I've heard rumors that legislators are trying to do away with AEA services in Iowa. What is the truth here?

Cut back on them at the very least.  I don’t think they plan on doing away with them completely but who knows.

Not true.
Reynolds addressed this in the Condition of the State address.
She also specifically said democrats were spreading fake rumors about this very thing.

She wants to let the actual school decide on if they want to give their funding to AEA. All school as of right now have to give their special ed funding to AEA even if they use it or not. If the schools want to keep the funding she wants to make it an option. As of right now they cannot keep it, they must send it to AEA.

She also want to make it the school's choice on what AEA they want to use and that the school can switch if they want. As of right now, the school must use the AEA thats in their local.

***Reynolds’ proposal would give school districts a choice in how they use that money.

“If schools like the services from their AEA, they can continue to use them,” she said. “If they want to use a neighboring AEA instead, they can do that. Or, they can go outside the AEA system — contract with a private company or partner with other districts to share a speech or behavioral therapist. Or they can spend more on special education teachers and put the dollars right into the classroom.”***

AEAs would also be prohibited from offering services other than special education services for students.

Reynolds said the agencies “have grown well beyond their core mission of helping students with disabilities, creating top-heavy organizations with high administrative expenses.”

She said Iowa is paying more than the national average per pupil on special education services, while students with disabilities are performing below the national average.

Of course AEA and all their stooges don't want this to happen. Its free money in their pocket.
How anyone could support forcing schools to send their funding to AEA instead of using it how they can best address their specific special ed issues is beyond me.

Thanks for clarifying that. I kind of got that gist from another source but yours is more informative. My wife and I saw that the AEA in the W'loo area had enough money to buy the Pipac Center, which was a very fancy multi million dollar event center when it was first built. It wasn't even that old when AEA bought it, which disgusted us at whatever system made that possible. Perhaps there's more to the sale that I'm not aware of, but on the surface it's bad optics. (Just looked it up, AEA spent $4M to buy it and $2M to renovate to their needs).

We've homeschooled most of our kids, but the experience we've had with the public school system has been frustrating and the whole system is badly broken. Even though this new deal isn't earth shattering, I'm glad Reynolds is willing to shake things up for better results.

Iowa Governor's salary= $130k/ yr.
Average AEA Administrator compensation= $310k/ yr.

I don't see that the AEA Administrators have more responsibility than the governor. To my mind, the governor is underpaid and the AEA's are overpaid.

Seemingly all government agencies bloat over time and need trimmed.