By Benjamin Olneck-Brown

In a high profile 5-4 decision, the U.S. Supreme Court ruled last week that the state of Montana cannot exclude religious schools from receiving tax credit-funded scholarships under its school choice program.

What do legislators need to know, and what does this decision mean for states?

Background

In 2015, the Montana Legislature created a scholarship tax credit program. Such programs—present in at least 18 states—provide tax credits to individuals and businesses who donate to scholarship-granting organizations. Families can apply to use funds from these organizations to send their children to private schools.

Montana is one of at least 37 states with a “no-aid provision” in its constitution prohibiting public support for religious or sectarian institutions. To reconcile this provision with the scholarship program, the Montana Department of Revenue promulgated a rule prohibiting families from using the scholarships to send their children to religious schools.

In 2018 the Montana Supreme Court ruled that under the no-aid provision, the state could not operate its scholarship tax credit program, as some recipients would use the scholarships—funded by public tax credits—to attend religious schools.

Montana parents sued, arguing that the scholarship program discriminated against them based on their religion by prohibiting them from using the scholarships to send their children to schools aligned with their religious values.

Legal and Historical Precedent

In the late 1800s, more than 30 states passed Blaine Amendments, also called no-aid provisions, which prohibit public aid to religious organizations. In modern times, the Supreme Court has repeatedly ruled that religious organizations can receive neutrally distributed government benefits. In 2017, the court established in Trinity Lutheran Church of Columbia, Inc. v. Comer that the exclusion of religious institutions from a state grant program “solely because of…religious character” discriminates based on religious status and is unlawful.

Private school choice programs have been subject to litigation since their inception. Supreme Court decisions in 1983 and 2002 upheld state programs that provided tax deductions for private school tuition expenses and that funded vouchers for students to attend private schools, including religious schools. In a 2010 case concerning scholarship tax credits, the U.S. Supreme Court declined to rule on the merits of the First Amendment question at hand.

In Espinoza, the court was asked to rule not only on whether religious schools could receive state funding through school choice programs, but whether states could exclude such schools from school choice funding.

The Espinoza Decision

In last week’s case, the court built on its decision in Trinity Lutheran, holding that Montana’s application of its no-aid provision to its scholarship tax credit program discriminates against religious schools and parents who wish to send their children to religious schools. Such discrimination would need to withstand strict scrutiny to be upheld—that is, it would need to be narrowly tailored to achieve a government interest “of the highest order.” The court found that Montana did not meet that standard.

The Espinoza case addressed two important clauses of the First Amendment: the establishment clause, prohibiting state and federal laws “respecting an establishment of religion,” and the free exercise clause, barring laws “prohibiting the free exercise [of religion].” With this decision, the court upheld previous findings that school choice programs supporting religious schools do not violate the establishment clause. Furthermore, the court found that programs that exclude religious schools do violate the free exercise clause.

What Does This Mean for States?

This decision establishes a uniform standard of interpretation for state no-aid provisions, prohibiting most states from excluding religious schools in their school choice programs. Based on a review of state constitutions and jurisprudence, the Institute for Justice found that all but six states will be required to include religious schools in school choice programs.

While the decision is written to apply to Montana’s scholarship tax credit program, it establishes a precedent that is likely to strike down school voucher programs and other state programs that exclude religious schools and institutions. The decision weakens state no-aid provisions that have been broadly applied – an initial review indicates that at least 18 states will be affected.

School choice advocates have hailed Espinoza as a victory for religious freedom and parental choice. Critics have expressed alarm that the decision may expand the public role in funding religious schools or further segregate schools. As legislators continue to innovate and experiment with school choice policies, last week’s decision has changed the landscape for religious schools’ place in the network of education providers. 

Benjamin Olneck-Brown is a research analyst in NCSL’s Education Program.

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