Proving Private Exchange Skeptics Wrong

Iowa Gov. Kim Reynolds speaks to schoolchildren as she signs a bill creating education savings accounts, Tuesday, Jan. 24, 2023, at the Statehouse in Des Moines, Iowa. Any Iowa student who wants to attend a private school would be able to use public money to pay for tuition or other expenses under the plan approved by the Legislature Tuesday morning, making the state the third to pass a measure allowing such spending with few restrictions. (AP Photo/Charlie Neibergall)

When the Republican-controlled Iowa Legislature approved using public money to fund private school scholarships, one of the biggest concerns was that there would be little to no transparency over how the money was spent.

This week we learned that a contract with New York-based Odyssey, the company that manages the scholarship program, was changed by Reynolds management without following proper procedures.

The contract change was not made public. So instead of being careful with government money, the government essentially gave its critics the green light.

It was State Auditor Rob Sand who discovered the change and provided information to the public, finding that contract changes would cost the state hundreds of thousands of dollars more than planned.

Originally, Odyssey was to receive $682,000 in the first year of the scholarship, limited to families with incomes below 300% of the poverty level. In the second year, when the income limit was raised to 400%, Odyssey was to receive nearly $730,000.

But an amendment to the contract gives Odyssey 0.25% of the total amount spent on “qualified education costs.” Sand claims the change means the state’s payment to Odyssey will more than double by fiscal year 2027.

Submission of a document describing the change to the Bureau of Accounting for review was delayed and did not provide an explanation for the contract change.

Sure, the money we’re talking about seems like a small detail in a massive entitlement program that will cost the state an estimated $345 million in FY 2027. So far, the actual cost of the program has exceeded estimates. Most families with access to scholarships already send their children to private schools.

The Ministry of Education stresses that even with the contract amendment, Odyssey remains the lowest bidder to administer the scholarship.

But this episode is a bad sign as the show moves forward. Transparency has been pushed aside. Iowans have a right to know how their tax dollars are being spent.

This would be a good time for the House and Senate Oversight Committees to ask some questions. But Republican lawmakers and the Republican governor are on the same team, so the administration has no fear of legislative oversight. It doesn’t exist anymore.

We urge the Reynolds administration to embrace transparency and prove its critics wrong.

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