Rural Iowa Schools Brace for Impact as ESA Program Expands to All Families
As Iowa's Education Savings Account program expands to cover all K-12 families for the 2026-27 school year, rural public school districts are grappling with tough questions about budgets, enrollment, and staffing. The program, signed into law by Governor Kim Reynolds in 2023, allows families to use public funds for private school tuition and other expenses. Supporters say it fosters market-based competition and gives parents more choices. Critics argue it drains resources from public schools that remain the heart of many rural communities.
How Are Rural Schools Affected by the ESA Expansion?
Superintendents across Iowa report that even small shifts in enrollment can have a big financial impact. In Creston, a town of over 7,500, Superintendent Deron Stender says his district loses three to five students each year to private schools. Each student represents about $8,000 in state funding.
“In a district of my size, three to five kids is still a significant number,” Stender said. “$8,000 is roughly what a student is worth when they go someplace else.”
Stender added that the ESA program has made it harder to retain staff. “We lose some of our best teachers because private schools are able to pay them the same or more,” he said.
What Are the Challenges for Districts Without Private Schools?
In areas like the Southeast Valley School District in Webster County, where there are no private schools, most departing students choose homeschooling. Superintendent Brian Johnson says the negative narrative around public schools has hurt morale.
“The negative narrative that I believe is being spread really affects a lot of these people that have dedicated their lives to educating kids,” Johnson said. “It just seems like some of the storylines or some of the laws that are being passed are tough for people to swallow.”
Johnson also pointed out a fairness issue: “Why do private schools and public schools, if they're getting the same amount of funding, not have to follow the same rules or laws or guidelines?”
Does Market-Based Competition Help or Hurt?
Shane Vander Hart, communications director for the Iowa Alliance for Choice in Education, argues that competition will push public schools to improve. “Ultimately, I think school choice will help improve public schools because it's forcing them to be competitive,” he said. “The majority of Iowans will still send their kids to the public school, but public schools might have to rethink their approach.”
But Joshua Brown, president of the Iowa State Education Association, disagrees. “Private schools receiving ESAs have no accountability for how they're using these funds, and no oversight to ensure that they are following all of the state laws,” Brown said. He added that some rural districts have had to cut programs or merge with others to stay afloat.
What Happens to Per-Pupil Funding for ESA Recipients?
Public schools still receive about $1,200 to $1,600 per pupil for students who leave for private schools, but that money is locked into categorical funds. Stender says Creston could use those funds more effectively if restrictions were lifted.
“We could use those $200,000 to hire two or three people to help with our behavioral or mental health issues,” Stender said. “Right now, the way it's categorical, we can't do that.”
Vander Hart downplayed concerns about funding losses. “They're still getting money for students they're not even educating,” he said.
What Does This Mean for Iowa Families?
For many rural families, the choice is limited. Brown noted that in areas without private schools, parents often have to choose between an underfunded public school or online schooling. “The only choice a parent has is to go to their public school that's underfunded, or go to an online private school where their student doesn't have the opportunity to connect with other students,” he said.
As the ESA program continues to expand, the debate over school choice, funding equity, and local control is likely to intensify. Rural Iowa schools are left wondering what comes next.
“I get asked like, 'What now? What did we do wrong now?'” Johnson said.