HELENA, Mont.—Tomorrow, Montana Gov. Greg Gianforte is expected to sign HB 279, a bill dramatically expanding the state’s educational choice program and allowing hundreds more children to participate. The program offers students scholarships to attend the private school of their choice and is funded by private donations for which the donor may claim a tax credit. The new law increases the amount of the tax credit a donor may claim from $150 to $200,000. This is the latest development in a multiyear legal saga over the program, which culminated in the 2020 landmark U.S. Supreme Court ruling Espinoza v. Montana Department of Revenue. The new law makes Montana one of 11 states to provide greater parental choice in 2021.

“Now, hundreds more children in Montana will have the opportunity to attend the school that best meets their needs,” said Institute for Justice (IJ) Senior Attorney Erica Smith. “Public schools work fine for many students, but other students struggle in their assigned school. This bill will help those children choose a school that works best for them, be it public, private or religious.” Smith testified in support of the bill at the Montana Legislature and represented the plaintiff families in the Espinoza case.

The Montana Legislature initially passed the tax-credit scholarship program in 2015. The program enabled taxpayers to receive a $150 tax credit in exchange for donating to nonprofit scholarship organizations. These organizations provide scholarships to low-income students and students with disabilities whose parents believe that an alternative to their public school will best serve their children’s interests.

Immediately after the program passed, however, it went to court. The Montana Department of Revenue adopted a rule banning scholarships for students attending religious schools. As a result, the Institute for Justice teamed up with three families who wanted to use the scholarships to attend religious schools and sued the Department. The case wound its way all the way to the U.S. Supreme Court.

In a landmark 5-4 ruling, the Court ruled that a state cannot exclude religious options from an educational choice program. The Court held that barring religious options from such programs violates the First Amendment’s protections for religious liberty. Educational choice programs require the state to remain neutral regarding religious options and allow families to choose the educational placement that works best for their families.

Although the program received nationwide attention, it was still small compared to dozens of other educational choice programs nationwide. Only about 50 students participated annually, receiving only $500 scholarships each. Its small size was due to the legal cloud hovering over the program, as well as the low amount of the tax-credit—$150.

Now, with the legal issues resolved, the Legislature chose to expand the program. Under HB 279, individual and business taxpayers will be able to donate up to $200,000 annually to scholarship granting organizations in exchange for a tax credit. This will allow many more children to participate in the program. The program is capped at $1,000,000 in available tax credits for 2022, and $2,000,000 for 2023, but it can expand in future years if the program proves popular. The law goes into effect immediately.

With the new law, Montana joins many states in providing greater parental choice to families since the Espinoza decision. So far in 2021, five other states (Arkansas, Indiana, Kentucky, Missouri, and West Virginia) have passed legislation to create new educational choice programs. In addition, seven states (Arkansas, Florida, Georgia, Indiana, Kansas, Maryland, and South Dakota) have passed legislation to expand their existing programs.

“We are overjoyed to see our legal victory in Espinoza make a real difference in lives of children nationwide,” said IJ President and General Counsel Scott Bullock. “We hope that in the coming years, many more states will take advantage of the solid legal footing we have been able to establish for educational choice programs.”