Iowa taxpayers will pay double in fees for school voucher program, says Rob Sand

The Education Savings Account (ESA) program will cost taxpayers way more than originally expected, according to a new report released by the Iowa Auditor of State Rob Sand.

Sand’s report shows the contract amended by the Iowa Department of Education will result in doubled costs for Iowa taxpayers.

Sand’s report documented that the original contract with Odyssey, a New York company chosen to oversee the funds for the ESA program, was amended by the Iowa Department of Education in a way that will cost hundreds of thousands more in years to come than originally proposed.

“In fiscal year 2024,” Sand’s report said, “the amounts paid out as a qualified educational expense amounts to an additional $267,250 cost to administer the program.”

The report says the cost for 2025 will be $390,750. For 2026, it will increase to $784,750. All of these numbers are estimates from the Legislative Services Agency (LSA), a nonpartisan agency which analyzes the cost of legislation.

By 2027, the cost is “more than double the original contract amount,” which was $729,550. The LSA estimates the cost under the new contract is $852,750.

The extra cost comes from 25-cent transaction fees and some other changes. Sand said in a news conference that no justification for the increase has been provided. He also warned that the estimates are conservative, and the actual cost could be more.

The ESA program already costs more than it was supposed to, since Gov. Kim Reynolds announced 30,000 students were approved for vouchers this year.

“If 30,000 receive the full voucher, then actually that would cost, for that fiscal year, an additional $587,000 when our report only estimates an additional $391,000,” Sand said at a news conference.

State officials including Reynolds said these transaction fees are a normal part of working with e-commerce companies, and that Odyssey’s numbers are less expensive than any other vendor.

Reynolds, a Republican, has pushed the private school voucher program for years, even endorsing the primary opponents of Iowa House Republicans who opposed her plans during the 2022 Republican primaries.

Sand said the way the contract was amended—without being provided to the Bureau of Accounting for review beforehand—violated existing rules as well.

Those documents were requested in December 2023 and weren’t received until July 2024. Even then, the report says, “While the documentation included that the estimated increase to the contract for years 2 and 3 was expected to be $540,500, it did not include documentation of the need to modify the existing agreement.”