Report: Nearly 80% of ESA Funds Went to Students Already in Private Schools

We cover Decorah because we love it. Show your love back — donate today. DES MOINES, Iowa — Iowa's Education Savings Account program (ESA) has cost taxpayers hundreds of millions of dollars to subsidize private school tuition for students who likely would have attended private schools regardless of the program's existence, according to a report released Wednesday by State Auditor Rob Sand. The report, which examines the impact of Iowa's school voucher program through its third year of operation, concludes that nearly 80% of ESA recipients in the 2025-26 school year were already expected to attend private schools before the state created the program. The findings come as Iowa's ESA program reaches its first year of universal eligibility. Income restrictions that limited participation during the program's first two years have now been fully phased out, making all Iowa K-12 students eligible for state-funded accounts that can be used toward private school tuition and other educational expenses. Speaking at a press conference Wednesday, Sand said the analysis relied entirely on enrollment projections and other publicly available data produced by Gov. Kim Reynolds' administration and the Iowa Department of Education. "Here's the bottom line. Eighty percent of the money that has gone into the school vouchers program has gone to pay for tuition for students who were already attending private schools," Sand said during the event. The report estimates the ESA program will cost approximately $329.6 million during fiscal year 2026. Using Department of Education enrollment projections released in 2022, before the ESA program was enacted, the report compared expected private school enrollment with actual enrollment during the 2025-26 school year. The department projected that 33,054 students would be enrolled in Iowa nonpublic schools during the current school year. Actual enrollment reached 41,892 students, according to the report. That difference of 8,838 students forms the basis of the auditor's analysis. Because statewide enrollment projections proved highly accurate overall, missing the total student population by only about 0.3%, the report argues it is reasonable to attribute the increase in private school enrollment to the ESA program. Dividing the program's estimated $329.6 million cost by the additional 8,838 students enrolled in private schools produces an estimated cost of $37,294 for each student who would not otherwise have attended a nonpublic school, according to the report. "If the purpose of the program was to provide access to non-public schools to children who otherwise would not have had it, it did so at a cost of $37,294 per new student," the report states. The analysis found that 32,206 of the 41,044 ESA users in fiscal year 2026, or 78.5%, were already projected to attend nonpublic schools even if the program had never existed. Applying that percentage to the program's overall cost, the report estimates approximately $258.7 million in state spending went toward tuition expenses that likely would have been paid privately. The report also found significant changes in Iowa's private school landscape since lawmakers approved the ESA program for the 2023-24 school year. Prior to implementation, the number of certified nonpublic schools in Iowa remained relatively stable and showed a slight downward trend. Between the 2017-18 and 2021-22 school years, the state's number of certified nonpublic schools fell from 187 to 181. Using pre-ESA trends, the report projected Iowa would have approximately 174 certified nonpublic schools during the 2025-26 school year. Instead, Iowa had 232 certified nonpublic schools operating at the start of the current school year, about 58 more than projected. The report concludes that roughly one-quarter of Iowa's current nonpublic schools exist beyond what historical trends would have predicted before the voucher program was enacted. School openings have accelerated dramatically during the ESA era. From the 2017-18 through 2021-22 school years, Iowa averaged 1.6 new nonpublic schools opening annually. Since the ESA program began, the average has increased to 21.7 new schools per year. At the same time, closures have increased as well. Before the voucher program, Iowa averaged 2.6 nonpublic school closures annually. Since implementation, annual closures have risen to 5.7 schools. The report notes that many recently closed schools were themselves recent startups. Of the 19 schools reported as closed since the 2022-23 school year, eight had opened within the previous five years. Some schools also reported opening and closing within short periods. The report cites Jordahl Academy, which opened with two students during the 2022-23 school year, later closed, reopened in another district using the same school number and then closed again. Another institution, Xceed Oakmoor Academy, reportedly closed and reopened during the same school year. Sand acknowledged during the news conference that the report does not determine why closures have increased. "This is something that we could have looked into if they had been willing to open the books," he said, adding that his office's ability to review the program had been limited in previous years. The report also found that newly opened nonpublic schools tend to be smaller than those operating before the ESA program. In 2021-22, only two of Iowa's 181 nonpublic schools enrolled fewer than 20 students. By 2025-26, 14 of the state's 232 nonpublic schools had enrollments below that threshold. The median enrollment at Iowa nonpublic schools declined from 137 students in 2021 to 126.5 students this year, according to the report. Another major shift identified by the auditor involves accreditation. Historically, most Iowa nonpublic schools received accreditation from the state. Among schools that opened before 2023, approximately 66.3% were accredited by Iowa. Among schools that opened after implementation of the ESA program and remain in operation, only one school out of 60 held state accreditation, a rate of 1.7%. Instead, most newly opened schools obtained accreditation through independent accrediting organizations approved by the State Board of Education. During the news conference, Sand said the trend raises questions about oversight and educational standards. "The state used to have a floor for accreditation," he said. "If the vast majority of the private schools are now using these other accreditation methods, to the point where only 2% are accredited by the state, we should be asking questions about why so many have moved in that direction." The report includes a list of schools that opened during or after the 2022-23 school year, documenting dozens of new institutions across Iowa communities, including Des Moines, Iowa City, Cedar Rapids, Bettendorf, Sioux City, Waterloo and Decorah. Sand emphasized repeatedly that the report was based on publicly available data and enrollment projections produced by state agencies under Reynolds' administration. Asked whether critics might view the report through a political lens because of his gubernatorial campaign, Sand rejected that characterization. "These are the Reynolds administration's numbers," he said. "It's just a simple math approach." Supporters of the ESA program have argued that public funding should follow students rather than remain with schools when families choose alternative educational options. Sand countered that taxpayers should understand the cost associated with increasing private school attendance. "At the end of the day," he said, "$37,000 per student is what taxpayers are paying for each additional student that would not have otherwise attended private school." Your inbox, upgraded! Subscribe for free and enjoy handpicked stories, helpful advice, and local insights delivered weekly.