Ep. 92: The Monthly Debrief – December 2018 Looking to January 2019

January 15, 2019

In this episode of EdChoice Chats, our state team updates you on the latest happenings at the end of 2018 and looking into the start of 2019.

Michael Chartier: All right, everyone. Thank you to our new 2019 edition of our EdChoice Chats where we’re going to look forward and talk about things that we expect to happen in this new January 2019, and also talk about a few things that happened in the past in 2018 in December. I’ll tease a little bit. We’ve got Jason Bedrick on the line and Lauren Hodge here in the studio. At the end of this podcast, we’re going to talk just a little bit about what two state Supreme Court cases came down in December. I think that you should stay tuned for a little bit of that. Then, we’ll also talk a little bit about some podcasts that we’re going to do going forward. Stay tuned and … stay on the line, stay on the podcast for that.

Again, it’s Michael Chartier, your senior director of state relations here, Lauren Hodge in the studio and Jason Bedrick on the line. We’re just going to go briefly through a couple of our states and what we expect to see. I’m going to lead the list here with the state of Alaska, the final frontier. Their new governor Michael Dunleavy was sworn in in December. I think one of the earliest states to swear in their governor, and they do that to give the governor time to get his proposed budget in line so he can submit that to the legislature. What we do know is that he has been a big fan of school choice, spoken very favorably about it in the past and has also introduced a number of school choice pieces of legislation when he was in the Alaska Senate there. So, I’m expecting to see some movement of school choice legislation there.

I haven’t seen any bills that have been pre-filed, but I do know that there are some legislators that are certainly talking about that and looking around to other states. They’ve got some time before their final deadlines I see on the calendar, so I expect some things to happen there, but as of yet, we don’t have any pre-filed bills or we don’t have any bills that have been filed in the past couple of weeks. But I’m going to be keeping an eye on that and you guys should be keeping an eye on that as well, especially, again, with the new governor that came in and being so pro educational choice. I think that we’ll see some movement of things up there.

Moving on from Alaska to a state a little further south, but still on the northern part of the United States, we’ll go to the great state of New Hampshire. I think Lauren will give us a little thought on what she expects to see there in the Granite State.

Lauren Hodge: Thanks so much, Michael. Well, for those listeners who have been tuning in along the way, you know that New Hampshire saw some radical changes … in the midterm elections. We expect to see a lot of movement here in New Hampshire in the coming year and one of the things that we’re looking for, we don’t really have a full bill in front of us that we’re watching, but rather an LSR that we’re paying attention to. As you might recall for those of you who’ve been following along to this podcast, well, you remember that the House and the Senate flipped control into the Democratic control. We have still Governor Sununu who was reelected and advocate of school choice, a vocal advocate of school choice. What we do have here, kind of a change in power and it’s going to result I think in some interesting filings such as this LSR that caught my attention.

An LSR in New Hampshire, we don’t have language of that bill but what’s of note to me is the title. It’s relative to the education tax credit, which is the school choice program there in New Hampshire, but a bigger note is the primary sponsors that we do have in there. For example, we do have Representative [Carol Shea-] Porter who’s sponsoring that bill and Representative [Cindy] Rosenwald. Both of these individuals have sponsored bills very similar to the one that I believe we have here, which have been direct repeal efforts to the tax credit scholarship program in New Hampshire.

We very well may be facing a repeal effort to the program in New Hampshire. Somewhat of a defensive posture potentially moving forward in New Hampshire, so be on a lookout for that and we’ll be following closely as developments continue.

Michael Chartier: Thank you for that, Lauren. Also, just for our listeners, what is an LSR? I don’t know what LSR is.

Lauren Hodge: An LSR is … Jason, as a former New Hampshire legislator, might be able to chime in here, but an LSR is an opportunity — so prior to pre-filing, it’s an opportunity for freshmen legislators, as I understand it, to go through and essentially pre-file and have legislative staff work up the bill and get their idea into shape. What you have is available to the public like us, basically a title and to those individuals who would be sponsoring and then legislative staff who is going through and working up the details and the nuts and bolts so to speak of that bill. Then, that’s ultimately formulated and then it becomes revealed at a later date. Jason, can you give us more information about that?

Jason Bedrick: That’s about it. The term is a legislative service request. It’s the pre-filing of the bill. It does not have official language yet, has not yet been assigned to a committee, but unless it is withdrawn by the sponsor, it will ultimately become a bill.

Michael Chartier: That’s perfect. I always like to give our listeners a little bit more information on these terms of ours that we throw around quite a bit. I didn’t know what LSR was, so it helped me out. It’s definitely worth noting these things as they come across, kind of stop and try to explain them for people that don’t keep their heads in the weeds like this and quite frankly, probably have better things to do than figure out what all these bill terms are across the country. Thank you both for that piece of information. I think as you talked about one state, New Hampshire, that has repealed efforts potentially moving to the legislature, I think we can move to a state that perhaps has some positive news, a positive outlook from our school choice friends. That would be the state of Tennessee, the volunteer state with their new governor that’s said and done a lot of pro educational choice things. Jason, do you want to walk us through some things that you’ve heard and seen about Tennessee and some things that we might be able to expect coming out of there?

Jason Bedrick: Yes. As we know, the state of Tennessee has a new governor, Bill Lee, who is a long-time supporter of school choice and on the campaign trail, was very adamant that he wanted to explore new options to expand educational options for children in the state of Tennessee. We don’t have legislation there yet, at least as of when we’ve recorded this podcast, but we do expect that there will be legislation to expand the state’s individualized education accounts program, which is an education savings account program similar to what we have in Arizona, Florida and Mississippi. It’s like a voucher program as our listeners know, but the dollars that flow into these accounts can be used for a wide variety of educational goods and services, private school tuition, but also tutors, textbooks, homeschool curricula, online learning, so on and so forth. Especially because this program is currently only available to students with special needs, it can also be used for educational therapy.

We expect that there will be a move to expand the eligibility for the education savings accounts in Tennessee, although we do not yet know what that bill is going to look like, but as soon as something is filed, we’ll be sure to let our listeners know. While we’re on the topic of education savings accounts, there’s also legislation that has been filed in the state of Missouri. House Bill 34 and Senate Bill 160 would each create a tax-credit funded education savings account program, so that is something that we’re going to keep an eye on. Then, HB33 would create a new funding mechanism for Bryce’s Law, which is basically a tax-credit scholarship law that had been passed, but because of some legislative shenanigans, actually ended up not having a funding mechanism attached. This is a way to restore that, so we’ll be keeping an eye also on Missouri.

Michael Chartier: I know Director Paul said that this would be … if Missouri passed this bill, this would be the first tax-credit funded education savings account program in the nation. Is that correct?

Jason Bedrick: Yes. That is correct. There have been a number of proposals in various states to do something like this, but none so far have passed. There are currently six states that have an ESA law on the books. In five of those states, they’re actually operating. All of those are funded directly via appropriations of public funds. Missouri’s would be the first one, if it were to pass, that would fund the accounts through donations for which the donors receive tax credits.

Michael Chartier: Thank you. Just really quickly, too, you’ve pointed out that New Hampshire has something similar, has sort of the tax credit with the ESA component. What’s the difference between this and what New Hampshire has?

Jason Bedrick: That’s a good question. In New Hampshire, it is a tax-credit scholarship program. It’s just that unlike other taxcredit scholarship programs where the scholarships can only be used for tuition, in New Hampshire, they can use these scholarships for a wide variety of different things like I outlined before. One of the major differences is that in New Hampshire, they don’t actually have an account. They have to submit receipts and get reimbursed by the scholarship organization for eligible expenditures and they can’t roll over unused funds from year to year. It’s a little bit different because with the ESAs, you actually have an account. In some cases like in Arizona, you even have a debit card that’s associated with the account, and unused funds can be saved for later years.

Michael Chartier: Thank you for making that delineation. I know we’ve talked about the wide variety of expenses and stuff that New Hampshire can utilize their program for. It’s also important to point out the differences to our listeners and if there are new readers to this podcast that read them online, they know that difference. I think one of the last states I want to point out before we move on to a few other things, specifically the court cases, is the state of Indiana. [We] expect to see probably at least two, maybe three ESA bills coming out of the Hoosier state, my home state. I know that there are legislators that are working on those things right now. I don’t know what any of those look like as of yet. They haven’t been introduced, but I do know that there’s some folks working on that, so who knows?

But I do know there’s probably going to be around two or three of those things that are introduced. I do expect a few other bills related to the state’s voucher program as well as the tax-credit scholarship program to be introduced, just some clean-up things, make the programs work a little bit, streamline a few things here, tweak a few things there. I expect a few things like that to come down in the pipeline. Not sure. Talking to folks here, not sure exactly what’s going to happen and not sure exactly what the chances are for anything passing or anything major new programs coming on the pipeline, but I certainly know that there are things that we should be taking a look at and following, and we will definitely be updating you guys as we move along through the course of the year about the Hoosier State.

I think if we want to, that the states by population, with the two largest school choice programs after Indiana is the state of Florida. Jason, do you want to talk about some things as we piggyback about what things you might expect to see in Florida? That could tie us right in there to the recent Florida Supreme Court case. Then, would tie us on the Montana case. We’ve got a little daisy chain here, things to talk about. Jason, do you want to take that and talk about Florida, and then Montana?

Jason Bedrick: Yes. Absolutely. In Florida, just like Tennessee, we have an incoming governor who is very positively disposed toward school choice, and we have an existing ESA program that is currently limited to the students with special needs. As in Tennessee, we are expecting that the DeSantis administration is going to support school choice. He’s already appointed former Speaker of the House [Richard] Corcoran to the position of commissioner of education. That’s a very good sign as a legislator of Corcoran had been a very strong proponent of school choice. We think it is very likely that there’s going to be an expansion of the eligibility for the education savings account program. As you mentioned, there’s been a lawsuit that has been hanging over the head of actually two of the school choice programs in Florida.

In Florida last year, there were more than 150,000 low income students and students with special needs that benefited from Florida’s school choice programs. The tax-credit scholarship program that Florida has with over 100,000 students participating is the largest single private school choice program in the country, and the McKay Scholarship program for students with special needs was also one of the pioneering school voucher programs for students with special needs.

Both of them were caught up in a lawsuit that was filed more than a decade ago. It’s called Citizens for Strong Schools v. the State’s Board of Education. Ostensibly, it was about the adequacy of funding for public schools, but they included arguments in their case that implicated the constitutionality of both of these school choice programs. Lower courts had upheld the constitutionality of the school choice programs or at the very least, in the case of the tax-credit program, said that the plaintiffs lacked standing to sue the state over the tax-credit program. In the recent decision by the state’s Supreme Court, which was a 4-3 decision, they essentially dispensed with the arguments against the school choice programs in a footnote.

The school choice programs came out of this lawsuit unscathed, and I think that bodes very well for the future of these programs in Florida and also in other states. Our Vice President of Legal Affairs Leslie Hiner is going to be doing an entire podcast dedicated to this lawsuit as well as the one I’m about to mention in Montana. For those who are interested in the legal minutia and all the different arguments that were made for the state’s Supreme Court, both for and against, and I should mention that Leslie drafted our amicus brief[s] that [were] given to the U.S. Supreme Court. She’s going to fill our listeners in with all of the details, but in terms of the implications, it just shows that these programs in Florida are very safe.

Constitutionally, I don’t expect to see any real legal challenge. They’ve been losing over and over at the state’s Supreme Court in Florida when they challenged these programs, and it’s also worth noting that again it was a 4-3 decision. The three dissenting votes all are going to be retired soon, and will be replaced by the new governor, DeSantis. The state’s Supreme Court is going to look radically different from the state’s Supreme Court that many years ago, struck down one of Florida’s voucher laws in the Bush v. Holmes decision. I don’t expect that we’re going to see anymore attempts to challenge the constitutionality of school choice programs in Florida. But that brings us to Montana where there was a recent Supreme Court decision that went in a very different direction.

Jason Bedrick: Montana had a … Sorry. By using the “had” in the past tense, you directly already see where this is going. Montana had a tax-credit scholarship program that was challenged recently, and a 5-2 majority actually struck down the tax-credit program. Essentially, they did something very different from all of the other state supreme courts and the U.S. Supreme Court. Until now, tax-credit scholarship programs, which exist in 18 different states, perhaps now 17 states, had a 100 percent track record of being upheld when challenged constitutionally. The reasons vary slightly from state to state, but in most cases, what they said was this.

They follow the U.S. Supreme Court precedent which said that the funds never enter the tax collectors’ hands. Therefore, they never become public funds. Because how a tax credit scholarship program works, as probably most of our regular listeners know, is that the donations made from private citizens go to private nonprofits than then aid private families that are attending private schools and … the donors received a tax credit, but all of the other state supreme courts and the U.S. Supreme Court found that constitutionally, there’s no difference between a tax credit, a tax deduction, a tax exemption.

In any of these cases that there’s a tax benefit, that does not mean that those funds that were otherwise owed to the state are to be treated like public funds, which is what the other side opponents of school choice had argued. They said, “Look, these dollars would have been going to the state. Therefore, they are public dollars.” That had never been accepted by any of these other courts. The Montana State Supreme Court did accept that argument. Then, they said because they’re public funds, they want to follow up the state’s Blaine Amendment. Again, our listeners know that the Blaine Amendment is the, officially, traditionally anti-Catholic amendment to state supreme courts that said public funds cannot be used for sectarian schools, which back in the day, meant wink, wink, nudge, nudge Catholic schools.

Now, the reason I say that maybe this is no longer going to be the law in Montana is because there is still the opportunity to repeal this to the U.S. Supreme Court. That’s exactly what the Institute for Justice is doing because the Institute for Justice argues that this ruling by the Montana Supreme Court actually violates the free exercise of religion guaranteed by the First Amendment of the U.S. Constitution and they point to the high court’s recent decision in Trinity v. Lutheran where they said that, if you offer a general benefit to the public and you deny access to otherwise eligible beneficiaries solely because of their religious status, then you have violated their free exercise of religion. It is an unconstitutional form of discrimination.

If the U.S. Supreme Court does take the case and follows the logic of Trinity v. Lutheran and takes that next step, potentially we could see the de facto repeal of the Blaine Amendment in the 40 or so states that have them. We would only have essentially Michigan and Massachusetts where school choice programs would be unconstitutional. That’s because in those states, they forbid the public funding or even funding indirectly the tax credits of any private school. There’s no religious question there, but any state that says non-religious organizations can get access to these funds, but religious organizations doing the same exact thing cannot get access to the funds it’s possible that the U.S. Supreme Court will say, “No. That’s …” By the way, Trinity v. Lutheran, I should mention, was a 7-2 decision. It’s not even like a very close 5-4. It is quite possible that we will see the de facto repeal of Blaine, then, a constitutional path for publicly funded school choice programs in 48 out of the 50 states. We’ll keep an eye on this, and we’ll keep our listeners posted.

Michael Chartier: Thank you for that update, Jason. That gives us a lot of stuff to think about there. Like you said earlier, stay tuned for a more in-depth podcast from our Vice President of Legal Affairs Leslie Hiner as she talks through the minutia of what happened in these rulings. With that, I’ll give our readers a break and let them get back to their daily lives. If you would please subscribe to this podcast on SoundCloud, iTunes and Stitcher. Follow us on social media, @edchoice. Sign up for our email alerts at www.edchoice.org. Thank you very much for spending your day with us here in this balmy Indiana January day and we look forward to talking with you guys again here in hopefully a very similar situated February day. With that, everyone, good evening.