By: Bryan Shapiro

A private school, like a private business, enjoys a level of freedom that public entities do not. Private schools can be restrictive in admission; they can have more choice over the curriculum and what is generally allowed on campus. The big hook with the freedom private schools enjoy is that private schools are privately funded. Still, many state and local governments try to bridge the gap between public and private schools by offering private schools funds for scholarships through tax credit programs. These tax credit programs essentially allow the public to donate to private schools or other private school organizations and receive a tax credit for that amount. There is a trend, however, to open up this tax-payer funded support to private religious schools.

There is a conflict with any taxpayer funds going to religious schools. On one end, the public is funding religious schools with public money possibly blurring the lines of church and state. On the other end, we are enticing religious schools to depend on this type of funding assuming there will be no strings attached. What would happen if a religious school, dependent on these funds, is put under pressure to violate their religious beliefs by a future state legislature’s will in order to continue receiving this support? Would the school’s ability to refuse these funds be a realistic check on this possibility? While opening up the door for private donations to private schools may be permissible generally, when states start allowing taxpayer money to be used to fund religious schools we enter a slippery slope of constitutional conflict.

 Espinoza v. Montana Department of Revenue

This term the Supreme Court is going to hear Espinoza v. Montana Department of Revenue, a case that addresses whether a state can allow religiously affiliated schools to receive funds from tax-payer funds. The claim in Espinoza addresses Montana Senate Bill 410 entitled “Tax Credit for Qualified Education Contributions.” [1]. The statute allows for a one-for-one tax credit for taxpayers who donate to Student Scholarship Organizations (SSO). [2]. The SSO’s then donate the money to Qualified Education Programs (QEP), which are private schools that use the funds to give their students lower tuition [3]. A Taxpayer under this statute may not directly donate to a particular QEP, to avoid possible corruption. [4]. The Montana Department of Revenue runs the tax credit program. [5]. After attempting to implement the program, the Montana Department of Revenue quickly realized that most of the QEP’s in Montana were religious schools. [6]. The Montana Department of Revenue concluded that allowing religious-based organizations to obtain the funds from this credit program would be unconstitutional; both at the state and federal levels. [7]. The Montana State Constitution provides:

(1) The legislature, counties, cities, towns, school districts, and public corporations shall not make any direct or indirect appropriation or payment from any public fund or monies, or any  grant of lands or other property for any sectarian purpose or to aid any church, school, academy, seminary, college, university, or other literary or scientific institution, controlled in whole or in part by any church, sect, or denomination.

(2) This section shall not apply to funds from federal sources provided to the state for the express purpose of distribution to non-public education.

[8]. Due to this conflict, the Montana Department of Revenue implemented Rule 1. [9]. Rule 1 states:

 (1) A “qualified education provider” has the meaning given in 15-30-3102, MCA, and pursuant to 15-30-3101, MCA, may not be:

(a) a church, school, academy, seminary, college, university, literary or scientific institution, or any other sectarian institution owned or controlled in whole or in part by any church, religious sect, or denomination; or

(b) an individual who is employed by a church, school, academy, seminary, college, university, literary or scientific institution, or any other sectarian institution owned or controlled in whole or in part by any church, religious sect, or denomination when providing those services.

(2) For the purposes of (1), “controlled in whole or in part by a church, religious sect, or denomination” includes accreditation by a faith-based organization.


[10]. Primarily, Rule 1 was enacted to bar all possibility a religiously affiliated school could benefit from this new tax credit. The Plaintiff, in this case, argues that Rule 1 is a violation of their free exercise rights under the Montana Constitution. [11]. The Montana Department of Revenue asserted the use of tax-payer funds for religious organizations was unconstitutional. [12]. The Montana lower courts found that Rule 1 relied upon with funds from individuals, not from the treasury. [13]. As such, the lower court reasoned, Rule 1 is not addressing the role of the state’s ability for an “expenditure,” and as the law was facially constitutional as enacted in 2016 by the Montana State Legislature, the court granted the plaintiff’s summary judgment. [14]. The Montana Court of Appeals affirmed. [15].

On further appeal, the Montana Supreme Court ruled on Espinoza. At the outset, the Montana Supreme Court asserted that as the ban on spending taxpayer money on religious schools was stricter under the Montana State Constitution than federal precedent, concluding they would only look to statue precedent. [16]. This distinction is important as it illustrates the narrow scope under which the Montana Supreme Court ruled. The Montana Supreme Court reversed the lower court by considering the tax exemption to be in line with general public expenditure and following the Montana Constitution this tax exemption was unconstitutional. [17].

With the decision in Espinoza, the Montana Supreme Court further deepened a long-standing state split on whether barring religious schools from student-aid programs violates the federal religion and equal-protection clauses. The Supreme Court took this case on an appeal from the Institute for Justice, a Virginia based non-profit. [18]. A local Arizona School, Arizona Christian School, filed an Amicus Brief highlighting a split in state adherence to this type of program. [19]. In this Amicus Brief, Arizona Christian School highlights how this same type of program that was enacted by the Arizona legislature to offer tax credits for religious schools in Arizona was upheld in the Arizona Supreme Court. [20].

With so many constitutional issues at play, the Supreme Court has an opportunity to make a bold statement in this case. While the Supreme Court might narrowly tailor their opinion not to create an expansive precedent, likely Espinoza will be a landmark case for education funding.

Looking to the future, the legal significance of this case should be viewed with caution by religious schools. With the future possibility that this funding could have strings attached, religious schools might be faced with the choice to stay financially viable or cave to a future state position. As noted above, this problem creates a constitutional conflict between state rights and religious freedoms that could create a complex set of different results around the country.  While the benefits of additional funds may be enticing to religiously affiliated schools, the risks of acquiring these additional funds are noteworthy. On the other hand, the increased access to additional funding might significantly increase the educational abilities of religiously based schools, giving many a needed financial leg to stand on. Either way, how the Supreme Court decides Espinoza will likely have a significant legal impact.


  1. Sections 15-30-3103 to -3114, MCA.
  2. Espinoza v. Mont. Dep’t of Revenue, 2018 MT 306, 393 Mont. 446, 455
  3. Id
  4. Id.
  5. Id. at 456.
  6. Id.
  7. Id. at 457.
  8. Const. art. X. § 6.
  9. at 458.
  10.  Id.
  11.  Id.
  12.  Id.
  13.  Id.
  14.  Id.
  15.  Id.
  16. Mark Walsh, Supreme Court to Consider Montana Religious School Tax Credit, Education Week Blog (Jun. 28, 2019, 11:03 AM),
  17. Brief for Arizona Christian School Tuition Organization as Amicus Curiae
  18. Id