Iowa Expands School Choice

Published September 1, 2007

Less than a year after its launch, Iowa’s nonpublic school choice program received a significant boost on May 29 when Gov. Chet Culver (D) signed Senate File 601, which expands the School Tuition Organization (STO) Tax Credit limit from $5 million in 2007 to $7.5 million in 2008.

Since 2006, Iowans have been able to receive tax credits worth 65 percent of their contributions to eligible organizations that provide scholarships for students to attend accredited private schools. Families of scholarship recipients must earn less than three times the federal poverty amount guidelines.

The tax credit expansion passed one year after the initial program was created, as supporters observed contributions had reached capacity.

“We already had evidence that STOs had formed, that they’d covered the state, and they had exhausted their first round of charitable tax credits,” said Sen. Rob Hogg (D-Cedar Rapids). “We knew the willingness to contribute and the demand was there.”

More Opportunities

Trish Wilger, executive director of the Iowa Alliance for Choice in Education (ACE), is pleased to see her organization’s advocacy for nonpublic education options pay off during its first two years.

“It’s a great affirmation that the work we do is needed and wanted,” Wilger said. “Educational opportunities for not only low-income families, but also middle-income families, will become more available. We are glad to see school choice is expanding to reach a much larger number of citizens.”

Iowa ACE works to remove financial barriers that prevent low-income parents from sending their children to nonpublic schools–including Catholic and other Christian schools. The group helped draft the original tax credit legislation and works to coordinate the program’s implementation at the grassroots level.

After outgoing Gov. Tom Vilsack (D) signed the STO Tax Credit into law on June 2, 2006, nine organizations had to work quickly to collect the $2.5 million in allotted tax credits for the remaining calendar year. Only one STO was able to help even a handful of students with tuition scholarships for the 2006-07 school year, Wilger said.

Bipartisan Support

Like Culver and Vilsack, Iowa’s current legislative majorities of 30-20 in the Senate and 53-47 in the House are Democrats. Wilger said support for education options outside the government system is strong on both sides of the aisle in her state.

“It’s definitely a bipartisan issue in Iowa,” Wilger said. “A lot of nonpublic schools are important to the rural areas and smaller communities. A large number of our legislators also attended nonpublic schools themselves.”

Hogg agreed.

“There are some party differences, but what you see is that while we need to meet our obligation to public schools, that isn’t exclusive of our support for private schools,” Hogg said. The Cedar Rapids lawmaker believes the recent tax credit expansion is closer to meeting public demand, but further expansion could be coming in 2008.

“I think next year we’re going to take a serious look at stepping it up to $10 million,” Hogg said.

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute, a free-market think tank in Golden, Colorado.