Banning religious schools from choice program could be illegal

Mary C. Tillotson
Posted: Oct 12, 2015 5:00 AM
Banning religious schools from choice program could be illegal

Montana’s new school choice program is scheduled to launch in January, but already it’s running into constitutional problems. Proposed regulations don’t allow faith-based schools to participate in the program, which is discriminatory and unconstitutional, one attorney says.

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Potential regulations for Montana’s new school choice program would unconstitutionally ban religious schools from participating, an attorney says.

“They’re interpreting their own constitution to require these rules, but they’re incorrectly interpreting their constitution,” said Erica Smith, a lawyer at the Institute for Justice.

IJ often helps lawmakers draft school choice bills, and it frequently intervenes successfully in anti-choice lawsuits on behalf of parents wishing to participate in school choice programs.

After the school choice bill became law last year, the state’s Department of Revenue was tasked with hammering out the details.

The proposed regulations would bar schools from participating in the program if they’re “owned or controlled in whole or in part by any church, religious sect, or denomination.”

The proposed regulations also note schools are barred if their accreditation comes from a faith-based organization.

“This is the first time I’ve seen this happen,” said Michael Chartier, state programs and government relations director at the Friedman Foundation for Educational Choice. “If the Legislature wanted to exclude private schools, I would argue that’s not a good idea, but that’s the Legislature’s prerogative. This goes outside of what the legislative intent was. If the Legislature wanted to do that, they could have done that, but they deemed it OK. It shouldn’t be the Department of Revenue’s prerogative, to essentially make laws for the state of Montana.”

Republican state Sen. Kristin Hansen, who supported the bill, said the department was out of bounds.

“It’s the opposite of the intent of the legislation,” she said. “When we drafted the bill, we intentionally drafted a substantial definition of who qualified, so there wouldn’t be any questions about who would be eligible. I think the department has exceeded its authority by adding its own interpretation … when the Legislature was very clear. Absolutely, I think this proposed rule exceeds the department’s authority on more than one level.”

The reasoning behind excluding faith-based schools? The state’s constitution prohibits public payments for religious purposes.

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That doesn’t hold water, Smith said, for two reasons.

First, the program is not a voucher program and isn’t publicly funded in any way. It’s a tax-credit scholarship program. Montana taxpayers donate to a Student Scholarship Organization, and those donations fund the scholarships. Donors receive a dollar-for-dollar tax credit for the first $150 they donate. If someone donates $150, he or she can subtract $150 from what he or she owes in taxes for that year.

The U.S. Supreme Court and all state supreme courts considering the issue have ruled tax credits cannot be considered public money — that is, the scholarships aren’t funded with public money — because the foregone revenue never reaches state coffers.

Said Smith, “The First Amendment does not allow the government to discriminate among religions or religious people or religious institutions. They can’t say that students can use a scholarship at a nonreligious school but can’t at a religious school. It’s discriminating against religion, hostile toward religion.”

Many private schools are faith-based, and barring those schools from the program would restrict school options.

“It would extremely restrict them,” Smith said. “It should be families, not the government, who decide what’s the best education for a child.”

While the tax-credit scholarship program is now part of Montana law, the Department of Revenue’s proposed regulations on the law, if approved as-is, would put a crimp in the program. Hansen said the proposed regulations will likely become the final ones.

“A huge number of people in relatively influential positions have asked the department (of revenue) to eliminate this rule, and here it is (in the official proposal),” she said. “I think there’s a very good chance it will be in the final rule. The administration’s intent is to kill the (program). They don’t want it to be operative in the beginning.”

However the final regulations look, Hansen said she expects at least one lawsuit to challenge the program or the Department of Revenue’s regulations.

The department, which did not return calls for comment, will hold a hearing Nov. 5.