July 7, 2020

What Espinoza Case Means for Private Schools in MN

By Krista Kaput

Last week, the Supreme Court issued a ruling in a case followed closely by many in the education world: Espinoza v. Montana Department of Revenue. A 5-4 majority found that states could not exclude religious institutions from participating in programs that subsidize private school tuition, like tax credits, scholarships, or voucher programs. 

The decision made headlines because it invalidates constitutional language from 37 states (including Minnesota) that explicitly blocked the flow of public money to religious institutions. But, the implications of the ruling are more narrow than many assume, drawing a line to say that private school choice programs can’t interfere with parents’ religious choices, but still leaving it to states to determine whether to create these programs in the first place.

Here we provide an overview of the case, provide answers to some burning questions, and clear up some misconceptions.

What the Decision Says

Known as “Blaine Amendments,” the language invalidated by the ruling dates back to the 19th century, when Congressman James Blaine urged President Grant to amend the U.S. Constitution to prohibit state governments from “funding religious schools with public money.” At the time, it was driven largely by anti-Catholic sentiment linked to waves of Irish and Italian immigration. While that amendment failed, it inspired states to amend their constitutions and adopt similar language. 

In the opinion, Chief Justice John Roberts writes that the principle underlying the decision is simple: “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.” In other words, this decision doesn’t mean that states have to institute programs to support private school tuition costs. But if they do, then they cannot deny these funds to families that choose a private school with a religious affiliation. 

Espinoza v. Montana Department of Revenue Background

In 2015, the Montana legislature created a program to incentivize private donations to K-12 scholarship funds. Donors receive a dollar-for-dollar tax credit, and the money donated provides scholarships for children to attend private schools. Soon after the tax-credit program was created, the Montana Department of Revenue issued a rule that barred families from using the scholarships at religious schools, citing the state’s Blaine Amendment.

In response, three low-income mothers who had been using the scholarships to send their children to a religious private school sued, arguing that barring religious schools from the scholarship program would violate religious freedom protections in the federal constitution. A trial court agreed with them, but the Montana Supreme Court reversed the decision, concluding that allowing families to use scholarships at religious schools would in fact be a violation of the state Blaine Amendment demarcating a separation between church and state. The federal Supreme Court ultimately sided with the plaintiffs, drawing a distinction around religious freedom protections for parent-driven decisions, even when public funds are involved. 

Does this Impact Existing Minnesota Programs? 

Across the country, 27 states have scholarship tax credit programs like Montana’s, or other direct voucher programs that give students access to private schools. Minnesota currently has no such program.

That said, Minnesota does have two tax relief programs that indirectly subsidize private school expenses, along with other public K-12 costs borne by families:

  • K-12 Education Subtraction: Enacted in 1955 and declared constitutional by the Supreme Court in 1983, under this program, families can deduct educational expenses from their taxes, including tuition, tutoring, and books. More than 212,000 taxpayers took an average of $1,145 in tax deductions. 
  • K-12 Education Credit: For lower-income families who do not benefit from the subtraction, the state also offers a refundable tax credit. This program covers similar expenses, with a significant caveat: families cannot receive a credit for private school tuition. Because of the program’s income thresholds and tuition restrictions, the program is smaller: 46,000 taxpayers received an average of $254 in tax credits. 

While these tax policies should be revised to create parity—ensuring that lower-income tax credit recipients can include tuition expenses alongside wealthier tax subtraction recipients—neither program will be directly impacted by the Espinoza decision.

Will this Enable New Funding for Private Schools in Minnesota? 

Despite the hype, the Espinoza case will have no impact on private school funding in the immediate future. For now, all we know is that Minnesota’s Blaine Amendment can no longer serve as a shield in the debate around funding for independent schools.

The political debate remains unchanged, with a core philosophical question around whether Minnesota will direct dollars only to public schools, or whether we will use funding to enable private school choice for students who otherwise would not have the opportunity. The debate is also active: as recently as 2019, Legislators considered an Equity and Opportunity Scholarship Act, and it’s likely to come up again next year. While Espinoza can’t decide the debate, it sets certain parameters in specifying that parent choice must extend to religious preference. We hope legislators will continue to focus the parent choice discussion on student-centered principles, including transparency, equity, access, and accountability.