Bills › 89th General Assembly

HF 808Renumbered as HF 847 · March 22, 2021

Relating to educational programs, funding, tax credits and deductions, open enrollment, supplementary weighting, and including effective date, applicability, and retroactive applicability provisions

Sponsored by the House Education Committee

Topics:K–12 education Taxes Tax credits & incentives

Same legislation: HSB 240, HF 847

Write your legislators about itWhat changed before it passed

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Where it is now

Done: IntroducedFebruary 23, 2021
Done: SubcommitteeFebruary 23, 2021
Done: House committeeMarch 4, 2021
Skipped: Passes the HouseContinued as HF 847
Next: Senate committee
Next: Passes the Senate
Next: To the Governor
Next: Signed into law

Became HF 847 → Its progress continues under the new number. Go to HF 847 What’s a funnel?

What’s in it

This bill relates to educational programs, funding, tax credits and deductions, open enrollment, and supplementary weighting, and is organized in divisions. Division I requires the state board of education to establish a flexible student and school support program to be administered by the director of the department of education. Under such program, upon request of the board of directors of a public school district or the authorities in charge of an accredited nonpublic school, the director may, for a period not to exceed three years, grant the applicable board of directors or the authority in charge of the nonpublic school the ability to use the flexible student and school support program to implement evidence-based practices in innovative ways to enhance student learning, well-being, and postsecondary success.

Read the full explanation

10. An exemption shall be granted only if the director deems that the request made is an essential part of an educational program to support student learning, well-being, and postsecondary success; is necessary for the success of the program; and is broadly consistent with the intent of the requirements of the educational program or the minimum school calendar requirements.2(2) to implement all or part of the flexible student and school support program. The bill also establishes requirements relating to program applications, renewal of participation in the program, and revocation of participation in the program.2(2). Division II of the bill relates to educational tax credits and deductions against the individual income tax. Currently, a taxpayer receives the tuition and textbook tax credit for each dependent of the taxpayer attending an accredited private elementary or secondary school equal to percent of the first $1,000 which the taxpayer has paid to others for the tuition and textbooks of each dependent in attendance at such a school. Division II of the bill modifies the tuition and textbook tax credit to allow a taxpayer to receive the credit for the tuition and textbooks of each dependent of the taxpayer receiving private instruction, in addition to dependents attending an elementary or secondary school situated in Iowa.3. The bill also increases the tuition and textbook tax credit to equal percent of the first $2,000 for the tuition and textbooks of each dependent receiving private instruction or in attendance in grades kindergarten through 12. Division II also provides that a taxpayer that is an eligible educator is allowed to take the deduction for certain expenses of elementary and secondary school teachers allowed under section 62(a)(2)(D) of the Internal Revenue Code in computing net income for state tax purposes in excess of the amount of the taxpayer’s deduction for such expenses for federal tax purposes, but not to exceed $500. Division II of the bill takes effect upon enactment and, except as provided in division II of the bill, applies retroactively to January 1, 2021, for tax years beginning on or after that date.18 and provisions relating to participation in certain extracurricular interscholastic contests and competitions. Under current law, good cause must be shown for failing to file an open enrollment request after the statutory deadline. The bill adds the determination that the child’s assigned attendance center in the district of residence is identified as in significant need for improvement, as defined in the bill, to the definition of “good cause”. The bill also amends the definition of “good cause” for purposes of consideration and approval of open enrollment requests that fail to meet statutory deadlines to include a change in a child’s residence from the residence of one parent or guardian to the residence of a different parent or guardian and the initial placement of a prekindergarten student in a special education program requiring specially designed instruction.18 to reflect the amendment to the definition of good cause.18(2) establishes a deadline for requests to open enroll as September of the current school year for students entering kindergarten. The bill adds prekindergarten students enrolled in special education programs to the group of students subject to the September deadline.18(5), open enrollment applications filed after March of the preceding school year that do not qualify for good cause are subject to the approval of the board of the resident district and the board of the receiving district.1. The bill also requires the state board of education to adopt by rule the criteria for determining a consistent failure to respond to a student’s failure to meet basic academic standards. Division III of the bill also relates to the determination of a student’s district of residence for purposes of open enrollment payments when the parent or guardian of an open-enrolled student moves to a different school district during the course of either district’s academic year. Under the bill, the child’s district of residence as determined on the date of the basic enrollment count for school districts, rather than the child’s first district of residence, shall be responsible for payment of the applicable costs to the receiving district.18(10)(b), if a pupil meets the economic eligibility requirements established by the department of education and state board of education, the sending district is responsible for providing transportation or paying the pro rata cost of the transportation to a parent or guardian for transporting the pupil to and from a point on a regular school bus route of a contiguous receiving district unless the cost of providing transportation or the pro rata cost of the transportation to a parent or guardian exceeds the average transportation cost per pupil transported for the previous school year in the district. If the cost exceeds the average transportation cost per pupil transported for the previous school year, the sending district shall only be responsible for that average per pupil amount. The bill establishes minimum standards for the economic eligibility requirements established by the department and state board of education.18(11)(a) generally provides that a pupil who participates in open enrollment for purposes of attending a grade in grades through in a school district other than the district of residence is ineligible to participate in varsity interscholastic athletic contests and athletic competitions during the pupil’s first school days of enrollment in the district. However, a pupil may participate immediately in a varsity interscholastic sport if certain circumstances exist. The bill changes the 90-day period to be counted using calendar days instead of school days of enrollment.18, as amended in the bill; (2) if the board of directors or superintendent of the pupil’s district of residence issues or implements a decision that results in the discontinuance or suspension of varsity interscholastic sports activities in the district of residence; (3) if the board of directors of the district of residence and the board of directors of the receiving district both agree to waive the ineligibility period; and (4) for open enrollment applications for the school year beginning July 1, 2021, if the pupil’s district of residence had a voluntary diversity plan in effect on January 1, 2021, and applicable to the school year beginning July 1, 2021. The bill also provides that if a pupil is declared ineligible for interscholastic athletic contests and athletic competitions in the pupil’s district of residence due to the pupil’s academic performance, upon participating in open enrollment, in addition to any other applicable period of ineligibility, the pupil shall be ineligible in the receiving district for the remaining period of ineligibility declared by the district of residence.46 requires the state board of education to adopt rules relating to the ability of a child who does not meet the residence requirements to participate in certain extracurricular interscholastic contests or competitions. The bill adds to the list of circumstances that allow participation by the child, if the child’s former school or school district, if located in this state, was unable to participate in varsity interscholastic sports as a result of a decision or implementation of a decision of the school board or superintendent.18(11)(c), take effect upon enactment.18(11)(c), apply retroactively to January 1, 2021, for open enrollment requests approved on or after that date.18(11)(a)(9) apply retroactively to July 1, 2020.1 to specify that a school corporation is entrusted with public funds for the purpose of improving student outcomes, including but not limited to student academic achievement and skill proficiency, and the board of directors of the school corporation is responsible for overseeing such improvement.11(5) provides supplementary weighting for school districts and area education agencies that share specified operational functions for at least percent of the school year. Supplementary weighting under this provision is available for school budget years beginning on or after July 1, 2014, through the budget year beginning July 1, 2024. Division V of the bill adds a work-based learning coordinator to the list of eligible operational functions and positions eligible for a supplementary weighting of three pupils. The bill defines “work-based learning coordinator” to mean an appropriately trained individual responsible for facilitating authentic, engaging work-based learning experiences for learners and educators in partnership with employers and others to enhance learning by connecting the content and skills that are necessary for future careers.11(5).

Changed since by amendments H-1527, S-3170, S-3165, H-1292, H-1291, H-1290; see Amendments.

Full bill text · What changed before it passed¹

House subcommittee

Named March 10, 2021. On March 16, 2021 it recommended passage. Vote Total: 2-1.

Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part

Fiscal note

AI summary This bill makes various changes to education standards, tax credits, and school policies. It is estimated that school districts and area education agencies will expend an additional $4.7 million from unobligated teacher salary supplement funds in fiscal year 2022, which will have no fiscal impact to the state. The fiscal impacts of other provisions, such as changes to flexibility accounts and the new student support program, cannot be determined or will have no fiscal impact to the state.²

Read the fiscal note

Description

House File 847 makes a variety of changes to the Iowa Code regarding education. A brief description by division is below, and the following pages include assumptions and fiscal impact where it can be estimated.

DIVISION I — Education Program Standards and Funding: Creates a flexible student and school support program to be administered by the Department of Education (DE), allows for an additional categorical source to be eligible for use within the school district flexibility account, and directs school districts and area education agencies (AEAs) to expend unobligated funds from the teacher salary supplement in FY 2022.

DIVISION II — Education Tax Credits and Deductions: Increases the annual amount of classroom expenditures that Iowa elementary and secondary school teachers may deduct from gross income for income tax purposes from the current $250 to $500. Also expands the Tuition and Textbook Tax Credit by doubling the allowed expense amount to $2,000 per qualified student and extending the credit to students educated through private instruction. DIVISION III — Open Enrollment: Modifies several provisions relating to open enrollment and athletic eligibility including:

Amending rules for participation in extracurricular activities.
Designating a deadline for prekindergarten students enrolled in special education programs and adding additional good cause provisions to open enrollment for such students after the deadline.
Expanding the good cause definition to include students who attend attendance centers identified as in significant need of improvement and defining such attendance centers.
Providing an opportunity for an additional appeal to the State Board of Education for a late open enrollment application that does not meet the definition of good cause for a student whose resident district consistently failed to respond reasonably to a student’s academic failure to meet basic academic standards.
Clarifying language regarding the resident district responsibility for paying open enrollment tuition.
Establishing minimum standards of economic eligibility requirements for transportation assistance of open enrolled students.
Adding to the list of circumstances in which an open enrolled student may immediately participate in varsity athletics.

DIVISION IV — School Board Powers and Duties: Clarifies school board member responsibilities.

DIVISION V — Shared Operational Functions: Adds a work-based learning (WBL) coordinator and special education director to the list of eligible operational functions and positions eligible for supplementary weighting funding from FY 2023 through FY 2025. Additional provisions of the Bill reduce the weighting for all positions generating a weighting of five to four, and reduce the weighting for all positions generating a weighting of three to two. DIVISION VI — Pledge of Allegiance: Provides that the board of directors of each public school district will administer the pledge of allegiance in grades 1 through 12 each school day and that each classroom will display the United States flag in each classroom where the pledge is recited. A student will not be required to recite the pledge.

DIVISION VII — Facial Covering Policies — Counties, Cities, and Schools: Prohibits a school district, school administrator, or authority of a nonpublic school to adopt, enforce, or implement a policy requiring employees, students, or members of the public to wear a facial covering while on the school district’s or accredited nonpublic school’s property unless for a specific extracurricular or instructional purpose. Prohibits a county from adopting an ordinance, motion, resolution, or amendment, or use any other means to require the owner of real property to implement a policy regarding facial coverings that is more stringent than a policy imposed by the State. Prohibits a city from adopting an ordinance, motion, resolution, or amendment, or use any other means to require the owner of a real property to implement a policy regarding facial coverings that is more stringent than a policy imposed by the State.

DIVISION VIII — School Tuition Organization Tax Credit: Raises the deduction allowed for contributions made by a taxpayer to a School Tuition Organization Tax Credit (STO) from 65.0% to 75.0% and raises the STO cap from $15.0 million to $20.0 million beginning January 1, 2022. DIVISION IX — Charter Schools: Subjects the governing board of a charter school to Iowa Code chapter 22 open records regulations. Requires the chief administrator of a charter school to hold a valid State administrator license, a valid teacher license, or a newly established charter school administrator license. Requires a charter school to notify the public school district of a student enrolled in a charter school by March 1 of the school year preceding the school year of enrollment. Requires the charter school to submit an annual report to the State Board of Education to support the evaluation of the charter school’s performance and compliance with the performance framework.

EFFECTIVE DATES — The Bill takes effect upon enactment with retroactive provisions in Division II, Division III, and Division VIII and an applicability provision in Division V.

Division I

Background

Education Program Standards and Funding — School districts and nonpublic schools are currently allowed to waive high school offer and teach requirements by applying for and receiving an innovative waiver available in Iowa Code section 256.11. The Flexible Student and School Support Program (FS3) would allow the waiver of offer and teach requirements for grades 1 through 12 to create programs that focus on a certain area of academics or on student well-being. Potential high school FS3 programs could include a focus on the following:

Advanced science, technology, engineering, and math (STEM) courses.
Advanced science, technology, engineering, art, and math (STEAM) courses.
Student voice, well-being, and mental health.
Work-based learning.

The FS3 program would also allow for a waiver of the minimum school calendar requirements in Iowa Code section 279.10.

2017 Iowa Acts, chapter 154, increased district flexibility in how unexpended and unobligated amounts from certain categorical funds can be used through the creation and utilization of a flexibility account within a school district’s general fund. Use of this flexibility account requires formal action by the district’s school board. Statewide in FY 2020, 276 school districts carried forward $45.0 million in teacher leadership funds.

In FY 2020, school districts and AEAs carried forward an estimated $10.5 million in teacher salary supplement funds.

Assumptions

Education Program Standards and Funding:

School districts will increase transfers to the flexibility account of unobligated or unexpended teacher leadership supplement funds. In FY 2020, 40 school districts made expenditures from their flexibility accounts.
Additional school districts may submit an adopted resolution authorizing expenditure from their flexibility accounts.
It is not known how much of the carryforward funds for the teacher salary supplement will be unobligated in FY 2022. Using FY 2020 data for estimation purposes, it is assumed the FY 2022 carryforward amount will be similar, and all carryforward funds will be unobligated.
Under current law, 5.0% of the estimated FY 2022 teacher salary supplement funds equals $15.9 million.
There will be 119 school districts and 3 AEAs with an estimated unobligated carryforward of more than 5.0% of the FY 2022 teacher salary supplement funds received.
Any teacher salary supplement funds not carried forward from FY 2022 may reduce a school district’s spending authority in FY 2023.

Fiscal Impact

The allowance for FS3 programs will have no fiscal impact to the State; however, additional DE administration and oversight may be required.

Changes to districts’ flexibility accounts under the provisions of this Bill will have no fiscal impact to the State. School districts may increase expenditures from their flexibility accounts; however, the extent cannot be determined.

School districts and AEAs will expend an additional estimated $4.7 million from unobligated teacher salary supplement funds in FY 2022. These additional expenditures will have no fiscal impact to the State.

Division II

Background

Education Tax Credits and Deductions — For information on the Tuition and Textbook Tax Credit, please read Fiscal Topic: Tax Credit: Tuition and Textbook. Information on the Teacher Expense Deduction is available here.

Assumptions

Teacher Expense Deduction:

Current Iowa law allows teachers to deduct up to $250 in qualified classroom expenses from their Iowa income. The deduction is per taxpayer, so married taxpayers are allowed to deduct up to $250 each. This deduction lowers Iowa taxable income and therefore the income tax paid by teachers utilizing the deduction. The Bill increases the deduction maximum to $500 per taxpayer. The deduction increase is first effective beginning tax year (TY) 2021.
The Iowa Department of Revenue (IDR) utilized a model of Iowa tax returns to develop the fiscal impact projection for this provision. The model is based on actual tax returns filed for TY 2019.
For TY 2019, 33,628 households claimed a total of $8.6 million in Teacher Expense Deductions (an average of $256 per household).
In determining the fiscal impact of the change, it is assumed that increasing the deduction will not increase the number of households utilizing the deduction and will not cause current claimants to increase their classroom expenses.
Modeled tax returns in which the TY 2019 deduction was $250 (the maximum for a single taxpayer) or higher (indicating two eligible taxpayers) were randomly assigned projected deductions between $250 and $1,000.
Modeled tax returns in which the TY 2019 deduction was below $250 were assumed to have deductions for future years equal to their TY 2019 deduction.
The fiscal impact of teacher expense deduction was computed by comparing the model results under current law (maximum $250 deduction) to the model results assuming a maximum $500 deduction.
The tax reduction associated with the enhanced deduction is assumed to occur when tax returns are filed (decreased final tax payments and increased tax refunds). Tuition and Textbook Tax Credit:
Current Iowa law allows taxpayers to claim a nonrefundable tax credit equal to 25.0% of up to $1,000 in qualified elementary and secondary (K-12) school expenses paid by the taxpayer for each dependent attending an accredited K-12 public or nonpublic school. Qualified expenses include:
Tuition to an accredited school.
Textbooks.
Specialized play, concert, and sports clothing.
Driver education fees paid to a K-12 school.
Certain dues, fees, and admission charges.
Materials for extracurricular activities.
Rental of musical instruments and other music expenses.
Required supplies for shop and other specialized classes.
Fees and charges for transportation if paid to the school.
Band and athletic uniforms.
The Bill expands the Tuition and Textbook Tax Credit by increasing the maximum basis of the credit from $1,000 per student to $2,000 and by extending eligibility to include private instruction students (home schooling and other nonaccredited education options).
Projection Assumptions and Methods:
The changes to the tax credit are effective beginning TY 2021.
The IDR utilized a model of Iowa tax returns to develop the fiscal impact projection for this provision. The model is based on actual tax returns filed for TY 2019.
For TY 2019, 111,800 households claimed a total of $14.9 million in Tuition and Textbook Tax Credits.
The expansion of the credit is projected to increase the number of taxpayers benefiting from the credit and the amount claimed by taxpayers. The tax reduction and the resulting projected State General Fund revenue reduction is the summation of three separate impacts:
The annual benefit to a portion of the 111,800 current claimants is projected to increase due to the increase in the expense cap to $2,000.
Usage of the current credit is low, at around 40.0% of eligible households. Enhancing the tax credit is projected to encourage additional taxpayers who are currently eligible but do not claim the credit to change behavior and claim the credit in the future.
The expansion of the credit to include private instruction households is projected by the Legislative Services Agency to add an additional 22,050 private instruction students.
The tax reduction associated with the enhanced tax credit is assumed to occur when tax returns are filed (decreased final tax payments and increased tax refunds).
Nonrefundable tax credits reduce the income raised by the local option income surtax for schools by an amount that is assumed to equal 3.0% of the reduction in State individual income tax liability.

Fiscal Impact

Teacher Expense Deduction — Increasing the maximum classroom expense deduction from the current $250 to $500 per taxpayer is projected to reduce net General Fund revenue by $410,000 each year, beginning FY 2022.

Tuition and Textbook Tax Credit — The expansion of the Tuition and Textbook Tax Credit is projected to reduce annual General Fund revenue by $11.1 million beginning FY 2022. The change is also projected to reduce the statewide amount of income raised by the local option income surtax for schools by $300,000 per year.

Division III

Background

Open Enrollment — Open enrollment is the process by which parents or guardians residing in a school district may enroll their children into another Iowa school district under the provisions set in the Iowa Code and Iowa Administrative Code. The deadline for parents to submit open enrollment applications for grades 1 through 12 is March 1. The deadline for students entering kindergarten is September 1. For information on open enrollment, please see here.

Assumptions

Open Enrollment:

The DE does not collect data on denied or approved open enrollment applications.
School districts may experience an increase in open enrollment applications; however, the extent is unknown.
Resident districts may experience a decline in net revenue, while receiving districts may experience an increase in net revenue.
Revenue includes the previous year’s State cost per pupil amount and the resident district teacher leadership supplemental cost. Additional revenue may include funding for additional weighting applicable to the pupil.
The number of open enrolled students in contiguous districts that qualify for transportation assistance may increase. The resident school district will continue to be responsible for payment of transportation assistance to the parent or guardian if the resident district chooses this option. The cost of transportation reimbursements incurred by the resident district will continue to be deducted from the tuition sent to the receiving district.

Fiscal Impact

Open Enrollment — Changes to open enrollment under the provisions of this Bill are expected to have no fiscal impact to the State. Open enrollment applications and transportation reimbursements are expected to increase; however, the extent to which each district may experience a fiscal impact cannot be determined.

Division IV

Background

School Board Powers and Duties — The Iowa Code provides for powers and duties of school boards.

Fiscal Impact

School Board Powers and Duties — This Division clarifies school board member responsibilities and is expected to have no fiscal impact to the State.

Division V

Background

Shared Operational Functions — School districts that share certain job positions with one or more districts, with an Area Education Agency (AEA), or with another authorized authority under an Iowa Code chapter 28E agreement may be eligible to receive supplementary weighting. To be eligible, the function’s sharing must be for at least 20.0% of the contract time during the fiscal year for the district and at least 20.0% for one sharing partner. For more information on operational function sharing, see Operational Function Sharing Guidance.

Assumptions

Shared Operational Functions:

Under current law, the State cost per pupil for FY 2023 and all future years is $7,227.
Based on supplementary weighting data for FY 2022, reducing the weighting generated for all positions, except superintendent, will reduce supplementary weightings for shared operational functions by 589 weightings beginning in FY 2023.
A total of 247 school districts will see a reduction in funding ranging from $7,227 to $36,820.
A total of 80 school districts will remain revenue neutral under the provisions of this Division.
Of the 80 school districts, 63 districts do not currently generate weighting for shared operational functions. The remaining 16 school districts will continue to submit operational sharing weighting data to the DE that exceed a weighting of 21.0. These districts’ weightings will then continue to be adjusted down by the DE to 21.0.
Funding for WBL coordinators and special education directors will begin in FY 2023 based on school year 2021-2022 data.
School districts not currently generating an operational function weighting will likely not generate weightings in the future.
It is assumed 20.0% of the eligible districts will generate operational function weightings by sharing a WBL coordinator and/or a special education director with another district, with an AEA, or with a local authority under an Iowa Code chapter 28E agreement up to the allowable cap of funding allowed.

Fiscal Impact

Beginning in FY 2023, the reduction to weightings for select operational sharing positions and the inclusion of two new positions will reduce State aid from the General Fund by an estimated $2.5 million each year. Property taxes will also be reduced by an estimated $300,000 each year.

Division VI

Fiscal Impact

Pledge of Allegiance — Changes regarding the Pledge of Allegiance are expected to have no fiscal impact to the State.

Division VII

Fiscal Impact

Facial Covering Policies — Counties, Cities, and Schools — Changes regarding facial covering policies for counties, cities, and schools are expected to have no fiscal impact to the State.

Division VIII

Background

School Tuition Organization Tax Credit — For more information on the STO Tax Credit, please read Fiscal Topic: Tax Credit: School Tuition Organization. The annual limit on STO Tax Credits is currently $15.0 million, and this amount is increased each year by 10.0% whenever tax credit awards in the previous year equals more than 90.0% of that previous year’s tax credit limit. This increase process can continue until the maximum annual tax credit limit is $20.0 million.

Assumptions

School Tuition Organization Tax Credit:

Under current law, the STO Tax Credit limit is assumed to increase by 10.0% per year until the $20.0 million limit is achieved for CY 2025. For the proposed law, $20.0 million in annual awards is assumed starting CY 2022.

Fiscal Impact

School Tuition Organization Tax Credit, Charter Schools — The Department of Revenue estimates that increasing the maximum annual level of tax credit awards under the STO Tax Credit to $20.0 million would decrease General Fund revenue by the following amounts:

FY 2022 = $3.4 million
FY 2023 = $3.4 million
FY 2024 = $2.2 million
FY 2025 = $0.6 millionDivision V Fiscal Impact Summary (in millions) State Aid FY 2023 FY 2024 FY 2025

Weightings Reduction -3.8$ -3.8$ -3.8$