Celebrating 20 years of school choice

By DAWN PROSSER
Director of Communications
 
Last week, Iowa ACE (Alliance for Choice in Education) marked 20 years of school choice with hundreds attending an Education Celebration rally in the capitol building and a fundraising dinner in the evening for about 110 supporters.
 
The contemporary school choice movement kicked off in 2006 when the Education Opportunity Act passed the Iowa legislature and was signed by then Gov. Tom Vilsack. The act provided for a state tax credit to be offered for contributions to school tuition organizations (STOs).
 
Trish Wilger, executive director of Iowa ACE, said she had interviewed for her current position in May 2006 when the bill was moving through the state legislature.
 
“They were working on passing it and all of the sudden it passed. My job description changed dramatically,” she said of her first few weeks on the job. “I was trying to organize 501(c)3s, see if the Catholic (STOs) could be set up in the Kennedy Directory … It was kind of like drinking out of a firehose for sure.”
 
Wilger pointed out that in the beginning, donors were allowed a 65% state of Iowa tax credit for their contribution and families at 300% of federal poverty levels could apply for the scholarships.
 
School and development offices in the diocese were also trying to determine how to implement this new tax credit program.
 
“I remember it was a ton of education that needed to be done for everybody – the development people, the staff and obviously for the donors,” John Steffes, Kuemper Catholic Schools president, recalled as he was working for the Kuemper foundation at the time. “For a lot of people, it was too good to be true.”
 
Steffes added that the diocesan Stewardship and Development Office, which was then headed by Jim Wharton, “did a good job of marketing and helping the schools market and get out the messaging.”
 Father Peter Pham, Kuemper chaplain at a school Mass.That first year of the STOs, $296,867 in scholarships were awarded to 487 students and $2.5 million in tax credits were issued to 1,125 donors. Schools raised $3.846 million in contributions to fund the new STO program.
 
A few years into the program, Steffes said more people were developing an understanding of how the STOs could benefit donors, even financial professionals.
 
“I know there were financial advisors where it took them several years to really understand it and take it seriously,” he said, adding that development professionals made an effort to reach out to tax professionals and others to share the benefits of MLTF donations.
 
Some were concerned that fundraising for MLTF would take away from other school fundraising including their annual appeals. However, Steffes said it actually helped build up relationships between schools and donors as development staff had another opportunity to reach out to their supporters to discuss the benefits of MLTF.
 
Two decades later, a total of $273 million has been awarded to fund 206,044 scholarships for families looking for a choice in education. Over 60,000 individuals and businesses have contributed $303 million for scholarships since 2006.
 
Numerous families selecting a Catholic school education in the Diocese of Sioux City have benefitted in the 20 years of scholarships funded by the Msgr. Lafferty Tuition Foundation, the diocesan STO established in 2006.
 
According to Marilyn Wellman, diocesan accounting analyst, school development directors and Catholic school leaders raised about $48 million for scholarships in that time with an average of 2,400 students receiving scholarships each year. The diocese and schools pointed out how important those scholarships have been for families each year.
 
“Even in my short time at the diocese, it is evident that the Msgr. Lafferty Tuition Foundation has been extremely beneficial in helping parents choose a Catholic education through the generous scholarship programs,” said Heidi Probasco, diocesan director of stewardship and development. “And it has provided a unique avenue for our supporters to help their school and enjoy substantial tax benefits at the same time.”
 
“We are so blessed to have MLTF funds for our families. Not only does it provide a 75% tax credit to donors, MLTF also helps our families with the greatest need in our Catholic schools,” said Stacia Thompson, enrollment and outreach coordinator for the diocesan Catholic Schools Office. “Last year nearly 3,000 students benefitted from the STO program in the Diocese of Sioux City. For many families, these tuition grants have made Catholic school a reality.”
 Pocahontas Catholic SchoolCindy Edge, principal of Pocahontas Catholic School, said in her elementary school, the MLTF scholarships gave parents the option of a Catholic school, who may have not been able to finance the tuition. 
“The last few years, I have seen STOs make a tremendous difference for many families considering Catholic education,” she said. “In these situations, parents who wanted to enroll their children at PCS were unable to because of financial concerns. STOs have filled in the financial gap to provide the assistance to make it happen. We are so happy to be able to receive and serve these children and their families.”
 
In addition to building enrollment, STOs such as MLTF, were helpful in stabilizing enrollment, especially when families’ financial situations changed. Wilger said she’s received many testimonials from parents in these situations.
 
“STOs have really helped – families who are already in the school but have some kind of crisis happen to them, losing a job, a death, losing a parent. The STO has helped people stay at their choice (of school) countless times over the years, not only helping low income families but helping those already there to be able to stay,” she said.
 
Kuemper’s enrollment has been steady or slow growth over the past 15 years, and STO scholarships helped stabilize the school’s number of students.
 
“It really helped keep families at Kuemper who would have been gone. It took the sting off and kept families who could not afford it,” he said.
 
The path to ESAs
Some of the school choice highlights over the years noted by ACE include several improvements to the STO program before the introduction of ESAs.
 

• 2009: C Corporations were allowed to participate as donors.
• 2013: S Corporations were added as eligible donors.
• 2019: The eligibility rate for recipients increased to 400% of federal poverty levels.
• 2021: Donors’ state tax credit percentage increased from 65 to 75% of the contribution amount.

 
“Of course, the passage of the ESAs (Education Savings Accounts) really pushed it over the edge, pushed the movement so much broader,” she said.
 
The ESA bill was first introduced in the House in 2012, according to Iowa ACE. It made it out of committee for the first time in 2019. The Students First Act passed in 2023, providing ESAs for the 2023-24 academic year.
 
Steffes agreed that the school choice movement through the STOs helped bring ESAs to Iowa parents.

 John Steffes“Could we have ESAs today if we didn’t have the STOs first? I don’t know but it makes sense that the tax credit program helped lead to ESAs,” he said. “It shows these programs work, they can be accountable and helps normalize the whole school choice concept in K -12 education. Instead of the funding going to school operations, it is more naturally going to the family, to the child, which makes sense.”
 
The implementation of ESAs has been a big boost for families desiring a Catholic education and for diocesan Catholic schools. Wilger said it has been a big support for parents choosing smaller private schools in the state.
 
“ESA funding has opened the door for true parental choice in Iowa,” Thompson pointed out. “Families can make educational decisions not solely based upon where they live or income level. We are so fortunate that school choice is available to all families here in the state of Iowa.”
 
Steffes said the ESAs provided “slow, steady growth,” but not a huge jump for the Kuemper schools. The growth was a major factor in the school’s $30 million capital campaign through private donations.
 
However, when ESAs came onto the scene in Iowa, it did affect STO fundraising, as well as other factors.
 
“ESAs definitely made it more difficult for STO fundraising because there’s a misperception that STOs aren’t needed anymore ... but the ESAs don’t meet all the needs out there,” Wilger explained. “It’s still needed for high schools and private schools as it doesn’t cover tuition.”
 
She pointed out that STOs help fill the gap when people move to a new area during the school or missed the initial application period to receive an ESA.
 
“If people qualify, the STO can still help them. It’s still needed,” Wilger said.
 Trish WilgerAnother challenge to STO fundraising in recent years has been the reduction in the Iowa tax burden and retirement income not being taxed. 
“The cap is $20 million for the tax credits. (Schools) still do a wonderful job fundraising but we haven’t been reaching that cap in the last couple of years,” Wilger said.
 
Despite the inevitable challenges in two decades of advocating for school choice, Wilger said she is pleased with the progress made and being able to assist families in enrolling children in the school of their choice regardless of income.
 
“I can’t believe it’s been 20 years and I never would have thought we’d accomplish so much,” she said. “When I interviewed, ESAs weren’t a concept in the school choice movement. Then there started to be some inklings a short time after that. I knew we’d do great things but didn’t know it’d be this great and that Iowa would be such a leader in the country among states with larger populations.”

Cover photo - Education Celebration in the capitol rotunda. ​

HOME