Iowa Catholic SGO explained

By DAWN PROSSER
Director of Communications
 
In July, the Iowa Catholic Conference announced that the bishops of the four Catholic dioceses of Iowa created the Iowa Catholic Scholarship Granting Organization (Iowa Catholic SGO) to offer K-12 scholarships with funds raised through the upcoming federal Education Freedom Tax Credit program.
 
Royce Ranniger, chief financial officer for the Diocese of Sioux City, has been on the ground floor of developing this new organization, which will benefit students in the 14 diocesan Catholic school systems, enhancing school choice opportunities. He will be one of two Diocese of Sioux City representatives on the board as the program moves forward.
 
“This is a nationwide scholarship program to provide parents with an opportunity to send their kids to a school of their choice. It won’t fund all their education, but it’s a stepping stone,” he explained, adding that parents will still need to pay some tuition for their child even with the addition of SGO scholarship funds.
 
Ranniger pointed out that in Iowa, this SGO will “complement” the existing Education Savings Accounts (ESAs) and the diocesan Msgr. Lafferty Tuition Foundation (MLTF). MLTF is a diocesan School Tuition Organization (STO), offering 75% state of Iowa tax credits for contributions. Both provide funds to parents for education expenses, which can include tuition at diocesan Catholic schools.
 
“There is a gap between the cost per student and what the ESA program and the STO programs provide,” he said. “So, there are still students out there that cannot afford to attend private schools (including our Catholic schools).”
 Donors can benefit from this new program, effective January 2027, by saving on their federal income taxes. They can contribute up to $1,700 and earn a 100% tax credit. (According to the USCCB, it is anticipated that the U.S. Treasury Department will limit the $1,700 credit to a married couple, rather than each spouse receiving a $1,700 credit.)
 
“It’s a federal tax credit, which means it’s not an itemization,” he stressed. “If you owe federal tax, you are going to get this money back.”
 
Iowa Catholic SGO donations cannot be accepted until Jan. 1, 2027, and the benefits won’t be received until taxpayers file their 2027 in 2028, Ranniger explained.
 
Dr. Dora Jung, superintendent of the diocesan Catholic schools, said she is pleased that there is another avenue to allow families to have a choice in education, regardless of income.
 
“We are happy the four dioceses have come together to create an SGO as another revenue stream for Iowa Catholic school families. The Iowa Catholic SGO will also provide an opportunity for our supporters to enjoy a dollar-for-dollar credit on their contribution while they help our families,” she said.
 
As the SGO is a federal program, it can benefit diocesan Catholic school families living in South Dakota and Nebraska which have opted in to the SGO program, the CFO pointed out. Those students can receive funds from the new SGO to assist with tuition, but families out of state cannot receive ESA or MLTF funds.

 Carroll Kuemper Catholic School studentsThere are several Iowa SGOs being created for both public and private schools at this time. However, only the Iowa Catholic SGO will benefit Catholic school students in the state. 

Diocese partnership
Ranniger said representatives of the four dioceses forming the Iowa Catholic SGO corporation, quickly recognized the advantages of working together from accounting and governance perspectives. The business activities of the SGO will be centralized out of the Diocese of Des Moines through an agreement between the four dioceses.
 
“The Des Moines Diocese has accepted the role of being the administrative arm,” the CFO said. “They will be the gate keeper for the money coming into the door and money going out the door.”
 
The Des Moines Diocese will also be responsible for issuing the tax credit certificates in 2028 from the 2027 contributions.
 
In the coming months, the Iowa Catholic SGO will be finalizing the platform for accepting funds and selecting a third party firm to receive and process scholarship applications. Ranniger noted eligible recipients can have no greater than 300% of the median household income for the area in which they live, adding that amount would differ greatly when comparing different areas of the state.
 
“I think that 76 to 80% of our kids would be eligible because that (threshold) is pretty high,” he said.
 
Similar to state STOs, the Iowa Catholic SGO must award at least 90% of the funds collected in a single year. The remaining 10% can go to administration, marketing or awarding more scholarships.
 
As of January, donors will be able to contribute online through the Iowa Catholic SGO website, which is not yet active. (Lumen Media will communicate that address closer to January.) Those interested in learning more can follow the organization on its Facebook account – Iowa Catholic SGO.
 
According to the USCCB, families receiving SGO scholarships can use the funds for qualified expenses including tuition, fees, books, supplies, other equipment, tutoring, special needs services, computer technology and many other items.

Cover photo - Catholic school students have the opportunity to attend and participate in school Masses, as the Humboldt St. Mary School students in this photo.

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