Des Moines, IA – State Auditor Rob Sand today released a report on the Iowa Department of Education that shows the cost of administering the Educational Savings Account (ESA) program will more than double by fiscal year 2027 because of an amendment to the original contract.

“Just three months after signing the contract to administer the ESA program, the Department of Education agreed to amend it for no good reason.  And in doing so, the Department violated its own policies and procedures,” said Sand.  “Most Iowans believe a deal is a deal and can recognize a bait and switch when they see one.”

The amendment allows Odyssey, the company chosen in April 2023 to administer the ESA program for the state of Iowa, to collect an additional 25 cents for every $100 in qualified educational expenses processed on its platform.

“Conservative estimates show that alone could cost Iowa taxpayers an additional $2.3 million by 2027,” said Sand.  “But we won’t know exactly how much more Iowans will pay for these administrative fees until we know how many students are enrolled in the program.”

Odyssey, which claimed in its contract proposal to have an office in the State Capitol, will also collect 5 cents per ESA transaction, a $100,000 annual “Standalone System Fee” not included in its contract proposal, and be reimbursed for payment processing fees.

“The State Capitol is the peoples’ building and this is their money,” said Sand.  “I want to thank the Auditor’s Office staff for their diligence and hard work, and for shining a light on how Iowans tax dollars are spent.”

In a second finding, the report also noted the improper use of more than $840,000 from the Elementary and Secondary Education Act.  The use of the funds is limited to programs for school leaders but was inappropriately allocated to paraeducator programs.