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Espinoza v. Montana Department of Revenue

Montana Moms Seek to Restore School Choice Program that was Struck Down for Including Religious Options

In early 2020, the U.S. Supreme Court will hear one of the most important education reform cases in the past half century. The case, Espinoza v. Montana Department of Revenue, will decide if states may discriminate against religious options in generally available scholarship programs. The U.S. Supreme Court already ruled in 2002 that allowing such options is permissible under the federal Constitution. The question now is whether the state can exclude such options. The case was accepted by the High Court after the Montana Supreme Court struck down that state’s new scholarship tax-credit program in 2018 under its state constitution solely because some of the children receiving scholarships attend religious schools. The Institute for Justice (IJ) appealed the decision on behalf of three parents and their children who wish to use the scholarships to attend a Christian school in Kalispell, Montana, arguing that the Montana Supreme Court’s decision violates the Free Exercise, Equal Protection and Establishment Clauses of the U.S. Constitution. The case will be argued in early 2020 and a decision will be announced by the end of June 2020.

In 2015, the Montana Legislature passed a program that provided a tax break to Montanans if they contributed to charitable organizations that provide scholarships for children. The program allowed families to use those scholarships at any private school in Montana—religious or nonreligious. But the Montana Department of Revenue interpreted the state constitution to forbid the participation of religious schools. Representing families who were unable to participate in the program because they send their children to religious schools as well as one family who was able to use the scholarship before it was suspended, the Institute for Justice sued and won on their behalf at the trial court. But the Montana Supreme Court reversed that ruling and declared that the entire program was invalid because it included religious options for parents. By striking down the entire program, even for those children attending secular private schools, the court made the impact of the discrimination even worse. Thankfully, families were permitted to continue receiving scholarships through the 2019-2020 school year.

A video news release about this case in which the Montana school choice moms and their attorneys from the Institute for Justice discuss this case and its importance is available here.

Espinoza v. Montana Department of Revenue

Date Filed

December 16, 2015

Original Court

Flathead County Court

Current Court

U.S. Supreme Court

Case Status

Open

Attorneys

Media Contact

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Case Team

Timeline and Case Documents

Introduction

In 2015, Montana followed the example of 27 other states and the District of Columbia when it enacted a private school choice program. The program was designed to give tuition scholarships to families so that they could send their children to the school that best fit their individual needs, whether that school was secular or religious. The Montana Supreme Court, however, struck down the program in December 2018 because the program allowed families to use scholarships at religious schools, even though parents—and not the government—decided where to use these scholarship funds.

The Scholarship Program

The purpose of Montana’s scholarship program was “to provide parental and student choice in education” for K–12 students. It did so by providing a modest tax credit—up to $150 annually—to individuals and businesses who donated to private, nonprofit scholarship organizations. Scholarship organizations then used the donations to give scholarships to families who wished to send their children to private school. Parents then selected among any “qualified education provider,” which was broadly defined to include virtually every private school in the state—religious or secular.

Big Sky Scholarships is a scholarship organization that was formed to participate in the scholarship program. Big Sky is a small nonprofit run by part-time and volunteer staff. Big Sky awarded scholarships only to families who were low income or who have children with disabilities. Its scholarship recipients attended both religious and nonreligious schools.

Shortly after the program was enacted, however, the Montana Department of Revenue imposed an administrative rule that prohibited scholarship recipients from using their scholarships at religious schools. According to the Department, the rule was necessary to comply with the Montana Constitution. Article X, Section 6 of the Montana Constitution, also known as Montana’s “Blaine Amendment,” prohibits the government from giving public money to aid religious schools. The Department of Revenue imposed this administrative rule even though it was parents—not the government—who decided at what schools to use the scholarships, thus making the program religiously neutral.

The rule threatened the success of the program. About 70% of Montana private schools for K–12 students are religious, and excluding them severely limited the choices of families. Three of these families are the petitioners who have appealed this case to the U.S. Supreme Court. Represented by the Institute for Justice, these families filed suit to block the implementation of the rule.

In May 2017, the trial court enjoined the rule. The Department of Revenue appealed the decision to the Montana Supreme Court.

In a 5–2 decision in December 2018, the Montana Supreme Court agreed with the families that the Department of Revenue was without power to pass a rule that fundamentally conflicted with the text of the scholarship program. But it nevertheless reversed the lower court’s ruling, reaching three dramatic conclusions.

First, the court found that the program’s inclusion of religious schools violated the Montana Constitution. Specifically, the court found that by providing the $150 tax credit to donors of the program, the Legislature “indirectly pa[id] tuition at private, religiously-affiliated schools” and thus aided religious schools in violation of Article X, Section 6 of the Montana Constitution.

Second, the court found that the inclusion of religious schools tainted the entire scholarship program and that even scholarships for children at nonreligious schools could not continue under the program. According to the court, “there is no mechanism within the [program] to identify where [its] secular purpose ends and the sectarian begins” or “when the tax credit is indirectly paying tuition at a secular school and when the tax credit is indirectly paying tuition at a sectarian school.” As a result, the court invalidated the entire scholarship program.

Finally, the court rejected the families’ claim that interpreting the Montana Constitution to prohibit scholarships for children at religious schools violated the U.S. Constitution.

Two justices dissented. Both expressed deep concern that the court’s opinion ran afoul of the First Amendment. As one dissenting justice wrote, quoting from a recent U.S. Supreme Court decision, “[t]he exclusion of a group ‘from a public benefit for which it is otherwise qualified, solely because it is a church, is odious to our Constitution.’”

In December 2018, the families asked the Montana Supreme Court to delay the effective date of its decision pending appeal to the U.S. Supreme Court. They argued that dozens of families were expecting to apply for scholarships in the spring of 2019 and receive them that summer, and that depriving them of these scholarships would be devastating.

In January 2019, the court granted a partial stay of the program, allowing Big Sky Scholarships to award its current scholarship funds in the summer of 2019 but prohibiting it from doing any further fundraising with the tax credits. Big Sky raised enough money to fund scholarships to only 40 students.

In March 2019, the families asked the U.S. Supreme Court to review their case. They argued that striking down the scholarship program just because it included religious schools violated the U.S. Constitution’s protections for religious liberty contained in the Free Exercise, Establishment and Equal Protection Clauses. The Supreme Court granted certiorari in June 2019.

Legal Arguments

As the parents argue, the Free Exercise, Establishment, and Equal Protection Clauses all demand that the government show neutrality—not hostility—toward religion in student-aid programs. Prohibiting all religious options in otherwise generally available student-aid programs rejects that neutrality and discriminates against religion.

In addition, Article X, Section 6 itself raises serious constitutional concerns. The historical record shows that this provision was originally adopted—along with dozens of other so called “Blaine Amendments” in the Nineteenth Century—to preserve funding for the Protestant-oriented public schools and to suppress Catholicism and Catholic schooling. The Montana Supreme Court’s application of Article X, Section 6(1) now extends the discrimination behind the provision to all religions.

The Petitioners Fighting to Preserve the Program         

The petitioners in this case are Kendra Espinoza, Jeri Anderson and Jaime Schaefer. They are all mothers with modest incomes who were counting on the program scholarships to keep their children in Stillwater Christian School, a nondenominational school in Kalispell, Montana. Although all three receive financial aid from the school, they still struggle to make their monthly tuition payments.

Kendra Espinoza

Kendra Espinoza is a single mom who transferred her two daughters out of public school after her youngest struggled in her classes and her oldest was teased and sometimes bullied by her classmates. Kendra is a Christian and chose to send her daughters to Stillwater for its religious values, strong academics and tight-knit community. Kendra’s daughters, Naomi and Sarah, are flourishing at Stillwater.

Yet Kendra struggles to pay Stillwater’s tuition. She has worked nights as a janitor, in addition to her full-time job as an office assistant, just to afford the monthly tuition payments. Kendra has also had to raise tuition money from her community by raffling off donated quilts and holding yard sales, and Kendra’s daughters have chipped in by taking odd jobs. Kendra was counting on receiving the program scholarships this year to ease her family’s burden. Without the scholarships, Kendra may have to pull her children out of Stillwater.

Jeri Anderson     

Like Kendra, Jeri Anderson is a single mom struggling to pay Stillwater’s tuition for her daughter, Emma. Jeri adopted Emma from China, and Emma is academically gifted. Jeri chose to send her to Stillwater for its academics, and Emma thrives on the individualized attention she receives from her teachers, who guide her in advanced studies. Yet even though Stillwater has been generous with its financial aid for Emma, Jeri says, “Paying the remaining tuition every month is still a serious struggle,” and she “worries about it constantly.” Fortunately, Jeri was able to rely on the program scholarships since 2017 to make ends meet. Without the scholarships, Jeri and her daughter would suffer even greater financial hardship.

Jaime Schaefer

Jaime Schaefer also struggles to pay tuition for her son and daughter to attend Stillwater. Jaime and her husband transferred their daughter out of a public school after they became disappointed with its curriculum. Jaimie now sends both her children to Stillwater, where she has been impressed by its academic rigor and music program. Paying the tuition, however, “is like a second mortgage payment,” and “it is a year-by-year decision” whether the Schaefers can keep their children there. Jaimie was counting on the scholarships for “significant financial and psychological relief.”

These parents’ stories are not unique. They echo those of dozens of other Montana families who are relying on the scholarships to make tuition payments, including families living in poverty and those with disabled children.

The Institute for Justice Litigation Team

CASE TEAM

The Institute for Justice’s litigation team for this case consists of Institute for Justice Senior Attorney Richard Komer, who will argue the case before the High Court, as well as IJ Attorney and co-lead counsel Erica Smith and IJ Senior Attorneys Michael Bindas and Tim Keller.

About the Institute for Justice

The Institute for Justice is the nation’s leading law firm protecting educational choice. Since its founding in 1991, the Institute has successfully defended school choice programs in numerous state supreme courts, intermediate courts of appeal and trial courts, as well as twice in the U.S. Supreme Court.

Journalists seeking more information about this case may visit https://ij.org/case/espinoza-v-montana/ or contact:

John E. Kramer
Vice President for Communications
Institute for Justice
(703) 682-9320 ext. 205
jkramer@ij.org

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