Iowa Expands Tax Credit Scholarship Program

Published September 1, 2009

Iowa Gov. Chet Culver (D) has signed Senate File 470, expanding the state’s tax credit scholarship program.

The new law allows scholarship-granting organizations to accept up to 25 percent of their donations from corporations. The scholarships then help low-income students attend the public or private school of their choice.

Good Law

The original scholarship program, enacted three years ago, allowed tax credits only for individuals. The new bill, signed in May, allows corporations as well as individuals to make donations. Advocates say it will provide low-income students more choice and save the state money because fewer students will be attending high-cost, government-run public schools.

The new provision will help scholarship-granting organizations raise the funds they need, because not all of them were raising the total amount possible from individuals. With the additional pool of potential donors, advocates hope more scholarships can be made available to low-income students.

“This is not a great law, but it is a good law,” said Don Racheter, Ph.D., president of the Public Interest Institute, a free-market think tank in the state. “We are using the ‘incremental’ steps approach since we could not get a universal voucher bill passed.”

One downside of the current law is its limits on eligibility: Only students from low-income families are allowed to receive the scholarships to attend the schools of their choosing.

Opposition to Expansion

Choice opponents say this was the wrong time to expand the budget for the voucher program, with some arguing there was not enough money to fund what was already in the budget. But advocates are pleased the program didn’t expire during the session.

“We are very excited about the precedent it sets for school choice, the possible relationships we may be able to forge with the business community, and the ability to ensure as many children as possible have access to the school of their family’s choice,” said Eric Goranson, chairman of Iowa Advocates for Choice in Education.

Sarah McIntosh ([email protected]) teaches constitutional law and American politics at Wichita State University in Kansas.

For more information …

Iowa Senate File 470: