Phoenix—Under a ruling today from the Ninth U.S. Circuit Court of Appeals, scholarship tax credit programs remain constitutional under the Establishment Clause of the U.S. Constitution.  However, the court said that allowing participating organizations to give scholarships to only religious schools, as a program in Arizona does, is unconstitutional because it limits parental choice.

The court was considering a challenge to a 10-year-old Arizona program that encourages individuals to donate to organizations that provide private-school scholarships.  The court did not halt the program or strike it down, but instead sent the case back to federal trial court to determine whether in fact scholarship organizations are limiting scholarship awards in an unconstitutional way.

“This is a narrow ruling that affirms that school choice tax credit programs are constitutional, but unfortunately limits the way in which scholarship organizations may participate and offer scholarships,” said Tim Keller, executive director of the Institute for Justice Arizona Chapter, which is defending the program on behalf of parents and the Arizona School Choice Trust, a scholarship-granting organization.  “The court is right that school choice programs must be both religiously neutral—neither favoring nor disfavoring religion—and offer parents the choice of a wide array of educational options.  But the court is wrong to suggest that Arizona’s program in any way limits parental choice.”

Indeed, Arizona’s individual tax credit program offers both taxpayers and parents a wide array of choices.   Taxpayers may choose to donate to any of 55 scholarship organizations, some religious and some non-religious, or choose not to donate at all.  Parents are free to apply to any scholarship organization and, by extension, can receive scholarships to a wide array of schools.  In 2008, 373 private schools had children with tax-credit scholarships.  The government in no way prefers religious groups or schools, but allows all to participate equally.

“Under the U.S. Supreme Court’s 2002 ruling in Zelman v. Simmons-Harris, which upheld a school choice program in Cleveland, the question is whether the government is doing anything to limit parents’ educational options,” said Keller.  “With Arizona’s program, the answer is clearly no.  This program offers choice for all, and it is wrong to suggest that the Constitution requires excluding religious organizations.”

IJ and its clients are considering options for appeal.

More than 28,000 Arizona schoolchildren participate in the program, and last year Arizona taxpayers donated more than $55 million to support their scholarships.

“Arizona is an example to the nation that school choice works to provide better educational options for families,” said Keller. “School choice in Arizona will continue to flourish and expand.”