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Montana School Choice

Montana Moms Sue to Restore School Choice

The Institute for Justice recently won a ruling in a Montana trial court that protects that state’s new tax-credit scholarship program. IJ had sued to protect the program after the Montana Department of Revenue had tried to prevent families participating in the program from using the scholarship at religious schools. Because of the court’s ruling, participating families can now send their children to the private school of their choice—regardless of whether it is religious or nonreligious. The Department has filed an appeal.

The controversy began in May 2015, when the Montana legislature passed its first school choice program. The program provides a modest tax credit (up to $150 annually) to individuals and businesses who donate to private scholarship organizations. Those scholarship organizations (SOs) then use the donations to give scholarships to families who want to send their children to private schools.

The Montana Department of Revenue, however, refused to implement the program as the legislature intended. Instead, the Department passed an administrative rule that limits program scholarships to only those who wish to attend nonreligious private schools, and excludes those who wish to attend religious private schools. As most of the private schools in the state are religious, this rule denies genuine choice to the participating families and virtually guarantees the program’s failure.

Not only is the rule unfair, but it was also invalid and unconstitutional. The rule exceeds the Department’s authority by contradicting the clear intent of the legislature to make scholarships available for students to attend all private schools. The rule also discriminates against religion in violation of both the Montana and federal Constitutions’ Religion and Equal Protection Clauses.

On December 16, 2015, three Montana families joined with the Institute for Justice in filing a constitutional lawsuit against the Department of Revenue in Flathead County Court. The lawsuit asked the Court to strike the rule down and restore Montana’s school choice program.

In March 2016, Montana District Court Judge David Ortley issued a preliminary injunction, prohibiting the Department of Revenue from enforcing the discriminatory rule while the case was pending. The court issued the injunction after finding that the rule was “likely” unconstitutional. On May 13, 2016, the Institute for Justice filed a summary judgment motion asking the court to make a final determination on the rule’s unconstitutionality.

On June 19, 2017, Montana District Court Judge Heidi Ulbricht ruled that the rule was invalid and permanently enjoined the rule’s enforcement. Families across the state celebrated. The Department appealed on August 17, 2017 and a briefing at the Montana Supreme Court was held on February 12, 2018.

Individuals and businesses interested in donating to the program and receiving a tax-credit should go here: https://www.bigskyscholarships.org/donate.

Montana School Choice

Kendra Espinoza

Date Filed

December 16, 2015

Original Court

Flathead County Court

Current Court

Montana Supreme Court

Case Status



Media Contact

  • Andrew Wimer
    Assistant Director of Communications

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Case Team

Timeline and Case Documents


On May 8, 2015, Montana followed the lead of 27 other states and the District of Columbia and enacted a private school choice program. The program is designed to give tuition scholarships to families so that they may send their children to the school that best fits their needs. The Department of Revenue’s new rule, however, would exclude the majority of private schools in the state from participating in the program, just because these schools are religious.

That’s why mothers Kendra Espinoza, Jeri Anderson, and Jaime Schaefer are bringing a lawsuit to challenge the Department’s political and unconstitutional maneuver. The mothers are represented by the nonprofit law firm, the Institute for Justice, which is the national legal champion for school choice.

The Scholarship Program

Montana’s scholarship program will be funded entirely by donations from individuals and businesses to private scholarship organizations. The scholarship organizations (SOs) will use the donations to give scholarships to families who wish to start sending their children to private schools or who have children currently attending such schools. Donors are eligible to receive a modest tax credit for their contribution, up to $150 annually. The state can give a maximum of $3 million of tax credits in the program’s first year.

Students eligible for program scholarships must be Montana residents who are at least 5 years old and not older than 18. SOs can consider a family’s financial need in selecting scholarship recipients. As written by the legislature, SOs must allow the scholarship recipients to attend any private school. The program is set to go into effect on January 1, 2016, at which point, SOs can register with the Department and start accepting donations.

The same type of tax-credit scholarship program has already succeeded in states like Alabama, Arizona, Florida, Georgia, Iowa, Indiana, Kansas, New Hampshire, and Rhode Island.

The Scholarship Program Is Good For Montana Families

The program could be a boon both for families who cannot afford to send their children to the school of their choice and for families who make tremendous financial sacrifices in order to do so. One of these families is Plaintiff Kendra Espinoza and her two daughters, Naomi and Sarah, who live in Flathead County. Naomi is 10 years old and in the 4th grade, and Sarah is 7 years old and in the 2nd grade.

Before her husband unexpectedly left, Kendra homeschooled her daughters. But his leaving threw their lives into turmoil. Their house went into foreclosure, and Kendra had to find a job, starting out as a housekeeper, then eventually as a full time bookkeeper. Kendra also had to put her girls in public school, where Naomi was sometimes bullied and Sarah struggled in her classes.

When Kendra first toured Stillwater Christian School in Kalispell, she nearly cried. Kendra desperately wanted to send her children to Stillwater, but knew she could not afford the tuition on her salary.

So Kendra started working to raise tuition funds. She held two yard sales and auctioned off handmade quilts made by a generous donor. She also found additional work cleaning houses. Naomi even chipped in by getting a job mowing lawns. Adding to the extra funds, Stillwater provided the family with partial financial aid, and the girls began school there in September 2015.

Now Kendra’s girls are flourishing at Stillwater. Her girls love their teachers, and Kendra doesn’t worry about them being bullied or neglected. It gives Kendra great peace of mind to know that her children are happy and safe at Stillwater, and Kendra loves that the school teaches the same values that she teaches at home. But it is still a real financial struggle for Kendra to pay the remaining tuition every month. Kendra often worries that she will not have enough money to make the payments.

Kendra’s daughters would be eligible to receive scholarships under the program to attend Stillwater if not for the Department of Revenue’s new rule. And Kendra’s not alone—parents across Montana, like Jeri and Jaime, also want to take advantage of the new program for their children. Jeri has an 8-year-old daughter, Emma, and Jaime has a 12-year-old daughter, Ellie, and a 9-year-old son, Jake.

The Department of Revenue’s New Discriminatory Rule

On December 14, the Department of Revenue defied the will of the legislature and adopted a rule that forbids parents from using the scholarships to send their children to religious private schools and instead only allows them to be used at secular private schools. As the majority of private schools in Montana are religious, this rule severely restricts parental choice and threatens to cripple the program.

Many submitted both written and oral comments against the rule before it was adopted. Even the State’s own Attorney General’s Office sternly urged the Department against its adoption. But the MEA-MFT President, Eric Feaver, submitted comments in support of the rule.

The Rule is invalid and unconstitutional

The Department lacks the authority to adopt the rule

Under Montana law, state agencies are prohibited from making rules that conflict with either the text or purpose of a statute. Here, the program statute clearly allows families to use their scholarships at any private school. The rule is thus invalid. In fact, after the Department proposed the rule, the legislature conducted a poll of its members that showed that the majority of legislators thought the rule went against the intent of the scholarship program.

The Department claims it has the authority to enact the rule under the Montana Constitution’s Article X, Section 6(1) and Article V, Section 11(5)—but this is incorrect. These provisions prohibit the state from giving grants to religious entities, which the program does not do—for two reasons. First, the program does not give grants to schools, but instead generates scholarships for families. Second, as courts across the country, including Montana’s own courts have concluded, tax credits are not public grants or appropriations. Instead, tax credits merely allow taxpayers to keep more of their own money.

Tellingly, the Department has never interpreted these constitutional provisions to prohibit similar tax benefit programs before. For example, Montana already has four other tax credit programs that, like the scholarship program, may incidentally benefit religious organizations. These include the College Contribution Credit, the Qualified Endowment Credit, the Dependent Care Assistance Credit, and the Elderly Care Credit. Montana also allows tax deductions for donations to religious charities, which according to the courts, are legally indistinguishable from tax credits. There is no logical reason for the Department to allow these other tax benefits, while hindering the scholarship program.

The rule is unconstitutional under both the state and federal constitutions

Worse yet, the rule discriminates against religion in violation of both the state and federal Constitutions. The state and federal Free Exercise, Establishment, and Equal Protection Clauses require government neutrality, not hostility, toward religion. The rule violates these provisions by allowing scholarship recipients to attend virtually any private school except religious ones.

As the U.S. Supreme Court has said, the government cannot discriminate against “a particular religion or . . . religion in general.” Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 532 (1993). The Court has also held that the state must be “neutral in its relations with groups of religious believers and non-believers; it does not require the state to be their adversary. State power is no more to be used so as to handicap religions than it is to favor them.” Everson v. Bd. of Educ., 330 U.S. 1, 18 (1947). As a result, Montana’s Attorney General’s Office has declared that there is a “substantial likelihood that [the Rule] would be held unconstitutional” because it “categorically excludes religious entities from an otherwise neutral benefits program.” The Montana Attorney General’s Office even labeled the rule as not “defensible.”

Moreover, Article X, section 6(1) of the Montana Constitution, also known as Montana’s Blaine Amendment, is in itself constitutionally suspect. This provision bars the state from funding religious schools and was actually added to the Constitution in 1889 to discriminate against Catholic schools at a time of widespread Catholic bigotry. If this provision is now interpreted to discriminate against all religions by barring families from using scholarships at religious schools, then this provision in itself may be unconstitutional under the federal Constitution.

Anyway that you look at it, the Department’s rule cannot legally stand. That’s why a coalition of Montana families is challenging the rule in state court.

“This case is important on a national level as well. Many states have Blaine Amendments like Montana’s, and opponents of school choice are drawing upon these relics of past discrimination to try to cripple the modern and innovative reform of school choice. Beating back the Department of Revenue’s rule will be another defeat for them. In fact, the Institute for Justice currently has a cert petition at the U.S. Supreme Court that challenges a Colorado Supreme Court decision that relies on a Blaine Amendment to exclude religious options from the Douglas County school choice program. The sooner the U.S. Supreme Court ends this discriminatory exclusion, the better off American families will be. “

The Plaintiffs

The Plaintiffs are three Montana mothers who currently struggle to send their children to private school: Kendra Espinoza, Jeri Ellen Anderson, and Jaime Schaefer.

The Defendants

The Defendants are the Montana Department of Revenue and its director, Mike Kadas.

The Claims and Requested Relief

The Plaintiff families are bringing several claims against the Department of Revenue’s rule. The first claim is that the rule exceeds the Department’s authority and is therefore invalid. The other claims are that the rule is unconstitutional under the state and federal Free Exercise Clauses, Establishment Clauses, and Equal Protection Clauses.

The families seek a declaration stating that the rule is invalid and/or unconstitutional, as well as a permanent injunction stopping the Department from enforcing it. The families are also asking for a preliminary injunction that would prevent the rule from going into effect during the pendency of litigation.

The Litigation Team

The litigation team consists of Institute for Justice Senior Attorney Dick Komer[1] and Institute for Justice Attorney Erica Smith.[2]

About the Institute for Justice

The Institute for Justice is the national law firm for protecting school choice. Since its founding 25 years ago, 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.[3] It currently has four other school choice cases pending in Colorado,[4] Georgia,[5] Florida,[6] and Nevada.[7]

The Plaintiffs are also represented by Bill Mercer of Holland & Hart LLP in Billings, who is serving as local counsel in the case.

[1] http://ij.org/staff/dick-komer/.

[2] http://ij.org/staff/esmith/.

[3] Zelman v. Simmons-Harris, 536 U.S. 639 (2002); Arizona Christian School Tuition Organization v. Winn, 563 U.S. 125 (2011).

[4] http://ij.org/case/douglas-co-colorados-scholarship-program/.

[5] http://ij.org/case/ga-school-choice/.

[6] http://ij.org/case/florida-school-choice/.

[7] http://ij.org/case/nevada-school-choice/.

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