Institute for Justice · May 26, 2017

Arlington, Va.— In a major victory for Big Sky families, the Flathead County District Court has ruled that the Montana Department of Revenue made a “mistake of law” when it tried to exclude students attending religious schools from the state’s school choice program. As a result, the program is now returned to the way the state Legislature intended—allowing 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. In December 2015, the Institute for Justice and three families who want to apply for scholarships under the program filed a lawsuit against the Department of Revenue.

“The court recognized that it is perfectly constitutional for the Legislature to create this program for families who wish to send their children to any private school, not just nonreligious schools,” said Dick Komer, a senior attorney at the Institute for Justice.

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) can then use the donations to give scholarships to families who want to send their children to private schools.

“What a wonderful victory this is for all the families in Montana who have chosen private education for their children. We are thrilled and encouraged,” said Kendra Espinoza, one of the parents who fought to protect the law in court. “This is going to make such a difference for all the parents who will now have the opportunity to send, or continue to send, their children to the school of their choice.”

The Department of Revenue claimed it had the authority to enact its rule excluding families attending religious schools under the Montana Constitution’s Article X, Section 6(1) and Article V, Section 11(5)—both of which prevent the state from giving public funds to religious organizations. As the court found, these provisions only limit the state in spending “public appropriations” at religious organizations. As the court found, however, the school choice program is not funded by public appropriations, but instead by private donations given in exchange for tax credits.

“There are so many families who have never hoped to be able to afford private school for their children. This decision is a game changer for them,” said IJ Attorney Erica Smith, who was co-counsel on the case.

IJ has successfully defended numerous school choice programs, including twice in the U.S. Supreme Court. It currently has three other school choice cases pending in Colorado, Georgia and Florida.

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