ESA program prepares launch
Company paid $4.3M to run private school educational accounts
DES MOINES — The New York-based company that will operate Iowa's new state-funded private school financial assistance program will be paid $4.3 million over the first six years, according to the terms of the contract with the state.
Odyssey, which was chosen by the state through a competitive bidding process, will be paid from the state's general fund budget, the governor's office said.
The company, which operates similar programs in Arizona and Idaho, this week began educating Iowa parents through a series of webinars about the new state program, which is projected to ultimately cost the state $107 million in the first year and $345 million annually at full implementation.
The new program passed with only Republican support in the Legislature and was signed into law by Gov. Kim Reynolds, who had pushed for similar measures in previous years and made it a centerpiece of her 2022 re-election campaign.
Under the new law, Iowans will be eligible for state funding equal to the amount of state per-pupil funding for K-12 public education, which for the 2023-2024 school year will be roughly $7,600, to pay for attending a private school.
The educational savings accounts, or ESAs, must first be used to pay for tuition and fees. Any remaining funds can be used for other eligible expenses, like textbooks, computers, or tutoring sessions.
Odyssey will host a marketplace that will serve as the only eligible place for Iowa families to spend ESA funding on those other eligible expenses. Any purchases made outside Odyssey's marketplace will not be eligible for reimbursement, a company official said this week during a webinar.
A spokesman for the governor's office said Odyssey will not receive any portion of those marketplace sales.
Odyssey will be paid by the state roughly $730,000 annually to operate the program, according to the contract's terms.
STUDENT ELIGIBILITY: In the first year of the program, the ESAs are available to all public school students, all kindergarten students, and private school students in a household at or below 300% of the federal poverty level – for example, $90,000 for a family of four.
In the second year, the 202425 school year, the program will be expanded to include the same population plus private school students in households at or below 400 percent of the federal poverty level.
In the 2025-26 school year, the program will be open to all K-12 Iowa students, regardless of income.
WEBINARS HELD: Odyssey this week began holding webinars to inform Iowa parents on how to enroll in the program. Over the course of the webinar, a company official described how parents can apply for ESAs, how the application and approval process will work, and who is eligible for the program.
The state plans to begin accepting applications for the 2023-24 school year on May 31, and that application period will be closed June 30.
The online application will determine whether the student is eligible for an ESA by using personal identification and tax filing information. During the webinar, Odyssey founder Joe Connor said the company will not share that personal information and will protect the applicants' privacy.
Connor said in most cases once an application is submitted, the eligibility verification process should take roughly a half-hour. He said in rare cases, more documentation may be required to determine a student's eligibility.
ESAs will begin to be funded on July 15, Connor said. At that point, the parent will log into the program's website and declare which private school the student plans to attend for the 2023-24 school year.
ELIGIBLE PURCHASES: Any purchases made with ESA funds must be made through the Odyssey-hosted marketplace, Connor said. The company will work with vendors that will provide educational products and services that are eligible under the program, he said.
Examples of what products and services are eligible and ineligible for purchase with ESA funds can be found at the Iowa Department of Education's website, educateiowa.gov.
State Auditor Rob Sand, a Democrat, during a public event this week in Cedar Rapids bemoaned a lack of accountability and transparency over how hundreds of millions of taxpayer dollars are spent by private schools.
Comparatively, when Iowa public schools receive state funding, budgeting requirements restrict how public schools can spend public money, Sand told reporters following a town hall in Cedar Rapids on Tuesday.
Public schools are also required to hold public meetings, release public records and receive annual audits to publicly track how they're spending taxpayer dollars.
Private schools are not required to follow those same requirements once they start receiving money this fall from the publicly-funded Education Savings Accounts.
The only prohibition under the law is that private schools cannot "refund, rebate or share any portion of" ESA payments made back to the parent or family that paid it to the school.
"Literally anything else they want to do with that money is legal," Sand said. "If they want to take it as profit, that's fine. If they want to send their principal on an all-expenses-paid trip to Europe, that is legal. There is no obligation that they actually take those public dollars and put them into educating kids. That's absurd to me."
Reynolds and Republican state lawmakers have said all schools – be they public or private – are accountable to parents and students. And that if parents and students feel that a school is not meeting their needs, they now have the flexibility and ability to choose the educational setting that best fits their needs.
Reynolds, speaking to reporters earlier this month at the statehouse, said "the closed system we put in place with Odyssey will help make sure that we're tracking fraud and that the expenses are allocated in a manner that it was intended to do."
"So we have a pretty good system in place," Reynolds said. "We're very confident about that. That will allow us to monitor the expenditures – make sure they're being utilized in a proper manner. And, you know, it's a small state. We'll be able to see which schools are doing what and how it's being ran and operated."
The governor added that "a lot of other states are watching what we're doing," and that it's "imperative we do it right" and are vigilant in monitoring how the money is spent.
Tom Barton contributed to this story.