Montana Court Restores Full School Choice Program

Institute for Justice · April 1, 2016

Kalispell, Mont.—Yesterday, the Flathead County District Court ruled that the Department of Revenue (DOR) can no longer enforce its new rule excluding children attending religious schools from receiving scholarships under Montana’s school-choice program. The Court issued this preliminary injunction to restore the program to the way the legislature intended—which was to allow all low-income families to apply for scholarships to attend the private school of their choice, regardless of whether their chosen school is religious or secular. Judge Ortley said the injunction will stay in place “until further order of this Court.”

“We are very happy the Court recognized that DOR’s Rule likely exceeded the DOR’s authority, as well as jeopardized the religious freedom rights of Montana families,” said Dick Komer, a senior attorney at the Institute for Justice. IJ brought the lawsuit against the DOR on December 15 on behalf of three mothers who currently struggle to send their children to Stillwater Christian School, and who wished to apply for scholarships under the new program.

“I am excited, relieved and so very grateful that my two daughters now have a chance at getting scholarships!” said Kendra Espinoza, one of the plaintiffs. Last year, Kendra fundraised and took on a second job cleaning houses in order to make it possible to send her two daughters to Stillwater Christian School. Now both girls are thriving at Stillwater, and Kendra is encouraged that they will likely have the opportunity to continue there in the fall.

The scholarship program was enacted in May 2015 after the legislature decided that all parents should have the opportunity to choose their children’s schools, regardless of the size of their bank account. 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) will then use the donations to give scholarships to families who want to send their children to private schools.

The DOR claimed it has the authority to enact a rule excluding families attending religious schools under the Montana Constitution’s Article X, Section 6(1) and Article V, Section 11(5)—but the Court found this claim unpersuasive, and for good reason. These provisions merely prohibit the state from giving grants to religious entities, which this program does not do. The program gives scholarships to families, not grants to schools. In addition, courts across the country, including Montana’s own courts, have been clear that tax credits are not public grants. Instead, tax credits merely allow taxpayers to keep more of their own money.

“The Court also recognized that the rule likely violates both the state and federal constitutions because it allows scholarship recipients to attend any private school except religious ones,” said IJ Attorney Erica Smith, who is also representing the mothers suing the program. “That’s discrimination against religion.”

The Court issued the preliminary injunction because it found the rule was “likely” invalid and unconstitutional. The preliminary injunction will allow the state’s only scholarship organization, Big Sky Scholarships, to accept applications for scholarships for students wishing to attend all private schools, religious or nonreligious, during the course of the litigation. If the Court later determines the rule is in fact invalid and unconstitutional, it will strike down the rule and issue a permanent injunction against it.

The Institute for Justice is a nonprofit civil rights organization and is the nation’s law firm for protecting school-choice programs. Since its founding 25 years ago, the Institute has successfully defended school-choice programs numerous times, including twice in the U.S. Supreme Court. It currently has four other school-choice cases pending in Colorado, Georgia, Florida, and Nevada.

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