The Battle After Blaine

Courts across the United States have been chewing on various aspects of the constitutional debate surrounding educational choice for decades, and parental freedom has prevailed in the overwhelming majority of those cases. Now, the U.S. Supreme Court is primed to use the Espinoza v. MT Dept. of Revenue case to settle the largest and longest-standing legal debate related to K-12 scholarship programs: whether state constitutional Blaine Amendments can be used to deny scholarship families the ability to choose faith-based private schools.

But will that ruling be the end of the conversation? Not if the teachers unions have anything to say about. Today, we’ll take a look at a raft of ballot initiatives in Missouri designed to circumvent the anticipated anti-Blaine ruling in Espinoza.

Blaine Refresher

For those just tuning in, Blaine Amendments are state constitutional provisions forbidding aid to “sectarian” schools and institutions. More than three dozen state constitutions include some type of Blaine Amendment in their constitution. And because most K-12 scholarship programs typically include faith-based education providers, these provisions are very often used by the teachers unions and other opponents of K-12 scholarship programs to launch legal attacks under the guise of maintaining the “separation of church and state.”

In reality, Blaine Amendments have little to do with preserving American ideals. They are discriminatory relics rooted in politically charged anti-immigrant and anti-minority sentiment from the 1800s. Today, they are most often used to deny people and education providers of faith access to otherwise available public benefit programs—including K-12 scholarship programs.

The constitutionality of allowing faith-based schools to participate in public benefit programs is well established under the First Amendment (see here, here, and here). Whether these programs violate the “separation of church and state” articulated by opponents is not in question—they do not. Instead, the opposite question now stands before the U.S. Supreme Court: whether forbidding parents from using K-12 scholarships at faith-based schools violates those parents’ rights to religious freedom under the First Amendment.

Espinoza Ruling

The U.S. Supreme Court will hear oral arguments in the Espinoza case early next year. Following the U.S. Supreme Court’s 2017 Trinity Lutheran decision, it seems very likely that the justices will use Espinoza as a way to finally settle the Blaine argument once and for all. Indeed, ACE Scholarships joined dozens of other organizations in filing an amicus brief asking the court to do exactly that. 

A ruling that Blaine Amendments can no longer be used to discriminate against parents or schools of faith in K-12 scholarship programs would be the most important education-related ruling since Brown v. Board of Education in 1954. It would also settle a debate that has been raging for the better part of two centuries.

Missouri Initiatives

Proponents of parental freedom and choice in education are not the only ones watching Espinoza closely. And they’re not the only ones anticipating a broad ruling against Blaine Amendments as they have been applied thus far.

The national and state teachers unions, who most often launch and bankroll legal attacks against K-12 scholarship programs across the country, understand that Espinoza could be a watershed moment in American education. And they’re taking serious—and seriously sophisticated steps—to make sure that moment does not compromise their ability to maintain a stranglehold on education systems nationwide.

Enter Missouri, where the Missouri NEA, a state affiliate of the goliath National Education Association, has filed six 2020 ballot initiatives (2020-117 through 2020-122 on this list) designed specifically to circumvent the most likely legal rationale for the impending SCOTUS ruling in Espinoza.

Each of these initiatives is slightly different, and it’s not yet clear which, if any, will make it through signature gathering and onto the 2020 ballot. However, all of the initiatives frame themselves around the misleading language of “equitably and adequately” funding public education in Missouri. In reality, that laudable goal is a Trojan horse. The union’s real intent is to forbid the state of Missouri from ever adopting a K-12 scholarship program regardless of any ruling in Espinoza.

To that end, the initiatives seek to do three important things:

  • Sidestep a court ruling forbidding discrimination against people of faith by permanently forbidding any scholarships or other funding from going to any private school, religious or non-religious, in Missouri
  • Ignore prevailing legal logic and regulate tax-credit-incentivized private giving toward K-12 scholarships as public funds, thereby forbidding the state from ever adopting a scholarship tax credit program. These programs, which provide state tax credits for private contributions to nonprofits like ACE Scholarships, are extremely popular with the public on both sides of the aisle and currently serve nearly 300,000 students across 18 states. Courts have nearly universally held that private contributions to such programs, including those incentivized with tax credits, do not constitute public money and therefore cannot be easily challenged in court.
  • Grant standing to sue to parties traditionally found to lack such standing, including any taxpayers, public school student, or school district. In general, lawsuits against scholarship tax credit programs brought by these parties—nearly always at the behest and direction of the unions—are thrown out of court because the parties cannot demonstrate direct harm from private contributions to private nonprofits. In essence, the union is granting itself the eternal and unlimited ability to sue any K-12 scholarship program in Missouri.

What Now?

Any of these initiatives would have the effect of permanently blocking disadvantaged Missouri students from accessing high-quality private schools through a state K-12 scholarship program. If successful, they would also create a roadmap for unions and others who would like to see any SCOTUS ruling against Blaine Amendments undermined in their own states.

ACE Scholarships, which serves approximately 150 students in Kansas City, Missouri, filed a public comment with the Missouri Secretary of State asking that any language circulated in relation to these questions explicitly tell voters that they are designed to cripple educational opportunity, not to ensure “adequate and equitable” public school funding. A number of our Missouri partner schools and several other organizations also submitted comments.

Missouri’s initiative process is complex. If and when the petitions are approved for circulation, the Missouri NEA will have until May to collect signatures from eight percent of the legal voters in six of Missouri’s eight congressional districts. If they succeed, the initiatives would move the final phase of hearings before being officially placed on the ballot.

ACE will be watching these initiatives closely as they work their way through the system and participating in that process wherever possible. If you would like to learn more, please contact Ross Izard at rizard@acescholarships.org.

 

 

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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.

Parental Choice as a Human Right?

 

So much has been written about parental choice in education that it can sometimes feel like every article is just an iteration of every other. Occasionally, though, someone publishes a that examines the issue from a totally new (and totally unexpected) angle. Case in point: a recent Education Post article on school choice as a human right.

Folks cite all sorts of documents in support of or opposition to broad-spectrum choice in education—the U.S. Constitution, state constitutions, various statutes, regulations, founding documents, etc. The Universal Declaration of Human Rights (UDHR), however, is rarely among them. The United Nations doesn’t exactly wade into many debates over education policy.

Former teacher Joe Nathan argues in his article that choice supporters may be missing an important argument by failing to recognize Article 26 of the UDHR when advocating for expanded educational options. That article reads:

  • Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
  • Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
  • Parents have a prior right to choose the kind of education that shall be given to their children.

Nathan specifically highlights the third point, which flatly states that parents have a “prior right” to choose what type of education their children receive. That right stands equal among others with which we are all familiar: the right to free association, the right to fair and equitable legal systems, and the right to life, liberty, and security of person.

The declaration stops short of calling for specific policy solutions, but it is rather unequivocal in its call for parental empowerment. Given the breadth of language, it is surprising that Nathan goes on to say that he opposes private school choice programs. He cites two primary reasons for this opposition, one about faith-based education and one about admissions practices in schools receiving “public funds.” Through these points of contention, he seems to imply that choices should be limited to those provided in the public education sector (and even then, he opposes public magnet schools for certain types of children).

In point of fact, scholarship tax credit programs, which are the most widely used form of private school choice, rely solely on private funding rather than state money. But even setting aside that important caveat, I think Nathan misses the mark on this point.

The UDHR does not state that parents have a prior right to choose the type of “public” education their children will receive. It also does not state that parents should be free to choose among only secular options, or that schools with more rigorous admissions processes should be excluded. It says that parents have a prior right to make choices about “education,” period. If we’re talking about a broadly applicable human right, attempting to limit it or oppose certain iterations of it seems both dangerous and contrary to the spirit of the document being cited. After all, “prior rights” can’t be revoked or circumscribed. That’s kind of the point.

The UDHR itself seems to agree, stating specifically in Article 2 that the rights apply to everyone “without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.” It would be very difficult to argue that restricting the types of schools parents have a right to choose would not draw a “distinction of any kind” based on certain beliefs or opinions. Parents ought to have access to the educational options that work best for their children, full stop. Whether those options are provided in the public or private sectors is immaterial.

Setting aside specific policy disagreements, however, Nathan has done the choice debate a service by framing it in a different light. Now if you’ll excuse us, we have human rights to fight for.

 

Thousands Voice Opinions on IRS Proposed Rule

Back in August, the IRS issued a proposed rule on federal charitable contribution deductions under state tax credit programs. For a refresher on this rule and its implications, see our previous post on the topic. For those just tuning in, the short version is that the IRS is considering a regulatory change that would forbid donors from receiving both a state tax credit and a federal charitable contribution deduction for the same gift.

The federal rulemaking process is a complicated one, as you can see below. The process for this rule has been slightly different because of a special agreement reached between the White House Office of Management and Budget and the Department of the Treasury regarding the implementation of the Tax Cuts and Jobs Act.

The public comment period (about halfway down the chart) on the proposed rule officially ended earlier this month. All told, nearly 8,000 individuals and organizations submitted comments on the rule. Unfortunately, many of these comments were submitted by opponents of parental choice in education—opponents who are thrilled at the prospect that the proposed rule could damage longstanding scholarship tax credit programs.

The negative comments tended to follow a template that offered little in the way of practical input. Instead, they thanked the IRS for the “ending of a tax shelter that allows taxpayers to turn a profit when they fund private schools through state tuition tax credit programs.” While there is a valid argument to be made that donors should not be able to “profit” from charitable contributions, these folks fail to mention that the scholarship programs they are targeting serve nearly 300,000 students nationwide.

Opponents were not the only ones who showed up to make their voices heard. Dozens of organizations and hundreds of individuals who support or benefit from scholarship programs submitted their own comments. Many of these comments criticized the IRS for failing to distinguish private charities from government-run workaround entities. Others offered substantive suggestions on how to avoid harming disadvantaged scholarship students as the rule moves forward.

ACE worked with its partner schools and scholarship families in Kansas and Louisiana to submit hundreds of comments asking the agency to consider ways to mitigate negative impacts on scholarship students. ACE also submitted a more detailed comment to the IRS making the following points:

  • Because the problem the IRS is seeking to address were created by federal legislation, allowing Congress to address the issue may be more appropriate (and effective) than a blanket regulatory solution.
  • The IRS should consider a phased implementation that would minimize shocks to existing scholarship programs.
  • If a phased implementation is not possible, the IRS should at the very least delay the rule’s effective date.

The IRS is currently reviewing comments on the rule, and will hear direct testimony on the issue at a Nov. 5 hearing in Washington, D.C.  After that, the agency will begin revising the rule into its final form before another round of review. ACE will continue watching the process closely as the rule moves toward finalization.

Explaining the IRS Proposed Rule on Charitable Contribution Deductions

On August 23, the IRS issued a long-awaited proposed rule on federal charitable contribution deductions under state tax credit programs. The rule was originally intended to address schemes in high-tax states to circumvent new federal restrictions on the deductibility of state and local taxes (SALT). So, how did it come to affect private school choice programs? And what happens next?

The Tax Cuts and Jobs Act, passed in late 2017, limited the amount of state and local taxes taxpayers can deduct each year to $10,000. Unsurprisingly, this new cap caused a fair amount of consternation among high-wealth individuals who could no longer deduct the full amount of their state and local taxes from their federal tax bill.

In response, several states—New York, Connecticut, and New Jersey—set up government-run “charities” that allowed taxpayers to make payments in lieu of taxes. These taxpayers received state tax credits for their gifts in addition to a federal charitable contribution deduction, effectively allowing them to preserve their tax breaks despite the SALT cap.

Meanwhile, it became clear that the imposition of the SALT cap messed with tax formulas in way that allowed some donors to receive tax benefits in excess of their contributions when those donors claimed both a state tax credit and a federal deduction for the same gift. Opponents of school choice wasted no time capitalizing on the issue, writing letters (and even full-length white papers) arguing that the IRS should write any rule addressing SALT cap workaround schemes broadly enough to also include scholarship tax credit programs.

Unfortunately, that is exactly what the agency did. U.S. Secretary of the Treasury Steve Mnuchin issued a (very) carefully worded statement implying that the rule was designed not to impact state school choice programs. But while technically accurate in its statistics, that statement was misleading; the rule does indeed affect scholarship tax credit programs like the ones in which ACE participates in Kansas and Louisiana.

With only a few exceptions, the IRS rule means that donors will no longer be able to claim a state tax credit and a federal deduction for the same gift. This restriction applies across the board, impacting conservation, historical preservation, medical, and other credits in addition to school choice programs.

So, what happens now? First comes a 45-day public comment period, which closes on October 11, followed by a public hearing on November 5. Additional rounds of review by federal agencies will follow. If approved in its current form, the rule’s new restrictions would retroactively apply to donations made on or after August 28, 2018.

National school choice groups have taken different positions on the rule, with some arguing that full federal deductions should be preserved and others supporting the substance of the rule while asking for a delayed effective date.

ACE Scholarships is following this issue closely and will be participating in the public comment process on behalf of our Louisiana and Kansas scholarship families. Stay tuned for more on that front.

The Constitutionality of K-12 Private School Choice

Opponents of programs that expand access K-12 private school scholarships often cite the “separation of church and state” as a reason for their opposition. The misinterpretation of this concept often leads to discriminatory—and unconstitutional—attempts to exclude faith-based schools from choice programs. So, what does the Constitution say about this important issue?

One of the largest problems with “separation of church and state” arguments is that those words do not exist in the U.S. Constitution. Instead, we have a single sentence setting forth the First Amendment’s religious protections through the Establishment Clause and Free Exercise Clause. The sentence reads:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…”

The second half of the sentence is the Free Exercise Clause, which protects the right of Americans to hold religious beliefs and engage in religious activities. The first half of the sentence is the Establishment Clause. This clause prohibits the establishment of a government-sanctioned religion and requires that the government maintain neutrality between different religions.

“Church and state” arguments against choice stem from a misinterpretation of the Establishment Clause under which opponents argue that any monetary or other aid, including incidental aid, to faith-based organizations is strictly forbidden.

This definition does not hold up to even light scrutiny. Governments at a wide variety of levels already provide aid to faith-based institutions—hospitals, universities, preschools, etc.—through Medicaid, Pell Grants, GI Bill tuition assistance, early-childhood grants, and other programs.  Notably, these programs are almost never the subject of exclusionary rules aimed at faith-based schools in the K-12 space.

In truth, courts long ago made clear that government’s primary constitutional responsibility when it comes to religion is to guarantee neutrality. In Zelman v. Simmons-Harris (2002), the U.S. Supreme Court upheld a publicly funded K-12 scholarship program that allowed students to attend faith-based private schools. In that decision, the majority opinion found that:

“This court’s jurisprudence makes clear that a government aid program is not readily subject to challenge under the Establishment Clause if it is neutral with respect to religion and provides assistance directly to a broad class of citizens who, in turn, direct government aid to religious schools wholly as a result of their own genuine and independent private choice.”

The U.S. Supreme Court also upheld scholarship tax credit programs, which rely on private funding incentivized by state tax credits, under the Establishment Clause in Arizona Christian School Tuition Organization v. Winn (2011). ACE participates in similar tax credit programs in both Kansas and Louisiana.

Despite (or because of) their clear constitutionality under the U.S. Constitution, some opponents have tried to exclude faith-based schools from choice programs under state constitutional clauses prohibiting state aid to “sectarian” institutions. Called Blaine Amendments, these clauses exist in 38 state constitutions. They are deeply rooted in history of religious discrimination.

The U.S. Supreme Court came close to declaring Blaine Amendments themselves unconstitutional in Trinity Lutheran v. Comer (2017). Now, two new cases in Washington and Maine are also tackling the issue of religious discrimination. And, of course, we expect any day to see a Montana Supreme Court ruling in Espinoza v. Montana Department of Revenue that could trigger a reevaluation of the issue by SCOTUS. ACE has engaged heavily around that case to support the plaintiff parents.

Public debates continue, but the legal argument is largely settled: K-12 private school scholarship programs are constitutional, and they are here to stay.