This week the House and Senate passed a final SSA agreement after months of negotiations. While our original proposal included more money for schools, this final agreement includes a couple of key wins secured by House Republicans.

This final agreement includes:

• A 2% increase in SSA for Fiscal Year 2026, raising the State Cost per Pupil to $7,988, resulting in more than $105 million more in school aid.
• Phase two of the teacher salary increase, which will include nearly $35 million in additional dollars for public schools.
• An increase in the operational sharing cap from 21 to 25, generating an additional $942,087 for many rural public schools.
• A 5% increase in transportation equity funding, equating to $1,554,938 more for public schools with geographically large districts.
• An additional $5 for per pupil equity, addressing a long term issue faced by some school districts when the school funding formula was established.
• Extends the Property Tax Relief Payment (PTRP) an additional year which has the state pick up any property tax growth in the Additional Levy portion of the school funding formula.
  • ($136.7 Million this Fiscal Year)

These increases represent many of the specific funding issues we hear from our school districts. While each line item may not affect each individual school district equally, one line item may have a big impact on addressing the issue a specific district is facing – specifically rural ones.

Democrats have circulated misleading claims to make it sound as if we are spending more on private schools than on public schools, but that is far from the truth. The cost of ESAs increases each year at the same rate as the number we set for SSA. This year is the final year of expansion for the ESA program that allows all families to qualify – that’s why the increase looks greater this year.

Even with this expansion, the cost of the ESA program does not even come remotely close to the amount we spend each year on public schools. For example, in the FY 2026 budget, state aid to public schools accounts for nearly 45% of the entire state budget. Meanwhile, ESA’s account for only about 3% of the total state budget.

Last month, we introduced a major property tax overhaul bill to kickstart a broad conversation about property tax reform. In the time since, we have been taking feedback from Iowans and different entities to gain a complete understanding of how any change we make to the system would affect Iowans across the state. As a result of this feedback, Iowa House Ways and Means Chairman Bobby Kaufmann and his counterpart in the Senate have introduced new legislation, updating the bill proposed several weeks ago.

Iowans have been loud and clear about their complaints with property taxes and their fear that they may be priced out of their homes. Based on the feedback we hear from Iowans, the current system is disliked by both taxpayers and taxing entities – therefore, we can’t be afraid to make big changes to the current system.

House Study Bill 328 makes the following changes to the original proposal:

• Increases the homestead exemption benefit to $50,000 to help bring relief to residential property taxpayers.
• Removes the rollback for all classifications except agriculture, effective for the Fiscal Year 2027 budget.
• Implements a Consumer Price Index adjustment alongside the 2% revenue restriction to help local entities manage rising costs times of high inflation.
• Provides a minimum budget guarantee to provide small communities certainty in their budgeting process.

Once again it is time to get additional feedback from Iowans on this legislation – please do not hesitate to share with me your thoughts!

This week the Senate passed House File 954 which addresses the issue of citizenship verification for voters and protects the constitutional requirement that only US citizens participate in US elections. Division IX of the bill strengthens citizenship verification and helps ensure that the Secretary of State and county auditors in Iowa are not solely reliant on the federal government to confirm a potential voter’s citizenship status. The law now provides tools and policies to catch noncitizens within days of registering to vote. A status code for voter registration records designated as “unconfirmed” will ensure that ballots are not given to any potential voters whose citizenship status has has yet to be confirmed or has informed the DOT or other state agencies that they are not US citizens. To bolster the unconfirmed status, the bill codifies and directs the sharing of information between state agencies and other states to ensure the most up to date information of potential individuals who have indicated to a state agency that they are not citizens. The bill also expands reasons to cancel a voter’s registration to include citizenship status and allows challenges of voter’s qualifications to include questioning citizenship status.

Now having passed both chambers of the legislature, HF 954 will be sent to the Governor’s desk for consideration to be signed into law.

Last week marked the end of “second funnel” – a legislative deadline where bills need to be out of committee in the other chamber to move forward. This year the House Commerce Committee advanced 18 bills with every single bill receiving bipartisan support. Below are some of the bills that advanced on energy, PBMs, insurance, and financial institutions.

HF 303 – Prior Authorization – This bill sets up timelines for response from health insurers on prior authorizations, requires insurers to review health care services that require prior auth, requires a prior auth exemption program with each health insurer and a report submitted to the Insurance Division on the effectiveness of their program.

HF 330 – Autism Coverage – This bill strikes age and benefit limits from the autism coverage requirements of health plans in Iowa.

HF 852 – Pharmacy Benefit Managers – This bill includes the following additional regulations of PBMs in Iowa:

• Prohibits a PBM or insurer from discriminating against a pharmacy if the pharmacy is acting within its license and all laws.
• Prohibits the removal of pharmacy choice or imposing any monetary advantages or penalties that result in removing pharmacy choice (including unnecessary specialty drug designations and requiring use of mail order pharmacies)
• Prohibits additional cost-sharing on the insured based on where they choose to have their prescription filled
• Requires all rebates to benefit the insured
• Requires any amount paid by the insured for the prescription drug to be applied to their deductible
• Requires PBMs to reimburse pharmacies based on acquisition cost
• Prohibits spread pricing unless all cost differential is provided to the insured
• Requires pharmacies have an appeals process if not reimbursed at acquisition cost

HF 834 – Governor Energy Bill – This bill comes from the Governor and does the following, as amended in committee:

• Allows advance ratemaking for new generation facilities, including small nuclear reactors, energy storage, and gas peaker plants
• Requires the utility to provide support for their advance ratemaking application through an electric utility resource plan that has been filed no more than 24 months prior to the advance ratemaking application
• Requires IUC to adopt rules to complete advance ratemaking proceedings within 10 months of filing an application
• Requires electric IOUs to file a resource plan with IUC at least once every 5 years, with IUC feedback and required good faith to involve stakeholders in the process
• Allows public utilities to apply for innovative tariffs that do not negatively impact nonparticipating customers
• This bill updates language passed by the legislature in 2020 to establish a right of first refusal to incumbent companies in building electric transmission lines. Last year, the Iowa Supreme Court issued a temporary injunction, LS Power Midcontinent v. Iowa, that the law likely violated the title clause and single-subject rule of the Iowa Constitution. This bill reinstates the law already passed by the legislature, with the following changes:
  • Requires incumbent owners to provide Municipal utilities and RECs an opportunity to jointly own a portion of the transmission line based on load ratio share.
  • Requires quarterly updates to the IUB to show that the incumbent owner has used competitively bid construction contracts.
  • Allows the OCA and IUC to utilize the filings to challenge the costs of the project in front of FERC.
  • Provides for ag restoration requirements and allows IUC to appoint an inspector to ensure that the land has been restored properly
• Adds water infrastructure to the existing energy infrastructure revolving loan program at IEDA.
• Requires the infrastructure revolving loan fund to provide Iowa State University $633,000 annually to do load forecasting
• Requires anaerobic digester systems to receive a permit from the DNR.

HF 857 – Trigger Leads – This bill prohibits financial institutions from using an unfair or deceptive practice when using prescreened mortgage trigger lead information from another financial institution.

HF 875 – Credentialing Timeline – This bill provides a timeline for an insurer to respond to a provider seeking to be credentialed in-network and to provide a reason for denial.

SF 470 – Dental Insurance – This bill makes the following changes to dental insurance:

• Prohibits a dental carrier from denying a claim submitted for an approved for by prior authorization, with certain exemptions.
• Requires dental carriers to disclose to dental providers whether the covered person’s dental care services plan is state regulated.
• Sets up an appeal process when an overpayment is made to a dental provider by a dental insurer, makes notice requirements regarding overpayments, and allows for withholding on a future claim if certain information is provided.

HF 879 – Infrastructure Sabotage – This bill adds cable services, information services, and wireless services to the definition of critical infrastructure under the sabotage law. A person who intentionally causes interruption of a fundamental service through critical infrastructure commits a class B felony.

HF 622 – Catastrophic Savings Accounts – This bill establishes catastrophic savings accounts, allowing Iowans to open interest-bearing savings accounts for paying qualified catastrophic expenses. The bill outlines contribution limits based on homeowners’ insurance premiums and provides tax incentives.

SF 449 – Crypto ATMS – This bill provides regulations to digital financial asset transaction kiosks (bitcoin ATMs) with daily transaction limits, maximum operator charges, required disclosures, detailed receipts, refund requirements, attorney general enforcement and fraud policy requirements.

SF 460 – Home Inspectors – This bill outlines requirements for independent home inspectors including registration or licensure, written information provided to the customer, insurance coverage, and violations that constitute an unlawful practice.

Last week marked the end of “second funnel” – a legislative deadline where bills need to be out of committee in the other chamber to move forward. This year the House Health and Human Services Committee advanced 33 bills with the vast majority receiving bipartisan support. Below are some of the bills that advanced to expand access to health care, including mental health and maternal health, address child care shortages, help children in foster care, and to ensure Iowa’s welfare programs are helping Iowans to self-sufficiency.

HF 300 – Physician Assistant Compact – This bill adds Iowa to the interstate license for Physician Assistants Compact. 14 states currently have enacted this compact (Including Nebraska, Minnesota and Wisconsin). The compact is effective and is now in the implementation process which will take 18 to 24 months.

HF 310 – Assaults on Health Care Providers – This bill expands the health care provider definition under the code chapter that provides enhanced penalties for assaulting a person engaged in certain occupations.

HF 384 – Minor Consent Vaccines – Iowa code allows for minors to consent to very few medical treatments without parental consent. One of those is for the prevention, diagnosis and treatment of sexually transmitted diseases. This code section has been construed to include the ability for a minor to consent to the Hepatitis B vaccine and the HPV vaccine. This bill removes the ability for a minor to consent to vaccines for a STD without parental consent.

HF 385 – Commitment Discharge – This bill requires facilities that are discharging individuals committed for substance abuse or mental health to provide the following at discharge:

• Refer the individual committed to the administrative services organization (ASO) for evaluation, case management, and post-discharge services
• Assess for suicide risk
• Provide a 30-day supply of medications prescribed
• A discharge report to the individual committee or their legal representative. The discharge report will have all their appointments and medications outlined, ASO contact information, an aftercare plan with crisis prevention, and education materials developed by DHHS
• Notify the ASO and legal guardians

This bill also requires the ASO to coordinate post-discharge care for individuals after commitment.

HF 386 – 3-year Medical School Study – This bill requires the University of Iowa and Des Moines University to study the feasibility of transitioning their medical schools to 3-year programs.

HF 390 – Child Care Employee Physicals – This bill strikes the requirement that all personnel in a registered child care provider must have a physical prior to beginning employment.

HF 516 – University of Iowa Health Care Bill – This bill requires the University of Iowa medical school and dental school to have at least 80% of their students be residents of Iowa. This bill also requires an annual report by UI regarding the same schools and UIHC medical residencies demographic information.

• Codifies requirements that were placed into session law in 2019 in House File 532. Additionally, it adds fellowships to the requirement that UIHC prioritize Iowans.
  • Requires medical residencies at the University of Iowa Hospitals and Clinic to give priority to applicants that have an Iowa connection (resident of Iowa, went to undergrad in Iowa, or medical school in Iowa).
  • Requires primary care residencies (family medicine, OB, psych, and internal medicine) at UIHC to provide the opportunity to participate in a rural rotation to expose those medical residents to rural areas of Iowa.
• Also requires the University of Iowa Hospital and Clinics to offer an interview for the medical residencies of some of the most-needed specialties in Iowa to those with an Iowa connection, with annual reporting requirements to the legislature.

HF 623 – Governor Child Care Continuum Bill – This bill comes from the Governor to do the following related to child care and preschool:

• Allows community-based providers not affiliated with a school district to participate in the statewide voluntary preschool program subject to the same requirements as a school district to participate.
• Removes the Child Development Coordinating Council
• Adds additional responsibilities of the Department of Education to ensure high-quality curriculum for preschool
• Revises the current ECI local board makeup from 34 boards to 7, which are modeled after the Iowa Behavioral Health District map.
• Makes child care employees providing care directly to children eligible to receive Child Care Assistance if working at least 32 hours per week and have children enrolled in child care.
• Creates a child care continuum partnership grant pilot program to award competitive grants to partnerships between preschools and child care centers to provide full-day early childhood education.

Fiscal Information: 

• DHHS estimates it will cost $9.1 million annually from the Child Care Development Fund to make child care employees eligible for Child Care Assistance.
• The Governor’s office has said that the child care continuum partnership grant program will be $16.3 million annually coming from existing funds.
• The Governor’s office has said that they will be repurposing about $3.6 million in Shared Services funding.

HF 638 – Finding Family – This bill appropriates $275,000 for additional Department of Health and Human Services employees focused on finding relatives for children placed in foster care, and provides additional emphasis on foster parents that have cared for the child for at least nine months in determining custody.

HF 644 – Foster Parent Consent – This bill allows for DHHS and foster parents to consent to routine medical care for a child placed in their care.

HF 972 – Governor Health Care Bill – This bill comes from the Governor to do the following:

• Requires DHHS to request federal approval for a health care hub-and-spoke partnership funding model to establish regional collaboration between health care providers in rural areas.
• Consolidates five health care loan repayment programs into one called the Health Care Workforce and Community Support Grant Program within DHHS that will award loan forgiveness or bonuses based on high-need health care professions in shortage areas. Provides for transition of funds to continue to support those with existing awards.
• Repeals existing residency and fellowship programs, with transition provisions, and converts those programs to the Medicaid graduate medical education efforts.
• Eliminates the Health Facilities Council and replaces it with DHHS as the decision maker regarding certificate of need
• Requires DHHS to bid out the Iowa Health Information Network.

HF 970 – SNAP foods, Double Up Food Bucks – The bill requires DHHS to request a waiver from USDA to only include healthy food based on necessary nutrition for good health in the Supplemental Nutrition Assistance Program. If USDA approves this waiver, there will be a $1 million appropriation to the Double Up Food Bucks Program in FY26.

SF 233 – Right to Try  – The bill expands the definition of eligible patient in Iowa’s right to try law and allows for individualized investigational treatment if they meet the written informed consent provisions.

HF 887 – Birth Centers  – This bill removes the requirement that birth centers must obtain a certificate of need prior to opening or expanding their service.

SF 615 – Work Requirements Medicaid Expansion – The bill requires the Iowa Department of Health and Human Services to request federal approval to include work requirements as a condition of a member maintaining eligibility for the Iowa Health and Wellness Plan. The bill specifies that at least 80 hours of work each month are needed to maintain eligibility and lists certain exemptions from the work requirement.

• This bill provides DHHS flexibility in determining what qualifies for work (education, job skills training, caregiving services) and allows DHHS to individually determine good cause for an exemption from the work requirement.
• This bill conditions continuing Medicaid Expansion in Iowa upon future federal administrations allowing work requirements.
• This bill seeks federal approval to align the work requirements of all public assistance programs to ensure consistency.
• This bill creates an IT fund to modernize IT within DHHS. The bill states that work requirements will be implemented when there is a real-time system that can facilitate evaluation and referrals.
• This bill increases the assets of a married couple participating in the Medicaid for employed people with disabilities program from $12,000 to $24,000. DHHS estimates this will have a $382,753 state general fund cost in FY26, $697,381 in FY27 and $1.36 million in FY28.
• This bill requires DHHS to review the MEPD programs of other states and make recommendations to the legislature.

HF 977 – Ground Emergency Management Transportation – The bill requires DHHS to employ dedicated staff for the sole purpose of expanding the GEMT program.

The House Veterans Affairs Committee advanced 9 bills this year to support Iowa Veterans through the second funnel deadline. Below is a list of some of those bills to help Iowa’s veterans.

HF 250 – County Vets Commission – This bill comes from the Iowa Department of Veterans Affairs to update a legislative report to be based on the fiscal year, rather than calendar year, and to provide oversight over the training of county executive directors and administrators by the commandant of the Iowa Department of Veterans Affairs.

HF 534 – Veterans Trust Fund – This bill comes from the Iowa Department of Veterans Affairs to continue the $2.5 million transfer from the Iowa Lottery to the Iowa Veterans Trust Fund until the fund reaches $75 million, rather than current law of $50 million. At the beginning of FY25, the trust fund was at $42.6 million.

HF 518– Hyperbaric Oxygen Pilot – This bill establishes a veterans recovery pilot program and fund to allow for the free treatment of veterans with PTSD or traumatic brain injury with hyperbaric oxygen treatment. The program is repealed July 1, 2031.

HF 885 – Deer Hunting Disabled Veterans – This bill allows disabled veterans to receive one any sex deer hunting license during any firearm deer hunting season using the method of take allowed during that season. This bill also increases the number of wild turkey nonresident hunting licenses from 75 to 125, with the additional 30 being allocated to nonresidents who have served in the military. There are currently 25 allocated to this program. This amendment increases it to 75 licenses total.

HF 909 – Veteran Service Organizations Grant Program – This bill appropriates $250,000 to the veterans service organization grant program to provide matching funds for employing staff to assist veterans with claims.

Earlier this year, the House Local Government Committee reported out of committee House Study Bill 246. Since then, the bill was referred to the Appropriations Committee which gave it a second approval this week. Finally, the bill made it through a third round in the Ways & Means Committee after the fees and tax changes in the bill were examined.

HF 982 (formerly HSB 246), enhances and improves Iowan’s recovery efforts for communities affected by natural disasters. This comprehensive legislation encompasses several important programs and regulatory changes that will benefit homeowners, renters, and the broader community. Here are the main highlights:

Natural Hazard Mitigation Financing Program

• Creation of a New Program: The bill establishes the Natural Hazard Mitigation Financing Program, designed to provide loans to eligible entities for projects that mitigate the impact of natural hazards.
• Revolving Loan Fund: A dedicated Natural Hazard Mitigation Revolving Loan Fund will be created, funded through state appropriations, federal grants, and loan repayments. This fund will be managed by the Department of Homeland Security and Emergency Management (HSEMD) in consultation with the Iowa Finance Authority (IFA).
• Project Eligibility: Projects eligible for funding include flood control structures, zoning changes, and building code enforcement, among others.

Disaster Recovery Housing Assistance Program

• Expanded Assistance: The bill clarifies that disaster recovery housing assistance will be available to both homeowners and renters affected by natural disasters, as specified in the governor’s disaster emergency proclamation.
• Financial Assistance Definition: The legislation defines “financial assistance” to include grants, loans, and forgivable loans, ensuring that aid is accessible to those in need.
• Administrative Cost Limit: The IFA is restricted to using no more than 5% of the funds for administrative costs, ensuring that the majority of resources go directly to assistance.

Disaster Recovery New Housing Program

• Tax Benefits: The bill introduces a new tax provision allowing individuals and businesses to subtract qualifying state disaster recovery new housing grants from their taxable income, encouraging investment in recovery efforts.

Post-Loss Assignment of Benefits

• Consumer Protections: The bill establishes regulations for post-loss assignments, ensuring that residential contractors cannot engage in deceptive practices when handling insurance claims. This includes prohibiting contractors from rebating deductibles or imposing fees for canceling assignments.
• Contract Requirements: Contractors must provide detailed itemized descriptions of work to be performed and inform clients of their rights under their insurance policies.

Licensing and Regulation of Adjusters, Appraisers, and Umpires

• Stricter Licensing Requirements: The bill enhances the licensing process for public adjusters, independent adjusters, and appraisers, ensuring that only qualified individuals operate in Iowa.
• Financial Responsibility: Applicants must secure a surety bond to demonstrate financial responsibility, protecting consumers from potential losses due to unlicensed or unethical practices.
• Penalties for Violations: The legislation establishes penalties for adjusters and appraisers who violate licensing laws, including potential felony charges for serious offenses.

Iowa Economic Emergency Fund

• New Appropriations: The bill allocates 10% of the maximum balance of the Iowa Economic Emergency Fund for disaster response and recovery activities, contingent upon a governor’s disaster proclamation.
• Nuisance Property Remediation: The bill also includes funding for the Nuisance Property Remediation Assistance Fund, supporting efforts to address blighted properties in disaster-affected areas.

House File 982 represents a significant step forward in Iowa’s disaster recovery efforts. By establishing new funding mechanisms, enhancing consumer protections, and improving the regulatory framework for adjusters and contractors, this legislation aims to create a more resilient Iowa.

This week the House Ways and Means Committee passed House File 565 unanimously. The bill provides a partial property tax exemption to Iowans who purchase a home from HUD (federal Housing and Urban Development) in a disaster area.

Specifically, an Iowan receiving the homestead tax credit on an owner-occupied residential property shall be partially exempt from paying property taxes if the sale was to provide housing following a major disaster or disaster emergency. The bill requires the residential property be in the major disaster or disaster emergency area.

The exemption is for a four-year period beginning with the first full assessment year after the sale. House File 565 provides an 80% exemption on the actual value in the first assessment year, a 60% in the second year, a 40% in the third year, a 20% in the fourth year, and the exemption expires in the fifth year.

House File 565 can now be considered by the full House chamber.

Iowa’s seasonally adjusted unemployment and labor force participation rates held steady in February amid modest job growth across many private industries. Meanwhile, the total amount of unemployment benefits Iowa paid remained near historic lows as a percentage of the wages covered by unemployment insurance.

Iowa’s seasonally adjusted unemployment rate was 3.3% in February, equal to January and up from 2.7% one year ago. The labor force participation rate was unchanged at 67%. Meanwhile, the U.S. unemployment rate increased to 4.1% in February.

The total number of unemployed Iowans increased to 57,300 in February from 56,600 in January. The total number of working Iowans fell by 600 to 1,663,600.

“February’s numbers remained steady, which indicated that we have sustained the large number of Iowans that returned to work in December and January,” said Beth Townsend, Executive Director of Iowa Workforce Development. “Overall, unemployment benefits still sit near a historic record low after adjusting for inflation.  That means fewer Iowans need fewer weeks of benefits because of the steps we have taken to make our agency a reemployment agency. Having a robust reemployment program lessens the impact of layoffs on the individual, as well as our economy as a whole.”

Seasonally Adjusted Nonfarm Employment
Firms in Iowa shed 1,100 jobs in February, lowering total nonfarm employment to 1,594,800 jobs. This loss ends a streak of job gains starting in November. February’s loss was fueled in part by weak seasonal hiring (less hiring than expected based on previous seasonal fluctuations) at state government universities. Collectively, government (a sector that includes federal, state, and local political subdivisions, as well as schools, universities, and public hospitals) shed 3,400 jobs in February after a gain of 2,900 the previous month. Private industry added 2,300 jobs with most of these gains occurring within service industries. Following this month’s loss, total nonfarm employment trails last February’s mark by 7,400 jobs.

Health care and social assistance added 800 jobs in February to lead all sectors. This sector has also added jobs in five consecutive months with 3,700 jobs gained over that period. Private education increased by 700 jobs since January. This sector has added 1,100 jobs so far in 2025. Manufacturing added 500 jobs. These gains were primarily related to food production and animal processing. Private sector losses were much smaller in nature and were led by professional, scientific, and technical services (-800). This industry has shed jobs in three of the last four months, paring 2,200 jobs since October. Other losses were small and include information services (-300), financial activities (-200), and retail trade (-200).

Health care and social assistance has added the most jobs over the past 12 months (+5,800). Firms in this sector have shown a growing willingness to hire as the annual gain continues to expand. Wholesale trade has gained 1,100 jobs annually, and other services are up 500 jobs. Conversely, manufacturing has shed the most jobs over the last 12 months (-7,600). Most of these losses were in durable goods firms (-5,600). Construction is second in terms of annual loss (-3,400). This sector has shown little movement in staffing to begin the new year.

Key Budget work began this week as the Federal Funds and Other Funds Subcommittee started to examine the biennial Federal Block Grants bill. This year’s version of the bill marks a major shift in state policy, as the Department of Health and Human Services proposes to include the TANF (Temporary Assistance to Needy Families) Block Grant in the Block Grant bill.

When Congress passed the Personal Responsibility and Work Opportunity Act of 1996, federal Welfare Reform went from theoretical to reality. The long-awaited reforms included many changes to a variety of programs, but one of the bigger reforms was the decision to send welfare funding to the states in a block grant.

Republicans and Democrats agreed at the time that decisions about welfare programs were better made in the states than they were in Washington. So, instead of formulaic funding that had been the standard for 30 years, Congress decided to give states a set amount of funding with relatively limited strings to fund their welfare programs. Included in this new approach was a requirement that state legislatures appropriate the funds.

Legislators from across the nation and across the aisle had worked to ensure that welfare funding and welfare programs were not left until the total control of governors and welfare agencies.  Their efforts culminated in specific language in the TANF bill that required legislatures to approve the use of the funds.

Since the start of the 1997 legislative session, the Iowa General Assembly has played an integral role in putting together Iowa’s welfare program – the Family Investment Program – and determining how the state’s TANF funds were utilized. At the start of the 1997 session, the Legislature approved the use of the first year’s allocation of funding – $82.2 million – and dedicated $71 million of that amount for the Family Investment Program.

Over time, the number of FIP participants declined and funding priorities shifted.  In Fiscal Year (FY) 2024, just $5.4 million of the state’s $131 million TANF block grant was appropriated for FIP.  The bulk of the FY 24 TANF money went to childcare assistance ($47.2 million), Child & Family Services ($32.4 million) and DHS field staff ($31.3 million).  Some of the initial priorities from the late 1990’s like abstinence-based pregnancy prevention programs remained in the TANF spending plan in FY 2024.

Abstinence-based programming was a major flashpoint issue when TANF began, but funding for these efforts remained a cornerstone of the state’s welfare plan over the years. In FY 2024, nearly $2 million was appropriated for these programs. How did programs like this continue to get funding?  Because spending of TANF funds had to be approved by the Legislature.

Now in 2025, the Department of Health and Human Services (DHHS) is advocating for a plan where the Legislature is effectively removed from TANF decision-making and the department is able to spend this money without any direction or oversight from the General Assembly. For those not familiar with the Federal Block Grant bill, this piece of legislation appropriates the entire amount of various block grants from Congress in one bill.  This allows these departments to spend the money under the federal rules governing the block grant.

Why does DHHS want to change how TANF funding is appropriated? The department claims it makes it easier for the department to move money around and address “issues,” while also allowing DHHS to spend an $80 million balance of unpent TANF funds that has somehow built up over the years. Central to this approach is the funds would be spent as the Department decided, not as the Legislature has set.

Under DHHS’s proposal, would funding to programs like Abstinence-based Pregnancy Prevention go on? Possibly, but no one in the Legislature would know for sure because the use of the TANF funds would be up to the discretion of the Department of Health and Human Services. Historically, support for these programs has been weak within the Department or its predecessor agencies.  With the Legislature’s role overseeing the use of TANF funds disappearing under the proposed language, it would be much easier for a Democrat governor or legislature to eliminate pro-life programs such as this.

As stated before, work on the Block Grant bill is just beginning. There will be significant discussions on this and other issues within in the bill.

The Iowa Education Savings Account (ESA) program, established under the Students First Act,  includes several safeguards and accountability measures to prevent improper expenditures by recipients and schools. These measures ensure that funds are used appropriately for approved educational purposes while maintaining oversight and transparency. Below are the key safeguards and accountability mechanisms in place:

Administration by a Third-Party Entity:
The Iowa Department of Education has contracted with Odyssey, a third-party administrator, to manage the ESA program. Odyssey handles applications, financial transactions, compliance, and fraud prevention. This external oversight helps ensure that funds are securely administered and that payments are processed only for verified, eligible expenses.

Restricted Use of Funds:
ESA funds must first be used to pay tuition and fees at an accredited nonpublic school before any remaining balance can be applied to other qualified educational expenses, such as textbooks, tutoring, or educational therapies. This prioritization ensures that the primary purpose—supporting enrollment in accredited schools—is met before discretionary spending is allowed.

Approval and Verification Process:
Parents or guardians must apply annually for an ESA, and applications are subject to verification processes. For example, residency and income (where applicable) are checked, often through automated systems like Iowa state tax return data. Once approved, families must designate the accredited nonpublic school their child will attend, and the school invoices the ESA account directly. Payments are only released after parental approval, keeping funds under state control until a legitimate expense is confirmed.

Enrollment and Payment Deadlines:
To retain ESA funds, students must be enrolled in an accredited nonpublic school, and tuition and fees must be paid through the ESA portal by specific deadlines (e.g., September 30 for fall funds and February 1 for spring funds in the 2025-26 school year). If these conditions aren’t met, the student becomes ineligible, and the account is closed, with any remaining funds returned to the state’s general fund. This ensures funds are tied to active participation in an accredited educational setting.

Fraud Detection and Penalties:
The program includes provisions to address fraudulent use of funds. If funds are improperly obtained or spent, the Department of Education or Odyssey can recover those amounts from the parent or guardian, including through legal action if necessary. Parents or guardians found to have committed fraud are barred from future participation in the program, serving as a deterrent against misuse.

Closure of Unused Accounts:
When a student graduates high school or turns 20 (whichever comes first), any remaining funds in their ESA account are transferred back to the state’s general fund. This prevents indefinite retention of unused public money and ensures it is redirected to other state priorities.

Accreditation Requirement for Schools:
Only accredited nonpublic schools can participate in the ESA program. This requirement ensures that schools meet certain educational standards, providing a baseline of accountability for the institutions receiving ESA funds. Home-based education and unaccredited programs are explicitly excluded from eligibility.

Annual Application Requirement:
Families must reapply each year to continue participating, which allows the state to reassess eligibility and monitor ongoing compliance. This recurring process helps prevent long-term misuse by requiring regular updates and verification.

What are the qualified educational expenses?

Tuition and Fees at an Accredited Nonpublic School:  
This is the mandatory first use of ESA funds. It includes costs associated with enrolling a student in an accredited private school in Iowa, such as tuition, registration fees, or other mandatory school fees.

Textbooks:  
Funds can cover the cost of textbooks required for coursework or related to the student’s education, whether purchased new, used, or rented.

Tutoring Services:  
Payments for one-on-one or small-group tutoring are allowed, provided the tutor is a licensed educator or a professional qualified to offer academic support.

Educational Software or Online Learning Programs:  
Expenses for software, apps, or online courses that supplement the student’s education, such as math or language learning platforms, are permitted.

Curriculum Materials:
Costs for curricula or instructional materials directly tied to the student’s educational needs, such as workbooks or lesson plans, qualify.

Fees for Standardized Tests:
This includes fees for national or state-recognized assessments (e.g., ACT, SAT, Iowa Assessments) that measure academic progress or are required for college admission.

Educational Therapies:  
Services like speech therapy, occupational therapy, or other specialized interventions are covered if provided by a licensed practitioner and deemed necessary for the student’s educational progress.

Transportation Services:  
Limited to transportation provided by a school or a contracted service to get the student to and from the accredited nonpublic school. This does not include personal vehicle expenses or reimbursements for parental driving.

Fees for Extracurricular Activities:  
Costs for school-sponsored extracurriculars (e.g., sports, music, or clubs) may qualify if they are offered through the accredited nonpublic school and tied to the student’s enrollment.

Other Approved Expenses:  
The Iowa Department of Education may specify additional allowable expenses through administrative rules, but these must align with the program’s educational focus. For example, certain supplies or equipment directly tied to coursework (like lab materials) might be included.

Key Restrictions:
Funds cannot be used for general living expenses, entertainment, or non-educational items (e.g., toys, electronics not tied to coursework).

Expenses must be verified and approved through the ESA portal managed by Odyssey, the third-party administrator, ensuring that only legitimate educational costs are reimbursed or paid.

Home-schooling expenses or costs associated with unaccredited programs are explicitly excluded, as the program is tied to enrollment in accredited nonpublic schools.

Parents access these funds via a digital wallet in the Odyssey platform, where they submit and approve expenses, adding a layer of oversight to prevent misuse.

Is the ESA program audited?

The Iowa Department of Education, which oversees the ESA program, is responsible for ensuring compliance with the Students First Act. As a state agency managing public funds, it is subject to audits by the Iowa State Auditor’s Office. The State Auditor has the authority to examine state programs, including the ESA, to verify that funds are being spent appropriately and in accordance with Iowa law.

Odyssey handles day-to-day operations, including processing payments, verifying expenses, and monitoring for fraud. As part of its contract, Odyssey is required to maintain auditable records of all transactions and compliance activities. The Department of Education has the authority to audit Odyssey’s performance to ensure it adheres to state guidelines, such as approving only qualified educational expenses and safeguarding against improper expenditures.

These measures balance flexibility for families with oversight to protect public funds. The use of a third-party administrator, strict eligibility and expenditure rules, and mechanisms for recovery and penalties create a framework intended to minimize improper use by both recipients and schools.

As always, you can can shoot me an email with any questions or concerns at taylor.collins@legis.iowa.gov or you can call the Capitol Switchboard and leave me a message at (515) 281-7340.
Sincerely,

Rep. Taylor Collins