full-time regular students attending local public schools -- such as Mid-Prairie CSD and Highland CSD – are eligible for state ESAs to attend accredited nonpublic schools – such as Hillcrest Academy, Lutheran Interparish in Williamsburg, and Regina Catholic in Iowa City.  State ESAs cannot be used to attend Pathway Christian, as the school is not accredited.

Students who already attend Hillcrest, Lutheran Interparish, and Regina Catholic are eligible for state ESAs as well, provided they meet household income limits.

Local consequences

Just how many students in our area districts will transfer from public to nonpublic schools now that state funds will reduce the expense of tuition for families?  How much does a school like Hillcrest Academy stand to benefit?  How much do districts like Mid-Prairie and Highland stand to lose?

According to the Iowa Capital Dispatch on May 31, the governor’s office reported over 5,000 families throughout the state applied for state ESAs on the first day of the application period.  This suggests we will see some student movement between schools locally.

Hillcrest Academy

When The News spoke with Dwight Gingerich, Principal of Hillcrest Academy, late February, whether or not the ESAs would actually become available for this coming school year was still in question.  At that time, we asked him how many students Hillcrest anticipated gaining, and he did not expect a large increase in enrollment.

“Contrary to public opinion, our phones haven’t been ringing off the hook,” he said.  “We’re really, at this point, just trying to figure things out, so it doesn’t feel like we have any earth-shaking announcements to make.”

As for students already attending Hillcrest, Gingerich said that he did expect that for those families that meet the income limit, ESAs would be helpful in paying tuition and expenses.

“There’s no question that it’s been very difficult for families and for private schools to finish in the black year after year, given inflation,” he said.  “This definitely allows for some relief.”

In fact, of students attending Hillcrest, “a very, very low percentage pays full tuition,” Gingerich said.  “We’re probably at a point where we have more families here of lesser means than ever.  I don’t mean that negatively; it’s just a reality.”

The full tuition amount of $9,735 is often paid in part by church congregations who support the school.  Covering tuition has become “a pretty large burden on the churches,” Gingerich said, and if families can use ESAs to pay tuition costs instead, churches would be freed up to support other local missions.

In addition, Hillcrest has “kind of bitten the bullet and refrained from increasing [tuition], when in reality, we really needed to.  [ESAs will] allow us to do what we’ve needed to do and not been able to do,” Gingerich said, noting the rising costs the school has been facing.

Highland CSD

Also in late February, The News spoke with Ken Crawford, Superintendent of Highland CSD.  We asked if he was worried about losing students to nonpublic schools once ESAs became available.

“I’m not worried about losing students,” he said.  “I’m worried that our State Supplemental Aid (SSA) for the last 10 years has been on average 2%, and inflation and the cost of living has gone up higher than that.  For 10 years, we’ve been told there’s not been enough money to support the schools the way [the state] would like to.  So, we’ve been running efficiently, cutting costs, trying to do everything we can.  And then this [legislation] comes along, and all of a sudden, [the state] has money for that.  So that’s very frustrating.”

Crawford did not expect many students would be leaving Highland in the coming school year.

“Even with a couple private schools around the area, I still think people are going to make the same choices that they’ve made before.  For the most part, I feel our community would still bring their children here,” he said.

“I worry about the money that’s coming into the districts in the future,” he continued.  “The bigger picture of this is that as the revenues decline in the State of Iowa, then what they give to 330 public schools is going to decline as well.  What’s going to happen to the State of Iowa’s education?  I feel like Iowans have always touted having quality education, quality public schools. . . I think that’s taking away a fantastic system that we have set up.  If the system works, the system is great.  Why would you take money away from that?  Why would you not fund that more?”

Crawford said that with less state funding, the district would be forced to find ways to be more efficient.  

“There are some easy decisions and then it becomes some very hard decisions,” he said, giving examples from changing bus routes to cutting staff. “I’m afraid [ESAs] are going to accelerate those issues that don’t need to be accelerated.  If this accelerates faster, you’re hurting small, rural Iowa, and small rural Iowa schools are producing fantastic kids.  I don’t think that’s been taken into account.”

Mid-Prairie CSD

Administrators at Mid-Prairie CSD have not discussed ESAs specifically with The News (although they have been invited to), but school finances have been a deep concern for the school board and administrators of late.    

At the April 10 meeting of the Board of Education, Larry Sigel of Iowa School Finance Information Services provided the board with a 5-year projection model for the district’s finances.  During that presentation, Sigel showed the board through his software model what effect the loss of a few students to nonpublic schools would have on the district’s revenue.  The board anticipates a loss of six to 12 students a year thanks to ESAs; Sigel’s projections showed that could cost the district a half-million dollars over the next five years.

But like Crawford at Highland, Mid-Prairie is more concerned over the state lowering the SSA rate.  Set at 3% this year, the SSA is anticipated to fall in future years.  Sigel showed the board what would happen if the SSA rate fell to 2.5%, or even lower to 1.5%; the result was a loss of $1 million or more over the next five years. 

We don’t have to wonder what the district will do as it faces declining revenues, as the wheel is already turning.  At the April 24 meeting, the board approved the elimination of one full staff position: the half-time assistant principals at both the middle and high school.  

When asked about this change, School Business Official Jeff Swartzentruber told The News in an email, “With the resident student count in the district down by 30 students in this school year, along with the end of COVID federal funds coming on June 30, 2023, we have been very cautious about adding additional ongoing expenses to the district.  Even though Open Enrolled In students increased to almost even out the losses, we are cautious to expect the open enrollment trend to continue at a pace that will match any future resident student declines.  Optimistically, we see growth in our kindergarten class for next year.”

He also noted, “While the district is NOT in financial difficulty, we believe that responsible fiscal management is even more critical.  Schools cannot stop spending quickly.  The system is such that it can take as many as two years to address overspending concerns that may arise.”

It is difficult to predict the future, but we can reliably anticipate that a change such as making ESAs available to families for nonpublic education will have an effect on the educational landscape in our communities.