DES MOINES — The Iowa Department of Education did not follow proper procedures when amending a contract with the company that administers the private school choice program — a move that will increase costs significantly, State Auditor Rob Sand said Tuesday.

In response, the Education Department said that even with the increased costs, the contract represented the lowest bid for administering the program and was a significant savings compared with other competitors.

Sand, a Democrat, released a report detailing his office’s inquiry into the contract with Odyssey, a company that manages programs like Iowa’s that allow students to use public funds to pay for tuition at private schools.

Iowa’s education savings account program allows students to use the full per-pupil state funding that would go to their public school district to instead pay for private school tuition and other costs. More than 30,000 Iowa students have been approved for the coming school year.

According to Sand’s report, the amended contract, which previously was not disclosed publicly, is expected to more than double the original annual cost to the state for Odyssey to administer the program by fiscal 2026.

“The cost to Iowa taxpayers for the administration of the school vouchers program has doubled with no apparent justification for it whatsoever,” Sand told reporters. “This is a contract that was signed just a couple of months after the original contract was signed, and still today there has been no justification provided whatsoever.”

A spokesperson for Odyssey did not immediately respond to a request for comment.

Iowa selected Odyssey in a competitive bidding process in April 2023 to administer the state’s ESA program. The initial contract was for three years, with three optional annual extensions, and totaled $4.3 million for the six-year period. The annual cost to administer the program initially was listed at $730,000 by year two of the contract.

The administration cost is a small piece of the overall cost of the ESA program, which cost the state $128 million in the last fiscal year and is expected to increase to at least $345 million by the 2026-27 school year.

Amendment ramped up costs

Sand’s report said the contract was amended in July 2023, three months after it was approved, to include new variable fees. One those fees calls for Odyssey to be paid 25 basis points — or 0.25 perecnt — of the total amount paid out as a “qualified education expense” that includes tuition and fees, textbooks, tutoring and certain supplies.

That payment, according to estimates by Sand’s office, will increase the cost to administer the ESA program by hundreds of thousands of dollars per year. It will likely double the annual cost of the contract by fiscal 2026, Sand said.

Sand said the Education Department did not follow proper policy to amend the contract.

According to the report, the department’s policy requires a document describing the need to modify the agreement and requires the Bureau of Accounting to review and approve any contract amendments. The report said the amendment was not formally approved by the Bureau of Accounting until July 12, the same day the department provided the documentation to Sand’s office and six months after Sand requested it.

The department also did not include an explanation of the need for the amendment, but did say it estimated the cost increase for years two and three to be $540,500.

The audit report also said Odyssey proposal to qualify for the contract said it planned to open an office in Des Moines. The company later said it had secured temporary accommodations and listed the address of the Iowa Capitol building.

“There does not appear to be any legitimate means to make this claim,” Sand’s report says. “However, based on documentation provided, this claim was not questioned by those reviewing the proposals.”

Department says Odyssey kept costs low

In a written statement, Iowa Department of Education spokesperson Heather Doe said the transaction fees added in the amendment are a necessary part of any e-commerce platform and were far lower than other competitors. She said the state “conducted a thorough evaluation” to determine whether the added costs would remain competitive.

Other vendors administering ESAs charge a 2.5 percent transaction fee compared to Odyssey’s 0.25 percent, Doe said. Doe said the department estimates the transaction fees in the first year would cost about $300,000, bringing the total to about $985,000.

“Even with the additional transaction fee costs, Odyssey’s costs were nearly four times lower than the next closest competitor,” Doe said.

The state received one other viable bid to administer the program from a company called Merit, Doe said. Merit would have charged $8 million over the first three years of the contract. The cost for Odyssey, including transaction fee estimates, is expected to be about $3.7 million over the first three years, Doe said.

Doe also said the department will ensure it has documentation of contract approvals going forward. “Processes can always be improved upon and the Department of Education notified the Office of the Auditor of State that it will have documentation of all relevant approvals at the time of execution moving forward, which was also accepted by the Auditor of State,” Doe said.

Republican Gov. Kim Reynolds said in a statement that the transaction fees added to the contract should not be passed on to ESA families. She also pointed to the cost difference between Odyssey and Merit’s proposal.

“I’m proud of the work that Director (McKenzie) Snow and the department have done to establish one of the leading school choice programs in the country, and I look forward to the start of its second year,” Reynolds said.

An Iowa law banning most abortions in the state will take effect Monday, roughly one year after Gov. Kim Reynolds signed it. 

The law prohibits physicians from administering an abortion after a fetal heartbeat is detected — around six weeks into pregnancy, before most women even know they’re pregnant. It briefly took effect in July 2023, but a lower court temporarily blocked the ban just days later in response to a legal challenge brought by abortion providers and the American Civil Liberties Union. 

The Iowa Supreme Court reversed that ruling last month, declaring the policy constitutional and clearing the way for it to go into effect.

A district court judge for Polk County said the law can be fully enforced starting July 29 at 8 a.m. CT, to allow time for medical providers to receive notice of the change.

The ACLU of Iowa tried earlier this month to petition the Iowa Supreme Court to rehear the case, but the court denied that request Monday.

Iowa’s new abortion law includes exceptions for rape, incest, fetal abnormalities that are “incompatible with life” and medical emergencies that endanger the life of a pregnant woman.

Previously, Iowa allowed abortions up to 20 weeks, meaning the vast majority of those seeking to terminate a pregnancy were able to do so. The new law puts Iowa among three other states that similarly ban abortion after around six weeks: Florida, Georgia and South Carolina. Fourteen states have full abortion bans, and 22 (including Iowa) have some kind of abortion restriction.

Just two abortion clinics in Iowa offer in-person care: the Emma Goldman Clinic and a Planned Parenthood facility in Ames. Planned Parenthood of the Heartland — which represents its Iowa clinics — and the Emma Goldman Clinic were both plaintiffs in the lawsuit challenging the law.

Both organizations have said they’ll continue to provide abortions within the limits of state law, but most Iowa residents seeking abortions will have to go to other states. The closest options for Iowans would most likely be Illinois, Minnesota or Nebraska, though Nebraska restricts abortions after 12 weeks. 

Ruth Richardson, president of Planned Parenthood North Central States, said the organization has been expanding abortion access in the region in anticipation of Iowa’s policy change. For example, she said, the clinic in Mankato, Minnesota, added medication abortion services; the St. Paul, Minnesota, clinic opened up more appointments; and the Omaha, Nebraska, location is extending its physical footprint to triple the number of patients it can accommodate.

“We are standing by ready to help patients receive access to care, even if that means traveling out of state,” Richardson said in a call with reporters last week.

The Emma Goldman Clinic said in a statement last month that it would also help those who can’t get abortions in Iowa seek care in other states.

According to an analysis from the Guttmacher Institute, a research organization that supports abortion access, the number of people who crossed state lines to obtain abortions has roughly doubled since 2020. The analysis largely attributes the trend to restrictions enacted after the Supreme Court overturned Roe v. Wade in 2022.

Republican lawmakers in Iowa attempted in 2018 to enact legislation restricting abortions after six weeks of pregnancy, but a lower court permanently blocked that law in 2019, and the Iowa Supreme Court upheld the lower court’s ruling last year.

In a statement last month about the new law, Reynolds, a Republican, said Iowa voters had “spoken clearly through their elected representatives” and that the Iowa Supreme Court’s decision had “upheld the will of the people.”

Around 63% of respondents in a national Pew Research Center poll earlier this year said they thought abortion should be legal in all or most cases.

Iowa Department of Transportation announced that the Iowa Mobile ID system will now be available on Samsung Smart Wallet on all Samsung Galaxy devices running Android 12.0 or above.

“You can use your Iowa Mobile ID in Samsung Wallet at participating Travel Security Agency checkpoints including the Des Moines and Eastern Iowa airports,” a DOT news release said. The news release clarifies that the Iowa Mobile ID does not replace a physical driver’s license.

More: Iowa Mobile ID is available for smartphones: Does it replace your driver’s license?

The Iowa Mobile ID program was started in October 2023 in partnership with IDEMIA, a French technology and security firm. It offered TSA checkpoints and all enrolled businesses an alternative to physical identification for age or identity verification.

At that time, it was an app available for download on the Google Play store and the Apple app store. Along with the new Samsung Wallet option, they can be used for age verification for the purchase of products like tobacco and alcohol at 37 locations around Iowa as well as at select TSA checkpoints.

While police departments can accept Iowa Mobile ID in traffic stops, emerging technology program manager Toni Smith said in an email that it is entirely up to individual departments. For this reason, drivers should still carry their physical license with them.

A full list of enrolled businesses, as well as more detailed information, can be found at iowadot.gov/mvd/MID-ID-Holders. Enrolled businesses can also be identified by the presence of an Iowa Mobile ID logo on their door, though there is no requirement to display one.

According to the news release, since its launch in late October, 32,000 Iowans have downloaded the Iowa Mobile ID app. Smith said the Iowa DOT is working to add Iowa Mobile ID to other digital wallets like Apple and Google but couldn’t say when those options may become available.