Espinoza v. Montana Department Of Revenue

140 S.Ct. 2246 (2020)

Facts

The Montana Legislature enacted a scholarship program for students attending private schools. The program grants a tax credit of up to $150 to any taxpayer who donates to a participating “student scholarship organization.” The scholarship organizations then use the donations to award scholarships to children for tuition at a private school. Big Sky Scholarships provides scholarships to families who face financial hardship or have children with disabilities. They are required to maintain an application process for awarding the scholarships; use at least 90% of all donations on scholarship awards; and comply with state reporting and monitoring requirements. A family whose child is awarded a scholarship under the program may use it at any “qualified education provider”-that is, any private school that meets certain accreditation, testing, and safety requirements. The Montana Legislature allotted $3 million annually to fund the tax credits, beginning in 2016. The program was to be administered in accordance with Article X, section 6, of the Montana Constitution, which contains a “no-aid” provision barring government aid to sectarian schools. The Montana Department of Revenue (D) promulgated “Rule 1,” over the objection of the Montana Attorney General. That administrative rule prohibited families from using scholarships at religious schools. It changed the definition of “qualified education provider” to exclude any school “owned or controlled in whole or in part by any church, religious sect, or denomination.” The Montana Attorney General advised that the Montana Constitution did not require excluding religious schools from the program, and if it did, it would “very likely” violate the United States Constitution by discriminating against the schools and their students. Espinoza (Ps), three mothers, whose children attend Stillwater Christian School in northwestern Montana sued D over the rule. The trial court enjoined Rule 1, holding that it was based on a mistake of law. It held that the provision prohibits only “appropriations” that aid religious schools, “not tax credits.” The Montana Supreme Court reversed the trial court. It held that the program aided religious schools in violation of the no-aid provision of the Montana Constitution. It held that the entire tax credit was no longer available to support scholarships at either religious or secular private schools as there were no severance provisions. The Court explained that the statute creating the scholarship program had broadly defined qualifying schools to include all private schools, including religious ones, and D lacked authority to “transform” that definition with an administrative rule. The Supreme Court granted certiorari.