Landmark Montana Case Advances Education Options

By Jack Park

On June 30, 2020, the U.S. Supreme Court declared it unconstitutional for a state to prohibit the use of tax credit scholarships at religious schools while permitting it at non-religious schools. It held that doing so violates the Free Exercise Clause of the First Amendment to the U.S Constitution.

The high court’s decision, in a Montana case (Espinoza v. Montana Department of Revenue), has nationwide implications: Provisions similar to that state’s constitutional and statutory prohibition on aid to “sectarian schools” appear in many state constitutions, including Georgia’s. The decision is also important because school choice is a worthy goal. As the Georgia Public Policy Foundation recognizes, school choice is cost-effective, performance-effective, and popular, too.

  • A study by Greg Forster of EdChoice observes, “School choice improves academic outcomes for participants and public schools by allowing students to find the schools that best match their needs and by introducing healthy competition that keeps schools mission-focused.”
  • Foundation Senior Fellow Ben Scafidi, a professor of economics and director of the Education Economics Center at Kennesaw State University, found that the academic performance of students who remained in public school improved or remained the same, refuting the contention that school choice skims the cream from the top of the public education system.
  • University of Georgia economist Jeffrey Dorfman, as a Senior Fellow at the Foundation, found that a voucher or educational savings account program can be structured to insure that public school districts retain the financial capacity to educate their remaining students.

Georgia has a state scholarship program and state constitutional provision similar to Montana’s. Corporations and individuals generate tax credits for contributions they make to school scholarship organizations (SSOs). Those organizations then distribute the funds to accredited private schools, some of which are religious. The Georgia Constitution provides, “No money shall ever be taken from the public treasury, directly or indirectly, in aid of … any sectarian institution.”

The Georgia Supreme Court upheld Georgia’s program, affirming the rejection of a state constitutional challenge in its 2017 decision in Gaddy v. Georgia Department of Revenue. The court concluded that the tax credits were private funds, so the prohibition on the use of public funds did not apply.

The court explained, “Individuals and corporations chose the SSOs to which they wish to direct contributions; these private SSOs select the student recipients of the scholarships they award; and the parents and students decide whether to use their scholarships at religious or other private schools. The State controls none of these decisions.”

The Georgia Supreme Court also rejected the argument that the tax credits were public funds because they were “tax expenditures.” They are not appropriations of public funds, which do come from the state treasury. Tax expenditures, in contrast, are an accounting feature, not money that ever became the property of Georgia.

Taking the tax expenditure argument to its logical extreme, all money belongs to the state. Our employers should send our compensation to the state, and the state should pay us after taking care of its needs.

Espinoza reached the same result Gaddy did, albeit for a different reason. Indeed, had Espinoza come out the other way, Georgia’s program would have been subject to renewed attack.

Montana’s Supreme Court ruled the state’s exclusion of religious schools from the program did not raise Free Exercise concerns. The nation’s highest court disagreed, noting, “The Free Exercise Clause protects against even indirect coercion,” and a state violates Free Exercise rights when it “disqualif[ies] the religious from government aid” that it extends to others. The program’s exclusion of otherwise eligible religious schools “solely because of their religious character” meant that Montana had to show that it was pursuing state interests “of the highest order,” which Montana could not do.  

In sum, “once a State decides to [subsidize private education], it cannot disqualify some private schools solely because they are religious.”

There are now two ways of defeating legal challenges to SSO programs whose beneficiaries include students attending religious schools. First, the money generated through donations producing a tax credit is not the state’s money. Second,  Espinoza prevents states from relying on state constitutional provisions restricting aid to religious schools to exclude religious schools from those programs.

Espinoza sweeps aside provisions prohibiting even indirect aid to religious schools. The U.S. Supreme Court’s ruling in Espinoza and the fact that public funds are not involved combine to ensure a future where SSO programs should be protected from legal challenges in federal or state courts.


Jack Park, a Gainesville attorney and the General Counsel of the American Constitutional Rights Union (theacru.org), wrote this commentary for the Georgia Public Policy Foundation. Established in 1991, the Foundation is a trusted, independent resource for voters and elected officials. The Foundation provides actionable solutions to real-life problems by bringing people together. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (July 31, 2020). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.