What happened with school choice in the states last month? There’s so much in this post, we organized the updates by legislative updates and litigation updates. Be sure to scroll all the way down to catch it all.
Senator Sylvia Allen (R-Snowflake), the chair of the Arizona Senate Education Committee, is sponsoring SB 1224 to allow families to use education savings accounts (ESAs) to pay tuition at schools located outside of Arizona but within two miles of Native American tribal land. The bill is intended to address an issue raised last year when the Arizona Department of Education demanded that some Navajo families stop using their ESA funds at a private school located within tribal boundaries but just over the New Mexico border. As it is, Arizona students already regularly obtain an education using resources produced outside of the state, such as public school students using online instruction. In his 2020 State of the State Address, Arizona Gov. Doug Ducey reiterated his support for enacting a permanent fix for the border situation.
Some Arizona lawmakers also filed bills to regulate or even repeal some of Arizona’s educational choice policies:
• HB 2578 would eliminate Arizona’s tax-credit scholarship programs and use the supposed revenue increase to pay for salary increases for some state employees. The bill is unlikely to pass, especially since it would require a supermajority in both legislative chambers. It would be even more unlikely to produce its intended effects, as a fiscal analysis of Arizona’s tax-credit scholarship policies found that they saved between $250 million and $553 million from their enactment through 2014. The cumulative savings to date likely exceed a billion dollars.
• HB 2328 would restrict eligibility for Arizona’s “switcher” tax-credit scholarships to no longer include students who had previously received a scholarship via the state’s tax-credit scholarship policy for low-income students.
• Several bills (SB 1214, HB 2329, HB 2488 and HB 2521) would cut in half the amount of tax-credit eligible contributions that school tuition organizations can use for administrative purposes, from 10 percent of the total to 5 percent. This would make it considerably more difficult for STOs to operate and could have the net effect of reducing scholarship funds available for low-income families.
• HB 2330 would restrict the eligibility for Arizona’s individual-donor tax-credit scholarship policy, which is currently open to all students. The bill would require that 65 percent of the scholarship funds go to students from families earning up to 185 percent of the income limit for the federal free and reduced-price lunch program.
The Colorado House Committee on State, Veterans, & Military Affairs voted to “indefinitely postpone” consideration of two educational choice bills: HB 19-1151, which would have created a scholarship program for students with special needs, and HB 19-1112, which would have created a “child safety account” program for students who have been victims of bullying.
Florida State Senator Manny Diaz (R-Hialeah) is sponsoring SB 1220, a bill that would expand eligibility for the state’s Family Empowerment Scholarship program. The bill would expand income-eligibility from 185 percent of the federal poverty line ($47,638 for a family of four in 2019–20) to 300 percent of the federal poverty line ($77,250 for a family of four in 2019–20), in line with the eligibility requirements for Florida’s tax-credit scholarship program, which serves over 100,000 low-income students. Students from lower-income families will still be given priority. The Florida Senate Education Committee passed the proposal in a 6-2 vote. The bill is currently pending consideration of the full state senate.
Illinois Rep. Allen Skillicorn (R-Crystal Lake) filed HB 4089, a bill that would create an education savings account program for low-income students.
Last week, the Kansas House K-12 Education Budget Committee heard testimony regarding HB 2465, a bill that would expand eligibility for the state’s tax-credit scholarship program. Currently, the program has some of the most restrictive eligibility requirements in the nation, limiting scholarships only to students who are assigned to one of the 100 lowest-performing district schools in the state and who are from low-income families who qualify for a free lunch (but not a reduced-price lunch) under the federal free and reduced-price lunch program ($33,475 for a family of four in 2019–20). HB 2465 would eliminate the “failing schools” requirement and raise the income eligibility to be the same as the qualifications for the free and reduced-price lunch program ($47,638 for a family of four in 2019–20).
Kentucky State Senator Ralph Alvarado (R-Winchester) is sponsoring SB 110, a bill that would create a tax-credit scholarship program for students from low-income families, students with special needs and students in foster care.
Maryland State Senator Andrew Serafini (R-Williamsport) filed SB 418, a bill that would create an education savings account program for all Maryland students. The bill is currently pending before the Maryland Senate Committee on Education, Health, and Environmental Affairs.
Missouri lawmakers are considering several bills that would create new educational choice policies. SB 707 and HB 1733 would create a tax-credit funded “Empowerment Scholarship Account” program for students living in most non-rural areas. Additionally, SB 581 and HB 2068 would create the “Show Me a Brighter Future Scholarship” program, which leverages tax credits and 529 plans to expand K-12 educational opportunities. The Missouri Senate Ways & Means Committee voted to pass SB 581.
Nebraska State Senator Lou Ann Linehan (R-Elkhorn) is sponsoring LB 1202, a bill that would create a tax-credit scholarship program for students from low-income families or who are in foster care.
The New Hampshire Senate Ways & Means Committee unanimously rejected SB 663, a bill that would have cut in half the funds available for the state’s tax-credit scholarship program for low-income students.
In the wake of controversy over expanded eligibility for Ohio’s Educational Choice Scholarship Program for students assigned to low-performing district schools, Ohio lawmakers passed an amendment to HB 9 to delay the enrollment period from Feb. 1 to April 1 as legislators debate whether or how to change the eligibility guidelines. The enrollment period for Ohio’s other school choice programs are unaffected. Currently, students assigned to about 500 schools are eligible and about 700 schools were scheduled to be added to the list of low-performing schools. The new law reduces that list to about 400 schools and raises the income cap from 200 to 300 percent of the federal poverty line. Some parents, private schools and Citizens for Community Values have sued to open the enrollment period immediately.
Several subcommittee hearings have occurred on SB 556, which as currently drafted would create an Education Scholarship Account. Children eligible under the current form of the bill include children with special needs, children in poverty, children of activity-duty military members, children whose parents or guardians were killed in the line of duty and children who are in foster care or have been adopted recently. If passed, parents could customize their child’s education by using the program funds for a whole portfolio of options including tuition, tutoring and therapy.
Tennessee State Senator Sara Kyle (D-Memphis) and Rep. Bo Mitchell (D-Nashville) have filed companion bills SB 1787 and HB 1550, which would repeal the Tennessee Education Savings Account Pilot Program. The bills are currently pending before the Tennessee Senate and House Education Committees.
Virginia Delegate Dave LaRock (R-Hamilton) filed HB 678, a bill that would create an education savings account program for children from low-income families or with special needs. Unfortunately, the House Education Committee’s PreK-12 Subcommittee voted not to recommend the legislation.
Additionally, Delegate David Bulova (D-Fairfax Station) filed HB 521, a bill to repeal Virginia’s tax-credit scholarship program for children from low-income families or with special needs. The bill is currently pending in the Virginia House Finance Committee.
A bipartisan coalition of Washington legislators led by Senate Minority Leader Mark Schoesler (R-Ritzville) are sponsoring SB 6520, a bill that would create a tax-credit scholarship program for students who have special needs or who are in foster care.
Parents of black and Hispanic children in Connecticut, whose children were denied the right to fill empty seats at Hartford’s magnet schools because of a discriminatory racial quota system requiring 25 percent Asian or white student enrollment, won an important victory in January. As a direct result of litigation filed by these parents*, represented by the Pacific Legal Foundation, the State of Connecticut agreed to end racial quotas in magnet school enrollment. A second lawsuit seeking an end to discriminatory racial quotas in magnet schools statewide is pending.**
*Robinson v. Wentzell, US District Court, District of Connecticut, Case 3:18-cv-00247-SRU (2018). Withdrawn/Dismissed.
**Connecticut Parents Union v. Wentzell, US District Court, District of Connecticut, Case 3:19-cv-00247 (2019). Pending.
The Institute for Justice’s Tim Keller presented oral argument on Jan. 8 to the First Circuit Court of Appeals in defense of parents from Maine. The case, Carson v. Makin, is brought by parents in Maine who wish to choose a religious school for their children’s education under Maine’s town tuitioning program. Parents were permitted to choose religious schools through town tuitioning from the beginning of the program in 1873 until 1982, when an attorney general suggested that including religious schools may be contrary to the U.S. Constitution (Maine has no Blaine Amendment.) and legislators changed the law to exclude religious schools. Parents assert that they cannot be denied the right to choose a school in a generally available student-aid program just because the school is religious.
Carson v. Makin, Case No. 0:19-civil-01746 (U.S.C.A. 1st Circuit, 2019). Pending.
You can listen to the arguments here.
The U.S. District Court in Maryland on Jan. 21 denied Bethel Ministries’ request for a Preliminary Injunction, which would have allowed Bethel Christian Academy to continue in the BOOST voucher program pending final outcome of the case. Bethel alleges that the school was dismissed from eligibility to receive students in the BOOST program because Bethel’s statement of religious beliefs conflicts with the state’s sexual orientation and gender identity laws (SOGI applies admissions for schools participating in the voucher program), even though Bethel has never excluded a child from admission based on sexual orientation. A schedule has been set for this case to continue to trial, which will likely take place later this year.
Bethel Ministries, Inc v. Salmon, US District Court, Northern District of Maryland, Case 1:19-cv-01853-SAG. Pending.
On January 22, Dick Komer of the Institute for Justice presented oral argument to the U.S. Supreme Court in defense of parents from Montana. Dick had previously retired, but returned specifically to defend this case which he began in Montana prior to his retirement. The case, Espinoza v. Montana Dept of Revenue, is brought by parents in Montana who wish to choose a religious school for their children’s education under Montana’s tax-credit scholarship program. Montana’s state legislature enacted the tax-credit scholarship program and included private religious schools, but the state’s department of revenue adopted a rule excluding religious schools. The Montana Supreme Court not only agreed that religious schools should be excluded, but also the court struck down the entire program. Parents assert that they cannot be denied the right to choose a school in a generally available student-aid program just because the school is religious, and thus, appealed to the U.S. Supreme Court. A decision is expected no later than the end of June of this year.
Espinoza v. Montana Dept of Revenue, US Supreme Court Docket No. 18-1195. Pending.
You can access the amicus brief of the EdChoice Legal Defense & Education Center here.
The Clark County District Court, in Morency v. State of Nevada, issued a Stipulation and Order establishing a briefing schedule for hearing on motions for summary judgment on Jan. 14. This follows the Court’s Dec. 27, 2019 order denying the State’s motion to dismiss the case. Parents participating in the state’s tax-credit scholarship program allege that the legislative bill repealing the automatic escalator clause in the program was passed contrary to the constitution, as it failed to secure the constitutionally required two-thirds vote of the legislature.
Morency v. State of NV, District Court, Clark County, Case Number A-19-800267-C (2019). Pending.
On Jan. 21, a North Carolina Superior Court, having retained jurisdiction over a case which began in 1994*, ordered the state legislature to adopt seven specific measures to guarantee a “sound basic education” for each child in North Carolina’s pre-K through grade 12 schools. The state is ordered to fund and provide the following: 1) a system of teacher development and recruitment, 2) a system of principal development and recruitment, 3) adequate, equitable, predictable funding to school districts, 4) an assessment and accountability system with multiple measures, 5) assistance and turn-around functions for low-performing schools, 6) a system of early education that includes quality pre-K and 7) alignment of high school to post-secondary and career expectations.
Hoke County Bd of Ed v. State, General Court of Justice, Superior Court Division 95-CVS-1158 (2020)
Leandro I affirmed that the state constitution guarantees each child “the opportunity to receive a sound basic education in our public schools.” Years later, after an allegation that the state had failed to comply with Leandro I, another round of litigation resulted in the Court upholding Leandro and holding that the state, not local boards of education, were responsible to provide a “sound basic education”.** In 2013, the North Carolina Supreme Court once again affirmed that their prior rulings remained in effect.***
*Leandro v. State, 346 N.C. 336, 448 S.E.2d 249 (1997) (Leandro I)
**Liability Judgment and Hoke County Bd. Of Educ. v. State, 358 N.C. 605, 599 S.E. 365 (2004) (Leandro II)
***Hoke County Bd. of Ed. V. State, 367 N.C. 156, 749 S.E.2d 451 (2013)
Citizens for Community Values, an organization of schools and parents in Ohio, plus other schools and parents, filed a lawsuit against the state on Feb. 3, 2020, asking the Ohio Supreme Court to issue a Writ of Mandamus* to compel the state to accept scholarship applicants to its EdChoice voucher program, today. The state “delayed” program scholarship applications until April (or May, as alleged by the litigants), pending a decision by the state legislature on whether to allow a new law expanding eligibility for the program (for children in 517 schools to children in 1,227 schools) to be implemented. There is some dispute over whether, at the time the law was passed, the state legislature intended eligibility to double in size.
State ex rel. Citizens for Community Values v. Gov. Mike DeWine, Supreme Court of Ohio, Case No. 2020-0175. Pending.
NATIONAL – IRS/Deptartment of Treasury
On Jan. 31, the Department of Treasury accepted public comments regarding its latest proposed rule affecting tax-credit scholarship-granting organizations. The proposed rule limits federal deductibility of charitable contributions for which a donor receives a state tax credit. The proposed rule, Treatment of Payments to Charitable Entities in Return for Consideration, proposes amendments to regulations under sections 162 (federal deductibility of ordinary business expense), 164 (federal deductibility of state and local taxes) and 170 (federal deductibility of charitable contributions) of the Internal Revenue Code, essentially combining the prior rule, Contributions in Exchange for State and Local Tax Credits, safe harbor provisions and other amendments. You can find the proposed rule, along with access to the 42 comments filed regarding the rule, including comments filed by EdChoice, here.
This highly controversial rule is detrimental to scholarship-granting organizations that raise money for children’s scholarships, and it sets a dangerous precedent for tax law, especially related to charitable giving, going forward. It is widely expected that thousands of children will lose scholarships this next school year as a direct result of the Department of Treasury’s actions. The IRS will hear testimony regarding this rule on February 20. Leslie Hiner of the EdChoice Legal Defense & Education Center will testify in defense of scholarship-granting organizations and the children and families who need and deserve scholarships to access a good education in a safe environment that aligns with the hopes, dreams and values of each family.