Recently, the U.S. Supreme Court issued its decision in Espinoza v. Montana Department of Revenue, which held that a State’s decision to bar aid to religious schools violates the Free Exercise Clause of the U.S. Constitution. As background, in 2015, the Montana state legislature created a scholarship program for students attending private schools. Although the State did not directly fund the program, it offered up to $150 in tax credits to taxpayers who donated to a participating student scholarship organization. The student scholarship organization used the donations to fund scholarships for students. Students awarded scholarships under the program could use the funds toward their education at a “qualified education provider” – private schools that met certain accreditation, testing, and safety requirements.

Montana’s Department of Revenue issued a rule that excluded from the definition of a qualified education provider any school “owned or controlled in whole or in part by any church, religious sect, or denomination.” The purpose of the rule was to comply with a provision in Montana’s Constitution that prohibits aid to sectarian schools. In effect, the rule prevented religious schools from receiving the scholarship funds and prevented families from using scholarship funds toward an education at a religious school.

Three families sued the Department asserting that barring scholarship funds from being used at religious schools violated their right to free exercise of religion. The U.S. Supreme Court agreed, stating the “provision singles out schools based on their religious character” and, therefore, violates the Free Exercise Clause because “it discriminate[s] on the basis of religious status.”

The Department argued that its exclusion of religious schools from the scholarship program both advanced religious liberty and advanced the State’s interests in public education. The Court rejected these arguments. The Court noted “[a]n infringement of First Amendment rights . . . cannot be justified by a State’s alternative view that the infringement advances religious liberty.” The Court also observed that the State’s interest in public education was not advanced by the rule because the State was still aiding non-religious private schools.

Ultimately, the Court held: “A State need not subsidize private education. But once a State decides to do so, it cannot disqualify some private schools solely because they are religious.”