The company overseeing Iowa's education savings account program is being paid more than the state originally agreed to after the contract was amended without adequate documentation, according to an annual audit of the Iowa Department of Education.
Gov. Kim Reynolds signed the education savings account law in 2023, allowing families to apply for about $7,800 per child in taxpayer-funded scholarships to pay private school expenses such as tuition and fees.
The state contracted with Odyssey, an out-of-state company, to oversee the disbursement of funds. The initial contract said Odyssey would be paid $682,333.75 in the first year and $729,550 in subsequent years.
An audit released Tuesday by State Auditor Rob Sand says the state later amended the contract with Odyssey to increase what the company would be paid but failed to provide documentation to justify the amended contract.
"A deal is a deal is a deal," said Sand, the only Democrat holding statewide office in Iowa. “And I think every Iowan knows that if someone comes back to you and says, ‘Hey, thanks. I'm gonna double costs, but I'm not giving you anything extra' that you're being had.”
After the initial Odyssey contract was signed, it was amended to include additional costs including transaction fees, Sand said in an interview. Those fees include 25 cents per $100 in qualified educational expenses processed through the Odyssey system, 5 cents per ESA transaction, a $100,000 "standalone system fee" and reimbursement for payment processing fees, Sand said in a news release.
During the 2024 fiscal year, "an additional $267,250" was paid to Odyssey because of the fees, the audit states. Moving forward, the program is expected to cost an additional $390,750 in fiscal year 2025, $784,750 in fiscal year 2026 and $852,750 in fiscal year 2027.
"The fiscal year 2027 additional contract cost is more than double the original contract amount of $729,550," the audit states.
Gov. Kim Reynolds signed the education savings account law in 2023, allowing families to apply for about $7,800 per child in taxpayer-funded scholarships to pay private school expenses such as tuition and fees.
The state contracted with Odyssey, an out-of-state company, to oversee the disbursement of funds. The initial contract said Odyssey would be paid $682,333.75 in the first year and $729,550 in subsequent years.
An audit released Tuesday by State Auditor Rob Sand says the state later amended the contract with Odyssey to increase what the company would be paid but failed to provide documentation to justify the amended contract.
"A deal is a deal is a deal," said Sand, the only Democrat holding statewide office in Iowa. “And I think every Iowan knows that if someone comes back to you and says, ‘Hey, thanks. I'm gonna double costs, but I'm not giving you anything extra' that you're being had.”
After the initial Odyssey contract was signed, it was amended to include additional costs including transaction fees, Sand said in an interview. Those fees include 25 cents per $100 in qualified educational expenses processed through the Odyssey system, 5 cents per ESA transaction, a $100,000 "standalone system fee" and reimbursement for payment processing fees, Sand said in a news release.
During the 2024 fiscal year, "an additional $267,250" was paid to Odyssey because of the fees, the audit states. Moving forward, the program is expected to cost an additional $390,750 in fiscal year 2025, $784,750 in fiscal year 2026 and $852,750 in fiscal year 2027.
"The fiscal year 2027 additional contract cost is more than double the original contract amount of $729,550," the audit states.
Audit: Iowa ESA program costs twice as much for management company
The Iowa Department of Education amended the contract with Odyssey, which handles ESAs, without proper documentation, audit finds.
www.press-citizen.com
