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February 2014 Policy Study, Number 14-1


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


What Next?



Liberal Open Enrollment to Include All Accredited Schools


One of the quickest and most efficient ways to expand educational freedom for all Iowa students is to expand open enrollment to make it “liberal.”  Liberal open enrollment would allow children to be open-enrolled to any school accredited by the state of Iowa.  If a school is “accredited,” that means it has applied to, been reviewed by, and been approved by the state Department of Education as meeting their requirements for a “legal” education and issues an accepted diploma.  The school is teaching a curriculum which has been approved by the state and follows key civil rights standards.


The amount of money transferred by the district of residence would be the same as is transferred to a government school under the current open enrollment program.  The application dates and approval process could be the same, and as the system is already in place there would be few, if any, additional start-up costs to allowing all accredited schools to be eligible to receive open enrollments.  This would give those 38 percent of Iowans preferring a private-school education an opportunity for their child to follow their wants. 


Under the current open enrollment system, only the $6,000 which is specifically allocated to teach the child is transferred with the registration; the other $5,000 for sunk or overhead costs remains with the home district.  This would also be true with liberal open enrollment.  The home school district would still receive almost half of the state allocation for that child, but without the responsibility for educating them.


As a large majority of Iowans supports educational freedom for all children, irrespective of income, liberal open enrollment would not be limited to only low-income children.


Further Expansion of STO Tax Credits


Based on the popularity and use of the STO tax credits, which have been 100 percent claimed every year, even with continuing modest increases in the amount allowed, the limit on these charitable donations should be immediately raised.  As with the open enrollment program, the system is already in place and working well.  Allowing corporate contributions was a recent change and allows significantly more in potentially eligible donations. 


Businesses in Iowa are well aware of the need for better educated and highly skilled workers, especially young workers.  An expansion of the STO tax credits would allow them to further assist low-income families and students to attend the school of their choice. 


Rather than addressing this issue every year, the Iowa Legislature should increase the limit from $18 million to $25 million for FY 2015 and put in place an additional automatic $5 million per year increase in the STO tax credit limit – unless state government finds it necessary to use the rainy day funds for emergency operations.  Then the limit could be frozen at that current level, until the rainy day funds are once again replenished.  This would help ensure the tax credits do not affect regular operations.


Currently, almost 11,000 low-income parents and their children are assisted by this program.  While higher-income parents have always been able to either move into a better school district or school zone or pay personally for private-school tuition, low-income children have been denied the opportunity.  Many of these children are Hispanic and African American, the children most in need of educational equality, as consistently demonstrated by test scores.  A tax credit expansion would help even more attend the school of their dreams and have the opportunity to succeed. 


Expansion of Tuition and Textbook Tax Credits


The tuition and textbook tax credit limit of 25 percent of the first $1,000 of educational expenses is woefully low.  A homeschooling or private-school parent will spend many thousands of dollars above that limit on their child’s education.  Even a government-school parent, whose child is actively involved in extra-curricular and school-related events, can easily spend $1,000 per year on soccer shoes, baseball gloves, achievement test preparation, music lessons, homecoming football game tickets, and prom dance fees.  


Though some might argue that these “extras” should not be subsidized by a tax credit, research and common sense shows that these are often the items which make a huge difference in a child’s commitment to school and to education.  These extras often mean the difference between a fully engaged child with the opportunity to explore and develop his or her talents and interests, or one who simply sits home in front of the television for hours every day. 


Because the tax credit is non-refundable, the taxpayer cannot make a “profit” off of claiming it.  Though this prevents a small percent of the very lowest income taxpayers from taking full advantage of it, these parents are also eligible – by applying for the Free and Reduced Lunch (FRL) program – to have most if not all, of any personal education expenses eliminated in the first place.  For example, FRL parents generally do not pay most extra-curricular fees.


Increasing the Tuition and Textbook Tax Credit limit or deduction percent, or both, up to the average of private-school tuition in Iowa, would allow parents and families who are committed to getting their child the education they determine is best for them to do so without financial hardship.  The state has a vested interested in helping them to do so and allowing this tax credit would be an important step in the direction of educational freedom for all.




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