Espinoza: Upholding Taxpayer Support for Religious and Non-Religious Schools Alike

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Our country has long grappled with whether and to what extent any government benefits or other favor may be accorded to private schools, especially religious grade schools. This summer, the U.S. Supreme Court issued another landmark decision in Espinoza v. Montana Department of Revenue, validating a state school tax credit program that benefits religious and non-religious schools alike by striking down the Montana State Constitution’s prohibition on any state aid to a school controlled by a “church, sect, or denomination.”

Espinoza provides welcome news for religious schools and other faith-based organizations that seek to benefit (or not be excluded) from government funding and programs available to similarly situated non-religious entities.[1] Indeed, Espinoza gives stronger grounds to challenge discriminatory government programs that prohibit religious entities from applying simply because they are religious. The following paragraphs address Espinoza’s significant historical background, the decision’s varying judicial opinions, and relevant additional law, along with observations about the changing legal landscape regarding government-sponsored benefits affecting religious organizations.

Introduction – The Long Legacy of Congressman James Blaine

Montana’s “no-aid” provision was included in Montana’s original Constitution, enacted in 1889, the same year Montana entered the Union. The provision stems from the failure of a proposed amendment to the federal constitution by then-Speaker of the U.S. House of Representatives, James Blaine. Introduced in 1875 as a reaction to waves of immigration from Europe, of primarily Catholic immigrants, Speaker Blaine’s amendment would have barred any federal aid to Catholic and other sectarian schools. In the wake of the amendment’s defeat in the U.S. Congress, voices hostile to immigration and Catholics took their battle to the States, with most states enacting similar “little-Blaine amendments” barring state financial support for sectarian schools. Today these prohibitions remain in some form in the constitutions of thirty-eight states and are relied on in some cases to justify discriminatory government programs.

Fast Forward – Big Sky Scholarships

In 2015, the Montana Legislature enacted a scholarship program “to provide parental and student choice in education” by providing a tax credit to parents who donate to participating scholarship organizations, such as “Big Sky Scholarships,” that in turn award scholarships to selected students attending private schools, including private religious schools. Montana resident Kendra Espinoza donated to Big Sky Scholarships and sought to have scholarship funds sent to Stillwater Christian School where her children attended. She was prevented from doing so, however, by a Department of Revenue rule prohibiting scholarship funds from being spent at religious schools. This administrative rule was promulgated to keep the scholarship program in compliance with Montana’s “no-aid” provision. Ms. Espinoza and two other parents sued, alleging that Montana’s rules discriminated against them based on their religious views.

Enter Trinity Lutheran

Ms. Espinoza’s case worked its way up to the Montana Supreme Court. The court struck down the scholarship program, finding that it violated the no-aid provision in the State Constitution by allowing state funds to flow to religious schools. Plaintiffs appealed the Montana decision to the U.S. Supreme Court, which ruled that the Free Exercise Clause of the U.S. Constitution barred application of Montana’s “no-aid” provision to invalidate the scholarship program and ordered the program be reinstated.

Central to the U.S. Supreme Court’s holding was its 2017 Trinity Lutheran Church v. Comer decision.[2] In Trinity Lutheran, the Court ruled that Missouri could not prohibit churches from taking advantage of Missouri’s “Scrap Tire Program” that offered reimbursement grants to nonprofit organizations that install playground surfaces made from recycled tires. The Court stated that to deny otherwise eligible recipients a public benefit “solely because of their religious character” imposes “a penalty on the free exercise of religion that triggers the most exacting scrutiny.” In other words, if a public benefit is generally available, it cannot be denied to religious adherents solely because they are religious. Applying Trinity Lutheran to the Montana scholarship program, the Court similarly held that otherwise qualifying schools could not be denied receipt of scholarship funds solely because the schools were religious.[3]

But Not So Fast (or Easy). . .

At first glance, Espinoza may seem like an easy case, flowing logically from Trinity Lutheran. However, the Court’s 5-4 decision and seven separate opinions totaling 92 pages indicate that the justices viewed the case very differently. Two issues complicated the Court’s analysis in Espinoza, making what may have otherwise been a straightforward application of Trinity Lutheran insufficient.

First, the justices in Espinoza struggled with an earlier Supreme Court case, Locke v. Davey, which upheld a Washington State law that established a state-sponsored scholarship program but prohibited use of scholarship funds for students pursuing devotional theology degrees. The majority found Locke distinguishable because Washington had “merely chosen not to fund a distinct category of instruction” and because of the “historic and substantial” state interest in not funding vocational religious training. But the dissenters interpreted Locke as allowing States to choose not to fund education of a religious nature, to include funding religious schools even if those schools teach subjects beyond religion. They further noted statements by the Plaintiff-parents in the lawsuit that “the tenets of their faith require them to send their children to a religious school.”[4] This argument did not win a majority, however, with most justices agreeing that the scholarship program unlawfully discriminated against religious schools based simply on their religious identity, separate from what the schools taught.

The second issue dividing the justices in Espinoza was procedural and jurisdictional in nature. The Plaintiffs brought an “as applied” challenge to the administrative rule that implemented the Montana statute, arguing that the rule discriminated against them. The challengers did not bring a facial challenge to the scholarship program – that is, that the program is discriminatory in all cases under the U.S. Constitution. Therefore, the dissenters argued, the Montana Supreme Court’s invalidation of the scholarship program as incompatible with the Montana Constitution should have ended the matter. Without a scholarship program to implement, there cannot be a federal constitutional violation and thus the U.S. Supreme Court overstepped its bounds by deciding an issue not presented.

This limiting argument also did not win a majority. Rather, the majority of Justices concluded that the Montana Supreme Court necessarily interpreted the federal U. S. constitution in striking down the scholarship program because it impliedly ruled that the Montana Constitution rightfully prohibited state funding of religious schools through the scholarship program, and that such a prohibition was consistent with the U.S. Constitution. In doing so, the Montana Supreme Court applied federal law, giving the U.S. Supreme Court an opening to review and ultimately overrule the Montana court.

Justice Thomas, Alito, and Gorsuch’s Concurrences

Three justices wrote separately to concur with the majority opinion, with each providing helpful clarity and explanations of why they believed the Montana Supreme Court ruling should be overturned.

In Justice Thomas’s concurrence, he addressed the Court’s “faulty” Establishment Clause jurisprudence. As Justice Thomas has stated in other religious clause cases, he believes that the Establishment Clause was originally intended to prevent the federal government (not the States) from religiously coercing States and citizens but does not “prohibit states from favoring religion.” Hence, the Establishment Clause should be seen as a prohibition against federal establishment. By implication, under Justice Thomas’ approach, a public high school football coach would not be violating the Establishment Clause if he led a voluntary team prayer. But if the federal government mandated prayer in all public schools, then the clause would be violated. Unlike other provisions in the Bill of Rights that have been “incorporated” to apply to the States, Justice Thomas believes that the Establishment Clause should not be so incorporated.[5]

Justice Alito’s concurrence is a historical tour of religious establishment and discrimination in the United States, focusing on the anti-Catholic sentiment that led to the adoption of Blaine Amendments in the late 1800s. According to him, the animus of the Montana provision’s sponsors weighed heavily in favor of striking it down as a clearly discriminatory attempt to punish religious people and practice. Justice Alito also provided a robust interpretation of the history of government support for religious practice, arguing that this history belies any desire by the Founders to inculcate a complete separation of church and state.

Justice Gorsuch took issue with the dissenters’ attempt to parse religious status and religious activity (as the Court did in Locke v. Davey), arguing that to discriminate against religious activity is to discriminate based on an individual’s status as a religious person. Thus, to interpret the Free Exercise Clause to protect religious status but not the outward expression of that status is no protection at all. According to Justice Gorsuch, even if Montana’s scholarship program is interpreted as discriminating only against religious activity, it was still correctly struck down as unconstitutional.

Lessons Learned and the Way Forward

Espinoza is good news for faith-based institutions. At a high level, it shows the Supreme Court’s continued affirmation for permissible government favor toward religion, albeit in properly prescribed and neutral ways. As one commentator noted, in recent years the Supreme Court, led by Chief Justices Rehnquist and Roberts, has “steadily steered the relevant doctrines in the direction of neutrality and even-handedness, reminding citizens and litigants alike that cooperation with religious institutions does not constitute an unlawful ‘establishment’ of religious authority.”[6] This trend confirms that the Constitution does not require government hostility or even strict neutrality towards religion. Rather, the “unbroken history” of our Nation includes “official acknowledgment by all three branches of government of religion's role in American life” (Van Orden v. Perry, 545 U.S. 677 (2005)). This history establishes the principle that “[s]imply having religious content or promoting a message consistent with a religious doctrine does not run afoul of the Establishment Clause.” Id. Faith-based institutions thus may be encouraged by Espinoza and its recognition of the legitimate and necessary role religious institutions play in public life, alongside non-religious institutions and worthy of full participation.[7]

On the practical side, Espinoza gives faith-based organizations stronger grounds to challenge their exclusion from otherwise generally available government programs. While there certainly are limits to government involvement with religion, with legitimate boundaries that governments must or may choose to adopt (per Locke v. Davey), faith-based organizations should now be better equipped to challenge (or to protect against) unlawful religious discrimination as reflected in laws like the Montana “no aid” school law and government programs as invalidated in Trinity Lutheran. The rubber meets the road in practical areas such as public busing for religious schools, state-sponsored voucher programs, school lunch funding, special education aid, federal CARES Act funding (and state counterparts), and numerous other issues where governments might erroneously assume that, since programs are run by the government and paid for with taxpayer dollars, faith-based entities need not apply.

A final word of caution is in order. Despite the laudable result in the eyes of religious school and religious liberty advocates, Espinoza does not represent a convergence of judicial perspectives on religious liberty and the government’s relationship with religious entities. Our country has a strongly pluralistic heritage, but is also experiencing troubled times, a changing culture, and evolving judicial standards regarding religious freedom. All carry a host of implications for religious organizations in relation to government programs and cultural shifts. Further watching and careful vigilance are thus warranted, as faith-based entities seek to stay true to their religious identities and operate within a culture that does not always welcome religion’s legitimate role in public life.


[1] Notably, Illinois’ “Invest in Kids” Act (enacted in 2017) allows individuals and businesses to donate funds to scholarship-granting nonprofit Section 501(c)(3) organizations in order to financially support private school education, and then to take a tax credit equal to 75% of such donations on their Illinois income tax return. Such law thus offers an innovative way for qualified Illinois private schools to receive additional funding, on a non-discriminatory basis for religious and non-religious schools alike, as in Espinoza. For more information, see our blog here.

[2] See our previous blog on the Trinity Lutheran decision.

[3] Trinity Lutheran also led the Federal Emergency Management Agency to change course and allow emergency relief for churches and other religious houses of worship, on par with non-religious organizations, in applications for disaster relief, recognizing that religious organizations may not be categorically disqualified from government grants or other programs they may offer - even if they contain religious elements. For more information on the FEMA decision, see our blog here.

[4] The dissenters in Espinoza also had a broader understanding of states’ “historic and substantial” interest in not funding religious activity. There is disagreement on the Court regarding the nature and extent of this interest and how to interpret what appears to be clear government funding of religion during our Nation’s history. For example, concurring Justice Alito noted both Congress’s support for denominational schools in the District of Columbia in the 1800’s and Congressional funding for church-run schools for American Indians through the end of the 19th Century. In Town of Greece v. Galloway, 572 U.S. 565, 605-06 (2014), Justice Alito similarly noted that at the time of the adoption of the Bill of Rights in 1789, at least six of the original thirteen States had state-established churches and with the last state-established church not ending until 1833 (in Massachusetts). This historical context helps show that to the extent a “wall of separation” has ever existed between church and state in our country, as commonly referenced, it has not been infinitely high and long but instead porous and subject to frequent circumvention and penetration.

[5] In Everson v. Board of Education of Ewing, 330 U.S. 1 (1947), the Supreme Court held that the Establishment Clause applied to the States as well as the federal government.

[6] Richard Garnett, A Win for Religious Schools, First Things, July 3, 2020.

[7] A similarly encouraging U.S. Supreme Court decision is Our Lady of Guadalupe, likewise issued this past summer that broadened judicial recognition of the “ministerial exception” in Title VII discrimination cases, thereby reflecting deference to religious organizations’ autonomy. See our blog here.