Reynold’s AEA legislation wreaks havoc

The bill, HF 2612, will redirect funds from the AEAs to school districts and limit the AEA’s autonomy, shifting both power and millions of state tax dollars back to the Capitol.

While schools will see more cash, Mason City administrators say the move will cost them more in the long term and negatively impact smaller districts more than larger ones. 

Established in 1974 to provide services to children with special education needs, nine AEAs serve all Iowa public schools and some accredited private schools.

Central Rivers AEA covers over 8,000 square miles and contains 53 public schools and just over 20 nonpublic schools. It is split into four sectors — Mason City, along with 15 other districts including Clear Lake, Garner-Hayfield-Ventura, and Central Springs — is in the northwest sector. 

AEA programs are sorted into three “buckets” — special education services, media services, and education services. 

Reforming Iowa’s AEAs was one of Gov. Kim Reynolds’ top priorities at the start of the 2024 legislative session. Reynolds said in her Condition of the State address that “in dozens of conversations with parents, teachers, school administrators and AEA staff, it’s become clear that while some of our AEAs are doing great work, others are underperforming.”

Thousands of AEA employees, teachers, and district administrators watched helplessly while legislation was written that radically changed how public schools operated.

Bridgette Exman Dunn, Mason City’s assistant superintendent and curriculum director, was at the Capitol on March 26, the day the Iowa Senate passed HF 2612. The atmosphere was frantic.

“I don’t think they even had time to read the bill. Sharon (Steckman) went past and said, “We’re voting in 30 minutes, and we don’t even have the bill!'” Exman Dunn said. 

Beth Strike, Central Rivers’ communications director, said the bill’s passage was difficult for AEA staff.

“There was, quite honestly, a great sense of sadness that 50 years of support and passion and dedication and commitment would be changing,” she said. 

HF 2612 was heavily influenced by a report commissioned by the Iowa Department of Management from a private, out-of-state consulting firm. Based in Virginia and owned by Bain Capital, Guidehouse Inc. recommended Iowa should limit AEA services to special education, use AEA funds to establish oversight over special education, and enable schools to seek services outside the AEAs by redirecting AEA funds back to districts.

Critics said the Guidehouse study made misleading claims about special education spending, cherry picked statistics about student achievement, and misrepresented the accountability standards and processes already in place for the AEA.

There were also allegations the federal Office of Special Education Programs could step in, since it designated Iowa’s special education programs as “needing assistance” in 2018. Strike said OSEP didn’t have the legal authority to take such an action. 

This claim was corroborated by an email from an OSEP representative obtained by the Globe Gazette.

Strike also disputed Reynolds’ claim the “needs assistance” designation indicated the AEA system was failing. 

“You really have to understand the “needs assistance” category, which is really the lowest in severity of consequence,” she said. 

Strike said the length of the legislative session took a serious toll on AEA staff.

“This is a calling for our folks. This is not a job. They are deeply, deeply committed. The uncertainty, the stress, from last year has impacted people,” Strike said.

The AEA has experienced a significant loss in staff — Strike said Central Rivers’ usual turnover rate hovered between 8% and 9%, but during 2024 it more than doubled to around 20%. 

Amy Knupp, Central Rivers’ executive director of special education, has worked in AEAs since 1999. She said she retired early due to the legislation.

“It’s not the way I wanted to end my career,” she said. 

The regional administrator in charge of Mason City schools, Amber Dietz, said seeing the distress the legislation caused was the most difficult part for her. Dietz acts as a direct liaison between Mason City school district and the AEA — she’s also responsible for Central Springs and Northwood-Kensett.

“What kept me up at night was knowing that other people are really hurting because of this game that we played politically,” Dietz said. 

HF 2612 skimmed $10 million from the AEA’s budget to establish a new division of special education within the Iowa Department of Education and hire 13 new positions there, as well as up to 40 new state employees to be distributed across all AEAs. 

HF 2612 also brings AEAs — previously independent governmental organizations — under the purview of the Department of Education and transfers responsibility for ensuring compliance with state and federal laws from the AEA to the state.

Heidi Venem, Mason City’s director of special education services, said it isn’t clear yet how compliance will be handled. “I haven’t heard anything from the state about what their plan is for replacing that compliance piece. … We’ll have to just figure that out as we go,” she said. Dietz agreed. “We have these big shifts happening without a lot of detail,” she said.

A coalition of Iowa superintendents released a statement during the session expressing alarm at the reforms.

“The move to centralize control within the Department of Education, which does not appear to have the capacity and has leadership that lacks experience in education, undermines local expertise and decision-making, which are crucial in tailoring services to the unique needs of their communities. This proposal is an unnecessary overreach by our state government,” the statement said.

Strike said to her knowledge, the state did not consult with any of the AEAs or allow them to participate in drafting the legislation. She provided customer service survey results showing very high rates of satisfaction with services.

She said no one is claiming the AEA system was perfect, but change should be based in sound data. 

“I don’t think anyone in the AEA system is averse to change. … We are a system that values continuous improvement,” she said. “In a collaborative environment we are very open to making adjustments and refinements to ensure that we’re serving children, families, and educators.” 

The bill also had some administrative changes that won’t go into effect until July of 2025. 

In year two of the restructure, each AEA’s local board of directors will be stripped of its authority and become strictly advisory. All professional development materials used by AEA consultants will need to be individually approved by the State Department of Education. A task force has been created to audit the AEAs and is expected to submit its report in December.

For the 2024-25 school year, 60% of the AEA’s funding for media and educational services will go to school districts, 40% to AEAs. During the 2025-26 school year, 100% of that funding will go to school districts. Districts can then use that money to purchase media and educational services from the AEA at a fair market price using their general funds, or look to the private sector. 

Strike said if the AEA could no longer afford its typical offerings, districts may need to find private providers for materials and services even if they wanted to keep using their AEA. 

“There are certainly private vendors that can provide services; oftentimes they’re out of state. So, you know, from an economic standpoint as well, there’s concerns with state tax dollars leaving the state to be used with private vendors,” she said. 

“It’s a complete change. It’s totally different from what we know. We’ve never had to budget for the AEA,” Mason City schools Superintendent Pat Hamilton said. 

These effects will be noticed first by students who utilize media and education services. Media services include the lending library, curriculum samples, online resources like databases, graphic design services for printing learning materials, and tech support for teachers and students. Educational services involve professional development consultations and leadership training for teachers and administrators, but also include materials, guidance, and support for talented and gifted programs.

Hamilton said while funds earmarked for the AEA were included in the district’s yearly revenue, it was what was called “flow-through money” — it passed directly to the AEAs. “There was no bill (from the AEA) if you were going to use them… They just provided the services for you,” he said.

Strike said since the AEA received money from each district on a per-pupil basis, smaller schools contributed less revenue than larger schools but received the same services. It will be difficult for a small school to pay full price for the educational and media services they were receiving from the AEA with what limited flow-through money is shifted back to them. 

“There was always an understanding that larger districts, urban districts, maybe at times used (AEA services) less than what their per-pupil amount was contributing, and smaller districts were maybe using more than what their per-pupil amount was contributing, but that it was for the benefit of all students, and that it was a system designed to ensure that everyone had equal opportunity,” Strike said.

Hamilton said consultants can cost approximately $900 dollars a day, and schools could burn through the additional money in their general fund quickly trying to pay for services under the fee-for-service model.

“It’s going to affect smaller schools even more than us. … You talk about $900 a day for a small school to have a reading specialist come in, it doesn’t take long for them to go through their (allotment),” he said. 

Reynolds claimed multiple times that districts would be able to receive the exact same services from the AEA if they wanted, despite the fact the amount of flow-through funding some smaller districts would receive won’t be enough to cover their expenses under the new fee-for-service model. 

Reynolds insists the new system will be more efficient for school districts, but Venem claimed it would increase responsibilities for special education teams at the district level. Exman Dunn said it’s caused logistical issues with budgeting and navigating the unique services each building needs.

Instead of building staff and educators using AEA services as needed without consulting administrators, everything will now need to be tracked, carefully budgeted for, and centrally managed by the district. Exman Dunn said Mason City schools now has the huge task of identifying exactly what materials were provided by the AEA and will now have to be paid for under the fee-for-service model.

“The idea of trying to itemize or audit the ways that those services have been provided, it just feels impossible,” she said. “It’s really created inefficiencies. The level of efficiency that was there (before) is literally a walk down the hall to communicate with somebody who already knows your teachers, knows your kids.”

Exman Dunn also said the Mason City school district is trying to be conservative with how it allocates the flow-through money they receive to prepare for the unexpected.

“An individual teacher might have an individual unit designed around access to a tool that we don’t even know about. And they’ll get to the point where they’re ready to start this unit, the kids are sitting there to log in, and they can’t,” she said. 

The AEAs will still get 100% of the funding for special education services in 2024-25, but in 2025-26 10% of that money will stay with schools and 90% will go to the AEAs.

While this sounds like special education services will be unmarred under HF 2612, Strike says funding cuts will impact the agency as a whole and that special education services could be affected by the loss of staff.

“There’s been an absolute disruption in our ability to hire and maintain staff because of the uncertainty,” Dietz said. 

Special education services include speech therapy, physical therapy, occupational therapy, and a wide range of specialists meant to assist children with a diverse variety of mental, emotional, and physical disabilities and needs. It also includes school psychologists, social workers, and behavior consultants. 

School districts are mandated by federal law to provide special education services. Exman Dunn said she worried AEAs would be in the untenable position of having to provide services they can’t afford with no way to increase revenue.

Exman Dunn also isn’t sure Mason City will be able to hire specialists from the private sector to ensure it is remaining compliant if Central Rivers is unable to supply them, since North Iowa has a limited pool of qualified providers. 

“Larger districts probably could hire somebody and bring them on staff, but I don’t even know if we would be able to be attractive enough to hire somebody,” she said. 

Senate Democratic Leader Pam Jochum, D-Dubuque, told the Iowa Capital Dispatch that this move will have a bigger impact on rural Iowa.

“Certainly it’ll affect the cities, but we do have professionals in our cities that we can count on,” Jochum said. “… It’s more important in the rural areas, where they do not have those OT, PT, speech pathologists to actually hire in the local community.”

Venem said the primary focus now among administrators in Mason City was minimizing the ways this overhaul will impact kids. “At the end, we’ll figure it out. And we will ensure that kids are receiving the services they deserve.”

Strike agreed. “There are many, many hours happening behind the scenes to ensure that we do our very best to continue to provide the highest quality services… We will find a way.”