MT Supreme Court Disappoints, but It’s Not All Bad News

 

There’s a first for everything, including state supreme court decisions striking down well-established scholarship tax credit programs.

Last week, the Montana Supreme Court issued a sweeping ruling against the state’s scholarship tax credit program in Espinoza v. Montana Department of Revenue. (You can read ACE’s press release about the ruling here.)

The Espinoza ruling breaks with logic applied in previous U.S. Supreme Court precedent, as well as with state supreme court rulings in Arizona, Alabama, Florida, Georgia, Illinois, and New Hampshire. It marks the first time in American history that a state supreme court has struck down a scholarship tax credit program.

There is an awful lot about this ruling that should make choice advocates and legal scholars frown, but it’s not all bad. Here’s a rundown of the positives and negatives of the Espinoza decision.

The Bad

  • It breaks with widely accepted legal logic to argue that tax-incentivized private donations to private nonprofits somehow constitute taxpayer money.
  • It strikes down the entire scholarship program, even for students who have chosen to take their scholarships to secular schools.
  • Despite attempts at rationalization, it comes down on the side of Montana’s state constitutional Blaine Amendment. Found in 38 state constitutions, Blaine Amendments are deeply rooted in a history of discrimination against religious minorities and immigrants.
  • It makes no effort to accommodate current scholarship students under the tax credit program, who stand to lose their funding as early as this school year.

The Good

  • Ironically, the program’s restrictive design softens this ruling’s impact. With donors only able to receive a tiny $150 tax credit per year, the program was only able to scholarship a small number of students. Hopefully, this will mean that any scholarship students who lose their funding as a result of the ruling will still have access to other scholarship assistance.
  • ACE Scholarships does not participate in the credit program, which means that Montana’s nearly 1,000 ACE scholars will not be affected.
  • As it is written, this decision provides a clear path to a U.S. Supreme Court appeal—an appeal that could finally finish what the high court started in Missouri and Colorado by addressing the constitutionality of Blaine Amendments themselves. A ruling against these relics of a darker time would unshackle hundreds of thousands of children across America.

The Institute for Justice, which has represented plaintiff families in support of the tax credit program since the beginning, has already declared its intention to appeal the decision to the U.S. Supreme Court “immediately.” It is not clear how long that process will take, particularly because the high court accepts only a small percentage of the requests it receives. But the conversation is most certainly coming. In fact, it’s already underway.

As several Montana private school leaders argued in an op-ed earlier this year, the true strength of Montana’s private school community comes from its diversity. If the state wants to support a great education for all students, the best thing it can do is allow parents to choose the educational environments their children need. Here’s hoping SCOTUS will instruct state leaders to do exactly that by reversing this decision.

The Trojan Horse of False “Improvements”

 

Can you improve a scholarship program by gutting it? The Center for American Progress (CAP) seems to think so. The organization recently published a brief laying out a handful of policy ideas to “improve” K-12 private school scholarship programs. Not surprisingly, nearly all of these suggestions would harm rather than help these programs and the kids they serve.

There’s a lot to swallow in the CAP report, so you can read through their entire list of “improvements” at your own leisure. For now, let’s just focus on a few big argumentative rocks.

“Voucher Program” is an inaccurate description of many choice programs. The CAP brief states in the fine print that “For the purposes of this issue brief, references to private school voucher programs are referring to all programs subsidizing private education.” And sure enough, the author uses that label to cover every K-12 scholarship program, regardless of form or mechanism.

The problem with this generalization is that it is objectively inaccurate from a policy perspective. Actual voucher programs use directly appropriated government money to fund K-12 private school scholarships. Scholarship tax credit programs, on the other hand, rely on tax incentives to encourage private giving to private nonprofits that fund scholarships. There is no government money involved. Don’t take my word for it, though. Ask the U.S. Supreme Court or the numerous state supreme courts that have tackled this issue.

Why bring up this point? Because it speaks to the intent of the brief. Someone seriously interested in improving or expanding K-12 scholarship programs would have at least ventured the effort to distinguish between radically different types of programs.

Phasing out programs and choking off scholarship funding is literally the opposite of improvement. CAP acknowledges that hundreds of thousands of students currently make use of private school choice programs (nearly 470,000, to be more precise), and that these families might be upset if someone cut their scholarships in the name of “improvement.” Their solution? Just don’t allow new kids into the programs and let natural attrition run its course.

This suggestion might be worth considering if we had reason to believe that a) we have already met all the current need for expanded access to private options, and b) every single student has access to a high-quality public school. Of course, neither of those things is true. Demand for scholarships exceeds availability by orders of magnitude in most places, and the public school system has made exceedingly little meaningful progress in the past decade.

Throw into the equation the fact that parents choose schools for a huge variety of reasons that may not even involve academics, and you can plainly see that this proposal serves only to neuter opportunity. Disadvantaged families would be hardest hit, as a policy shift like this would effectively trap many of them in schools they are actively trying to escape. Does that sound like progress to you?

Forcing draconian accountability measures onto private providers is both unnecessary and counterproductive. CAP argues that “If private school voucher programs are to receive public support, then the participating private schools should be on level footing with public schools.” It fails to mention, however, that choice programs categorically do not put private schools on equal footing with public schools.

Most programs cap scholarship values at an amounts significantly lower than state per-pupil funding—a design decision that has generated billions of dollars in savings for state governments across the country. Similarly, scholarship students typically make up only a percentage of students in any given private schools. If a school serves only a relative handful of scholarship students and receives only a tiny fraction of resources given to the public system, does it make sense to place it on “level footing” with the public system in terms of regulatory burden?

More importantly, rigid accountability and excessive regulation can have the counterintuitive effect of decreasing the quality of available private options. You can read in detail about this phenomenon here, but here are the CliffsNotes: Heavy regulation often leads high-quality, financially stable providers to decline participation in scholarship programs. Less stable providers, on the other hand, are often more than willing to swallow some extra rules for an infusion of scholarship cash. That’s not exactly a recipe for quality.

There’s a lot more to address in the CAP report, but that will have to wait. For now, I’ll leave you with this advice: Considering what just happened in Florida, lawmakers would be wise to stay away from underhanded attempts to cripple support for disadvantaged families. Instead, they should focus on real solutions designed to help more children achieve their dreams. And hey, if they need a road map of how to truly improve scholarship programs in their states, they could always start by doing exactly the opposite of what the CAP brief suggests.