Last week, the United States (U.S.) Supreme Court agreed to hear a case, Espinoza v. Montana Dept. of Revenue, concerning a Montana state legislative program that allowed individuals to receive up to a $150.00 tax credit for money that they could donate to one of several K-12 scholarship funds. Those funds could then be provided to needy families who were otherwise unable to afford private schooling, and it could be used at both religious and secular private schools.

The Montana state constitution prohibits the direct or indirect funding of religion.

Under the "Blaine Amendment" in the Montana state constitution, the state is prohibited from providing public funds to religious institutions, either directly or indirectly. According to the petition for certiorari, approximately 69% of Montana private schools are religious.

Soon after the tax credit program was put in place, the Montana Department of Revenue enacted "Rule 1," a regulation that limited funding to secular schools, specifically excluding religious schools. In response, three mothers whose children would have benefited from the program filed a lawsuit, raising three arguments.  First, they argued that the department had acted ultra vires, or in excess of its authority, by ignoring the legislature's intention to include religious schools in the program. Second, they argued that the Blaine Amendment applied only to public funds and not to private funds that had been incentivized by tax deductions. In their third argument, they said that the Blaine Amendment itself was discriminatory against religious groups under the Religion and Equal Protection Clauses of the U.S. Constitution.

The case reached the Montana Supreme Court, which threw out the program in its entirety, stating that the tax credit program violated the no-aid Blaine Amendment and that the department of revenue's Rule 1 was unnecessary. So, in essence, the Montana court agreed with the first of the petitioners' three arguments but did not consider the other two because the court was unable to overrule the state's constitution, which contains the no-aid provision. Because the underlying tax credit program violated the state constitution, and because the legislature had intended to include religion, the department of revenue could not make such a dramatic change to how to implement the program.

The petitioners then appealed to the U.S. Supreme Court with the intention of attacking the state constitution’s prohibition of "no aid" as discriminatory. They claimed that it was in violation of the Trinity Lutheran Church case interpretation of the Free Exercise Clause, which views prohibiting the state from funding religious organizations as being discriminatory against religion if the funds are not used for sectarian purposes. The U.S. Supreme Court in Trinity Lutheran held that because the funding was generally available to a wide array of community organizations, excluding religious entities was a form of anti-religious discrimination.

Although the body of the Trinity Lutheran decision was fairly narrow, the decision also included Footnote 3, added by Justices Thomas and Gorsuch, which stated, "[T]he general principles here do not permit discrimination against religious exercise—whether on the playground or anywhere else." The rationale in this footnote broadened the ruling to include aspects beyond playground surface material to issues of state money going to religious institutions. For instance, in 2018, the U.S. Supreme Court decided to send three cases, two involving school voucher programs and one textbook lending program case, back to the lower courts to decide whether they were singled out for exclusion based on their religious character and not because of fears that the funds would be used for religious, not secular, purposes.

Can the U.S. Supreme Court require Montana to re-establish and implement the tax credit program?

The procedural posture of the Montana case is somewhat odd because the state tax credit program is no longer in effect by virtue of the Montana court's ruling. If the U.S. Supreme Court were to find that the program was not discriminatory, could it compel the State of Montana to reinstate a tax credit program?  If the program has been struck down, no school can take advantage of the incentive program, so are religious schools truly being treated unequally?

This may be getting into the technical woods, but in this case, the state legislature made a law, the state tax department modified it to avoid a conflict with the state constitution, and the Montana Supreme Court modified it yet again. So, the petitioners are arguing that both the tax department and the state supreme court have acted in error by taking down a legislative program via two incremental steps.

Does the U.S. Supreme Court have jurisdiction to hear the case?

The "Question Presented" in the U.S. Supreme Court petition is "[w]hether it violates the religion clauses or the equal protection clause of the U.S. Constitution to invalidate a generally available and religiously neutral student-aid program simply because the program affords students the choice of attending religious schools."

In response, the Montana Department of Revenue asked the court not to hear the case, as the case never reached the religion clause or equal protection issues at the state level, and the case hinged on the state constitution. Because a program is no longer in place, the department argued that the U.S. Supreme Court lacks the jurisdiction to decide the dispute. The department further argued that the petitioners failed to raise federal equal protection and free exercise arguments in the lower courts.

We will continue to follow this case as it develops.



Case Name:

Espinoza v. Montana Department of Revenue  (Supreme Court Docket Number 18-1194
Question Presented: Whether it violates the religion clauses or the equal protection clause of the United States Constitution to invalidate a generally available and religiously neutral student-aid program simply because the program affords students the choice of attending religious schools.

Related Cases:

Trinity Lutheran Church v. Comer, 137 S. Ct. 2012 (2017), (The exclusion of churches from an otherwise neutral and secular aid program violates the First Amendment’s guarantee of free exercise of religion. )

Locke v. Davey, 540 U.S. 712 (2004) (States do not violate the Free Exercise Clause by denying state funds to college students pursuing degrees in theology.)



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