Bad Scholarship? Montana Agency Tries to Bar Religious Schools From Tax Credit

Critics say that a proposed rule by the Montana Department of Revenue violates both federal law and the intent of the state’s new school-choice program.

(photo: Wikipedia)

HELENA, Mont. — A Montana state agency argues that students who attend Catholic, or any other religiously affiliated private, schools cannot benefit from a new scholarship tax-credit program designed to help families afford to send their children to accredited private schools.

The state legislator who pushed for the school-choice program says the Montana Department of Revenue’s proposed rule undermines the legislative intent of the law. Meanwhile, several observers believe the issue will end up in court.

“At the end of the day, we believe there is a very good chance this will get litigated,” said Matthew Brower, executive director of the Montana Catholic Conference.

Brower told the Register that he does not agree with the Montana Department of Revenue’s reasoning that the Montana Constitution mandates that religious schools cannot participate in the scholarship tax-credit program. Brower noted that other courts have already ruled that scholarship tax credits do not appropriate public tax dollars, which Montana’s constitution prohibits.

“Given the way the bill was written, I think that for the department to write the rule the way it has and to suggest that, in essence, they had no choice but to write it this way, because this is what is required by our constitution, is highly questionable, given what other courts have said about tax credits and what constitutes public funds,” Brower said.

According to the National Conference of State Legislatures, at least 15 states have passed scholarship tax-credit programs, which are different from voucher systems, where parents receive public funds to send their children to private schools.

In 2012, the U.S. Supreme Court, in Arizona Christian School Tuition Organization v. Winn, determined that a similar tax-credit system in Arizona did not amount to an appropriation of tax dollars. Associate Justice Anthony Kennedy, writing for the majority, said individuals who contribute to scholarship tax organizations spend their own money, not taxpayer dollars.


New State Program

Montana lawmakers passed their version of the program earlier this year. The program grants tax credits for donations of up to $150 a year to scholarships for accredited private schools or to innovative educational programs in public schools.

Montana Gov. Steve Bullock, a Democrat, signed Senate Bill 410 when it reached his desk, after determining that the law does not divert or reduce state funding for public schools.

But the Montana Department of Revenue, charged with writing the rules to implement the program, is arguing that no educational institution owned or operated by a church or religious organization can receive scholarship money through the program. Mike Kadas, director of the state Department of Revenue, said the rules were written to keep in line with the state constitution.

Montana State Sen. Llew Jones, R-Conrad, the sponsor of Senate Bill 410, told local press outlets that the department’s rules do not reflect the intent of the law, which was meant to increase funding for all schools in the state.

“The intent is very clear: The law is meant to include, with very small exceptions, all private schools, including religiously affiliated and Catholic schools,” said Bower, who argued that the proposed rules discriminate against families who send their children to Catholic schools.

“They’ve really taken the vast majority of the private schools in Montana and attempted to write them out of the program,” Bower said.

In testimony before the Montana Department of Revenue on Nov. 5, Wen Fa, an attorney with the Pacific Legal Foundation, a nonprofit legal firm that litigates school-choice issues, said that more than two-thirds of the state’s 139 private schools would be excluded from the scholarship program because they have religious affiliations.

“Put another way, if these regulations go into effect, 88% of Montana’s private-school students would be ineligible for the tax-credit scholarship,” said Fa, who also argued that the proposed regulations overtly discriminate against religion, in violation of the U.S. Constitution’s First and 14th Amendments.

Fa said the agency “is essentially saying that it is going to prevent students from going to a quality school like Valley Christian just because it has the word ‘Christian’ in its name.”


Blaine Amendments

The Montana situation is also a reminder that dozens of states — at least 37 — still have constitutional amendments that were enacted in the 19th and early 20th centuries to enforce nativist anti-Catholic bigotry by targeting religious or “sectarian” schools.

Known as Blaine amendments — named after former U.S. House Speaker James Blaine, who proposed such an amendment to the U.S. Constitution in 1875 — those laws explicitly prohibit government aid to so-called sectarian schools or institutions. A growing number of legal scholars and academics believe those amendments were rooted in anti-Catholic sentiment.

U.S. Supreme Court Justice Clarence Thomas, writing for the justices in Mitchell v. Helms, where a plurality of the justices said Louisiana could provide aid to private religious schools, wrote that “hostility to aid pervasively sectarian schools has a shameful pedigree that we do not hesitate to disavow.” Thomas also wrote that “this doctrine, born of bigotry, should be buried now.”

Given that background, Brower said he believes the Montana amendment’s constitutionality is itself questionable.

“You need to look at what gave rise to these amendments,” Brower said. “The truth is: There is a very strong history of anti-Catholicism in this.”

Erica Smith, an attorney with the Institute for Justice, a Virginia-based public interest law firm that monitors school-choice issues across the United States, told the Register that the Montana rule, even if rooted in the state constitution, still violates the U.S. Constitution’s Free Exercise, Establishment and Equal-Protection Clauses by discriminating against families who send their children to religious schools.

“What the Department of Revenue is trying to do is absolutely unconstitutional,” said Smith, who added, “It should be up to parents, not government bureaucrats, to decide what education is best for their children.”


‘Almost Certain to Sue’

Smith said the Institute for Justice “is almost certain to sue” Montana if it finalizes the Department of Revenue’s rules, which she believes is likely.

Said Smith, “We will be ready to protect the program.”

Register correspondent Brian Fraga writes from Fall River, Massachusetts.