Iowa Governor Signs Law Providing Taxpayer Funds for Private School Students

Governor Kim Reynolds signed legislation on May 12, 2026, that alters the allocation of state funding for students enrolling in charter schools and those who are homeschooled.

According to the Iowa Capital Dispatch, the new measure shifts a portion of state funding to follow students from their public school district of choice to the charter school where they enroll.

The Students First Act and ESA Funding

This latest legislative action builds upon the framework established by the Students First Act, which Governor Reynolds signed into law in January 2023. The Students First Act was designed to make state funding available to support kindergarten through 12th-grade students across the state.

Under this system, families can choose between public school enrollment or enrolling in a private school using Education Savings Accounts, known as ESAs. For the 2025-26 school year, eligibility for these funds has been expanded to include all kindergarten through 12th-grade students attending an Iowa-accredited nonpublic school, regardless of the family’s income level.

The financial allocation per pupil under the ESA program is typically aligned with the amount allocated to public school districts for the same budget school year. For the 2024-25 school year, the ESA amount was $7,826.

Laurie Dougherty, the Director of Enrollment at Bishop Heelan Catholic Schools, indicated that the funding amount is expected to increase.

“It probably will go up 2%, like they’ve done for the last 48 years and so. It could be closer to $8,000 next year,”

Laurie Dougherty

Dougherty further described the impact of the ESA program on families, stating that “for our families, it’s really been a game changer.”

Impact on Public School Enrollment

The shift toward private and charter school funding has coincided with declining enrollment numbers in some public school districts. Data from the Iowa Department of Education’s School Performance reports show a downward trend in the Sioux City Community School Districts over a three-year period.

Enrollment in the Sioux City district was 14,343 in 2022. This number decreased to 14,270 in 2023 and further dropped to 13,887 by 2024, representing a loss of nearly 500 students.

Dr. Rod Earleywine, the Superintendent of Sioux City Community School Districts, noted that these shifts in student population have direct consequences for the district’s budget.

“Will definitely impact our enrollment, and obviously our finances are dependent upon enrollment. So we’ll have to wait and see how many students actually take advantage of the ESAs, and we’ll make adjustments accordingly,”

Dr. Rod Earleywine