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February 2014 Policy Study, Number 14-1


Educational Freedom – For Your Child, My Child, All Children


Iowa K-12 Education and Educational Options



Though government education and educational-union advocates are currently advocating for a 6 percent allowable growth (supplemental aid) increase in state spending, instead of the 4 percent agreed to in the 2013 legislative session, Iowans already spend a significant amount of taxpayer money on education.  It is the number one spending category of the entire $7 billion state budget.


According to the most recent data from the U.S. Department of Education, Iowa taxpayers spend $11,913 per student.   Unfortunately, much of that spending does not end up paying for a teacher to lead a class.  Only $6,040 of that is actually spent on “instruction.”[48]  The rest goes toward buildings, debt servicing, overhead, and other costs. 


The Iowa education budget has steadily increased by basically 5 percent per year for many years.  At the same time the number of students being educated declined every year for the last 14, until the 2012-13 school year when there was a very slight (25 student) increase, according to the State Department of Education,  and is now just over 512,000.[49]  The number of teachers, however, has remained consistent at almost 34,000, and the average salary has increased to over $50,600, the 25th highest in the nation.[50] 


The question must be asked, are these hundreds of millions of dollars of our tax money being used wisely?  It is well documented that achievement by Iowa students has decreased in both reading and math on the Iowa Test of Basic Skills at both the fourth and eighth grades.  These are key metrics.  By the fourth grade students are expected to be reading for knowledge, not learning to read, and remedial work is difficult to complete in high school if an eighth grader is not proficient at core reading and math skills.  The results of the NAEP reading and math tests of our Iowa students have remained flat, with “no significant gains.”  At the same time, children in other states have improved their performance above ours.


Though over 46,000 students have taken advantage of the tuition scholarships offered by the STO program since it began, clearly there is a need for more educational freedom options.


Open Enrollment


In contrast to many states, Iowa currently has limited school-choice options.  Limited open enrollment has been available since Governor Terry Branstad’s (Republican) first term, starting in 1989-1990.  It allows any student who applies to out-register to any other government-school district in the state as long as the application is submitted by March 1.[51]  If submitted by that time, the application is reviewed and must be approved by the receiving district.  However, some districts who are dealing with building capacity issues have chosen to not accept open enrolling incoming students.[52] 


The use of open enrollment continues to increase, with almost 27,000 (26,743) children open enrolled out of their home district in the 2011-2012 school year.  The number choosing to exercise this right has consistently increased by about 1,000 per year since 2010 and is 5.6 percent of the total student population.[53]  Both the smallest and largest districts are net open enrollment losers.  This means more children out-enroll than in-enroll, resulting in smaller numbers of total students.  For large districts dealing with space problems, this provides facility relief.  For smaller districts it makes their struggles more difficult.  These choices seem to indicate that parents and students at both ends of the spectrum find the government school of their residence unsatisfactory, either because it is too small or too large.  Additionally, it would serve as a signal to both Legislators and Administrators of the Iowa Department of Education that the problem of very small school districts has not gone away and requires further action.


On-line Education


The use of on-line classes could significantly help deal with physical capacity problems and provide more educational freedom for many students.  The general solution at this time to over-crowding is instead to build ever more new and lavish buildings, using taxpayer dollars from the 1-percent School Infrastructure Local Option (SILO – now called SAVE) sales taxes and voter approved bonding authority.[54]  At the same time two-thirds of the districts in Iowa have fewer than 1,000 total students.  Even after a focused effort on small district consolidation, this number is the same as it was in 2000-2001, over 13 years ago.[55]  These districts face the other problem of having too few children to offer advanced classes.  On-line education and on-line high schools in particular can alleviate some of this problem.  


Currently, most students can only take one on-line class a semester, and the approval process is neither transparent nor readily accessible to many parents.  The main on-line offerings are Advanced Placement classes through the Belen-Blank Center for gifted and talented students at the University of Iowa.  Two districts are offering fully on-line high schools through a private provider, but some Legislators object to this choice option and have now limited participation by other districts. 


School Tuition Organizations


As noted earlier, the STO Tuition Tax Credits are wildly popular, with all credits generally claimed by mid-October of each year.  Donors who send checks as part of their year-end charitable donations are often turned away without receiving the credit.  This is money people and corporations are eager to donate, to help low-income children obtain their education from the school of their choice.  Low donation limits (maximum of $12 million annually), though raised in recent years by the Legislature, prevent all children and all interested donors from participating.  With the state in a billion-dollar tax-collection-surplus situation, it would seem that the STO limits could easily be raised further, to $20 million or more.  This would both allow Iowa taxpayers to keep more of their hard-earned money in their own pockets and benefit low-income children and parents.


Currently, the average scholarship offered as a result of the STO donations is less than $1,000 per student.  The average tax credit award is $2,427, with many small donations and a few large ones.[56]  As this system is already in place, expanding it further would be a simple matter.


Tuition and Textbook Tax Credits


The number of children enrolled in accredited private schools remains almost 33,000, or 6.3 percent of the total children, with little change up or down.[57]  The number homeschooled is approximately 10,732 or 2.3 percent of the total school-age population.  The Iowa homeschool regulations are now some of the most favorable in the country, following the relaxation of homeschool reporting requirements in the 2013 legislative session.[58]


Another way which the state of Iowa encourages educational freedom is through the tuition and textbook tax credits.  These credits help government-school, private-school, and homeschooling parents.  A taxpayer can take 25 percent of the money they spend on a wide variety of educational expenses for their children – up to a gross expenditure of $1,000 per child – off as a non-refundable credit on their state taxes.  This reduces the tax burden for someone who owes taxes by $250 per child. 


Items which can be claimed include – but are not limited to – books and supplies specifically for school, achievement test preparation materials, sports shoes used for school extra-curricular activities, and surprisingly – tuxedo rental costs.  Tuxedo rentals can be necessary for some high school choir activities, as well as the spring junior and senior-year prom.  The credit is available to any parent, irrespective of the type of school their student attends.  The idea behind the credits is that these extra items help a child fully participate in school activities, whether low- or high-income.  Unfortunately, because these tax credits are “non-refundable,” the lowest-income parents – who generally have no taxable income originally – are unable to benefit.  As a result tuition tax credits go mostly to the higher-income people.




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