On June 30, 2020, the United States Supreme Court upheld a state tax credit program that benefitted students attending private schools, including religious schools. The First Amendment’s protection of the free exercise of religion, the court found, did not allow the state to discriminate against religious schools in the receipt of a public benefit merely because of their religious nature.

In Espinoza v. Montana Department of Revenue, the court considered a Montana program that awarded tax credits for donations to organizations providing scholarships for private school tuition. When passed by the state legislature, the program was subject to a provision of the state constitution that prohibited government aid to religious schools, and the state department of revenue passed a rule to the same effect. Parents of students attending a private religious school filed suit to challenge the restrictions.

In a 5-4 decision, the U.S. Supreme Court overturned the decision of the Montana Supreme Court, which found, among other things, that the tax credit program was invalid under the state constitution’s “no-aid” provision. Further, the nation’s highest court held that the Free Exercise Clause of the First Amendment of the U.S. Constitution, which prohibits Congress from making a law prohibiting the free exercise of religion, trumped the state constitution in this case.

By way of background, the “no-aid” provision of Article X, Section 6 of the Montana Constitution prohibited government aid “for any sectarian purpose or to aid any church, school, academy, seminary, college, university, or other literary or scientific institution, controlled in whole or in part by any church, sect, or denomination.” However, in its analysis, the court found that the state constitution’s “no-aid” provision impermissibly discriminated against religious schools by barring the receipt of public benefits solely because of the “religious character” of the schools.

In reaching its decision, the court applied “strict scrutiny” standard, meaning that in order to be constitutional, a “government action ‘must advance interests of the highest order’ and be narrowly tailored in pursuit of those interests.’” The restrictions, as applied, failed to meet this standard.  While the state asserted an interest in public education, the court found that this reasoning did not hold water because the restrictions did not affect all private schools, but instead only religious private schools. Furthermore, the court held: “A State need not subsidize private education. But once a State decides to do so, it cannot disqualify some private schools solely because they are religious.”

The court ultimately held that the First Amendment prevented the application of the funding restrictions to the tax credit program. It should be noted that three justices filed concurring opinions and three filed dissenting opinions, suggesting that the issues raised here invoked divides within the court. This decision will likely have implications for use of public subsidies to support students attending private religious schools.

For more information about this case as well as general information about First Amendment religion-based protections in the public school sphere, board members should consult with their board attorney or call the New Jersey School Boards Association Legal and Labor Relations Department at (609) 278-5254.