Supreme Court Rules That Excluding Religious Schools from Aid Program Violates Constitution: Implications for Congress
Legal Sidebari
Supreme Court Rules That Excluding
Religious Schools from Aid Program Violates
Constitution: Implications for Congress
July 2, 2020
Based on concerns about impermissibly supporting religion, many state constitutions bar state
governments from providing funds to churches and other types of religious institutions—even in
circumstances where that support would not violate the Establishment Clause of the First Amendment to
the U.S. Constitution. However, in recent years, some have questioned whether these state provisions are
unconstitutional under Supreme Court precedent that has interpreted the First Amendment’s Free Exercise
Clause to prevent governments from discriminating against religious organizations when they distribute
public benefits. In Espinoza v. Montana Department of Revenue, issued June 30, 2020, the Supreme Court
weighed in on this question, ruling that Montana’s state constitution could not be applied to bar religious
schools from participating in a tax credit program benefiting parents of private school students. This
Legal Sidebar discusses the legal principles that governed this dispute, explains the Court’s Espinoza
opinion, and explores implications of the decision for Congress. In particular, Espinoza could cal into
question any federal laws that exclude religious entities from receiving federal aid based solely on their
religious character.
Legal Background
The First Amendment’s Religion Clauses prohibit the government from making a “law respecting an
establishment of religion, or prohibiting the free exercise thereof.” In the words of the Supreme Court, the
Establishment Clause forbids “sponsorship, financial support, and active involvement of the sovereign in
religious activity.” But the Supreme Court has also upheld certain government programs that support
religious institutions, particularly if they provide general, secular benefits to a broad class of beneficiaries.
The Court has also approved of indirect aid programs like some school voucher programs, where the
government broadly offers assistance to individuals who may then independently choose to use those
benefits at religious institutions.
In Locke v. Davey, decided in 2004, the Supreme Court recognized that in at least some circumstances,
governments may choose not to fund certain types of religious activities even if government support
would not violate the Establishment Clause—that is, even if the exclusion is not required by the
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Establishment Clause. In Locke, a state barred students “pursuing a degree in devotional theology” from a
state scholarship program. The Court characterized the scholarship program as an indirect aid program,
and said it would not violate the Establishment Clause for the state to offer scholarships to theology
students. The Court nonetheless held that the state could choose not to fund these scholarships, noting the
“historic and substantial state interest” in not using government funds to support clergy.
On the other hand, in Trinity Lutheran Church v. Comer in 2017, the Supreme Court ruled that a state
violated the Free Exercise Clause when it excluded “churches and other religious organizations from
receiving grants” to purchase “rubber playground surfaces.” The Court held that because the program
“expressly discriminate[d] against otherwise eligible recipients by disqualifying them from a public
benefit solely because of their religious character,” it was subject “to the most exacting scrutiny” and
could be justified only by “a state interest ‘of the highest order.’” In the Court’s view, the state’s interest
in “skating as far as possible from religious establishment concerns” was insufficiently “compel ing” in
light of the policy’s “clear infringement on free exercise.” Trinity Lutheran distinguished Locke, saying
the state in Locke had permissibly chosen to deny a scholarship because of what the recipient “proposed
to do—use the funds to prepare for the ministry.” By contrast, in Trinity Lutheran, the Supreme Court
held that the state was impermissibly denying funds because of what the recipient was—a church. Further,
in a footnote joined by only three other Justices, representing a plurality of the Court, Chief Justice
Roberts described the Trinity Lutheran decision as involving only “express discrimination based on
religious identity with respect to playground resurfacing,” emphasizing that his opinion did “not address
religious uses of funding or other forms of discrimination.” Thus, some described the Trinity Lutheran
opinion as barring discrimination on the basis of religious status but al owing governments to prohibit
religious use of funds. Further, some questioned whether Trinity Lutheran was limited to general y
available programs providing secular benefits, and whether governments stil might be able to exclude
religious entities from programs providing funds that could be freely diverted to religious uses.
Facts of Espinoza
The Espinoza plaintiffs are parents of children who wanted to participate in a tuition scholarship program
but were barred from doing so because the students attended religious schools. The Montana program
offered tax credits to individuals who donated to “Student Scholarship Organizations,” private charitable
organizations that managed tuition scholarship programs for qualifying private schools. Although the text
of the state law establishing the program had implicitly included religious schools, a state agency had
nonetheless promulgated a rule excluding religious schools. The agency was concerned that if the tax
credit program included religious schools, it would violate the Montana Constitution’s “No-Aid Clause.”
This provision in the state constitution prohibits the state from making “any direct or indirect
appropriation or payment from any public fund or monies . . . for any sectarian purpose or to aid any . . .
school . . . controlled in whole or in part by any church, sect, or denomination.”
The Montana Supreme Court concluded that the tax credit program, as enacted, violated the state
constitution’s No-Aid Clause by indirectly aiding schools controlled by churches. To remedy this
problem, that court struck down the entire tax credit program. Consequently, after the ruling, the state no
longer offered these tax credits to anyone donating to these scholarship organizations, regardless of
whether the scholarships were used at religious schools. The parents appealed this ruling to the U.S.
Supreme Court. They argued that when the state excluded religious schools from the tuition scholarship
program, it unconstitutional y discriminated against religion, violating the Free Exercise Clause.
Opinion of the Court
The majority opinion was written by Chief Justice Roberts, who held that Montana’s No-Aid Clause
violated the Free Exercise Clause to the extent that it disqualified religious schools from receiving public
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benefits solely because of their religious character. The Court ruled that, as interpreted by the Montana
courts, the provision operated to exclude schools “because of religious status,” similar to the playground
grant program in Trinity Lutheran. The majority opinion noted that, as opposed to Locke, the No-Aid
Clause did not “zero in on any particular ‘essential y religious’ course of instruction at a religious school,”
but rather, general y prohibited aid to schools controlled by churches. Further, Chief Justice Roberts said
that unlike the special state interest “in not funding the training of clergy,” there was no “‘historical and
substantial’ tradition” that could support a state’s “decision to disqualify religious schools from
government aid.” Instead, the Court concluded that states “have taken a variety of approaches to
[supporting] religious schools.” Contesting Montana’s proffered evidence of state laws barring aid to
religious schools, the majority pointed to a history of state support for private schools, including religious
schools, in the founding era and early 19th century.
Accordingly, based on this “religious discrimination,” the Supreme Court subjected the provision to strict
scrutiny, meaning that the exclusion would have to “advance interests of the highest order and must be
narrowly tailored in pursuit of those interests.” As in Trinity Lutheran, the Espinoza Court held that the
state’s “interest in separating church and State” could not qualify as sufficiently compel ing. The majority
also rejected Montana’s arguments that the No-Aid Clause promoted religious freedom by “keeping the
government out of” the operations of religious organizations. The Court did “not see how” denying
religious organizations the option to participate in the government program promoted religious liberty.
And in response to Montana’s claim that the No-Aid Clause advanced the state’s interest in supporting
public education, the Court ruled that the provision was “fatal y underinclusive”: it did not permissibly
serve this goal because it excluded only religious private schools and stil al owed public support to be
diverted to nonreligious private schools.
Justices Thomas, Alito, and Gorsuch filed separate concurring opinions. In an opinion joined by Justice
Gorsuch, Justice Thomas cal ed for the Court to reconsider its Establishment Clause jurisprudence. In
brief, Justice Thomas restated his view that the Court should interpret the Establishment Clause more
narrowly, asserting that the Court’s current jurisprudence “hamper[s] free exercise rights.” Justice Alito
wrote separately to argue that anti-Catholic bias may have motivated at least some states in adopting these
provisions, maintaining that evidence of discriminatory motives was relevant to assessing the
constitutionality of Montana’s No-Aid Clause. Justice Gorsuch’s concurrence expressed doubt about the
validity of free exercise decisions distinguishing religious use from religious status.
Justices Ginsburg, Breyer, Sotomayor, and Kagan dissented, with Justices Ginsburg, Breyer, and
Sotomayor each writing separate opinions. Justice Ginsburg, joined by Justice Kagan, focused on the
procedural posture of the case, arguing that because the Montana Supreme Court had struck down the
entire scholarship program, the state could no longer be characterized as impermissibly discriminating
against religious schools. After the state court decision, she pointed out, there was no differential
treatment placing a burden on the parents’ religious exercise; “secular and sectarian schools alike are
ineligible for benefits.” (In response to this claim, the majority said that the state court’s decision to
invalidate the program violated the Free Exercise Clause, creating a reversible error of federal law.)
Justice Breyer, joined in part by Justice Kagan, would have concluded that Montana could permissibly
have excluded religious schools from the tax credit program. He wrote that, as in Locke, Montana had
permissibly “chosen not to fund” a religious activity: “an education designed to ‘induce religious faith.’”
Justice Breyer noted that the case before the court was brought by parents who wanted to use the publicly
supported scholarships to attend religious schools, arguing that the parents’ Free Exercise Clause claims
depended on a conclusion that these schools would be using the state support “to fund the inculcation of
religious truths.”
Writing for herself, Justice Sotomayor asserted that the Montana Supreme Court had reached its decision
based on state-law grounds, and that the majority opinion violated ordinary principles of judicial review
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when it essential y ruled that the No-Aid Clause was facial y invalid under the federal Free Exercise
Clause.
Implications for Congress
Although the Court’s judgment in this case directly concerns a provision in Montana’s constitution, its
opinion wil nonetheless have national implications. First, as Montana noted in its briefing at the Supreme
Court, 37 other states have some version of a No-Aid Clause in their state constitutions. To the extent that
other state provisions exclude religious organizations from general y available benefits programs solely
because of their religious character, they are subject to similar constitutional chal enge. Justice Alito’s
concurring opinion points to an additional avenue to attack these provisions: historical evidence
suggesting that some state constitutional conventions were motivated by anti-Catholic animus.
The Court’s opinion in Espinoza also has broader repercussions for federal and state governments that
exclude religious organizations from certain public aid programs. The Court made clear that while the
state was not required to “subsidize private education,” once it had decided to do so, it could not
“disqualify some private schools solely because they are religious.” There are some federal statutes that
could be read to exclude religious entities from federal programs based on their religious status. These
statutes could be subject to chal enge under Trinity Lutheran and Espinoza as unconstitutional religious
discrimination. On the other hand, statutes that prohibit federal funds from being used for religious
worship, instruction, or other sectarian activity could be interpreted as permissible exclusions based on
religious use. Congress could review federal laws to ensure they are consistent with the Court’s ruling in
Espinoza, possibly eliminating or narrowing some statutory exclusions, and in the future, could consider
drawing exclusions more narrowly around certain religious uses of funds.
Espinoza can be seen as expanding the government’s ability to support religious organizations, given its
affirmation that certain status-based exclusions violate the Free Exercise Clause and its conclusion that
there is no historical tradition against supporting religious schools. However, Espinoza did involve an
indirect aid program similar to ones that the Court has previously said do not raise Establishment Clause
concerns. In the words of the Court, “the government support makes its way to religious schools only as a
result of Montanans independently choosing to spend their scholarships at such schools.” Any
government programs that provide direct financial support to religious entities could raise more
significant Establishment Clause concerns, although the Court also stated in Espinoza that the
Establishment Clause is “not offended when religious observers and organizations benefit from neutral
government programs.” As a consequence, both of the Religion Clauses remain relevant considerations
when Congress determines whether and how to include religious entities in public aid programs.
Author Information
Valerie C. Brannon
Legislative Attorney
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