Wednesday, April 22, 2009
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Ninth Circuit Revives Constitutional Challenge to School Tuition Law
By KENNETH OFGANG, Staff Writer
A 1997 Arizona law that allows taxpayers to take credits for donations to organizations that provide private scholarships to children attending elementary and secondary schools or preschools may be unconstitutional, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The court reinstated an action by Arizona taxpayers who sued state officials, challenging the allowance of credits for donations to organizations that provide scholarships exclusively to students attending religious schools. Because these religious “school tuition organizations,” or STOs, do not assist parents who wish to send their children to secular schools and relatively few taxpayers donate to secular STOs, the plaintiffs argue, the program is not religiously neutral and violates the Establishment Clause.
The law, Arizona Revised Statutes Sec. 43-1089, allows a non-refundable 100 percent income tax credit for donations to STOs, up to $500 for individuals or $1,000 for couples filing jointly.
Christian Schools
The plaintiffs sued in February 2000. They noted in their complaint that of the three largest STOs in the state, one only benefits students attending Catholic schools in the Phoenix diocese, another only benefits those in evangelical Christian schools, and another only helps students attending two specific Catholic schools.
A facial challenge to the program was rejected by the Arizona Supreme Court in 1999, and the plaintiffs’ as-applied challenge was initially dismissed on the ground it violated the Tax Injunction Act. That ruling was reversed in 2004.
On remand, U.S. District Judge Earl H. Carroll allowed two large STOs—one which gives religious school scholarships only and one which gives both religious and secular school scholarships—and two parents of STO scholarship recipients to intervene in defense of the program. The intervenors are represented by two national conservative advocacy groups, the Institute for Justice and the Alliance Defense Fund.
The defendants and intervenors moved to dismiss based on lack of standing, failure to state a claim under the Establishment Clause, and res judicata. Carroll dismissed the suit again in 2005, this time for failure to state a claim.
Standing Ruling
Judge Raymond Fisher, writing yesterday for the Ninth Circuit, said the plaintiffs have standing because tax money is effectively being used for purposes they contend constitute a religious subsidy.
“In effect, Section 1089 works the same as if the state had given each taxpayer a $500 check that can only be endorsed over to a STO or returned to the state,” Fisher reasoned. “Because Section 1089 does not allow taxpayers to keep the money under any circumstance — and because it directs how the money will be spent if it is not surrendered to the state — we reject the suggestion that this money is not publicly subsidized simply because it does not pass through the treasury.”
The Supreme Court, Fisher added, has consistently allowed taxpayers to challenge state tax credits, tax deductions, tax exemptions, and indirect aid schemes as violations of the Establishment Clause.
Turning to the merits, Fisher said the state may ultimately prove its contention that the law “was enacted primarily to provide Arizona students with equal access to a wide range of schooling options.” But because the allegations of the complaint must be taken as true for purposes of the motion to dismiss, he said, the plaintiffs sufficiently pled their contention that the state’s assertion is a pretense for aiding religious schools and that the statute lacks a secular purpose and is thus unconstitutional.
The plaintiffs also sufficiently alleged that the law has the primary effect of aiding religion, the judge said. He cited claims that 85 percent of the STO donations go to exclusively religious STOs and that the leading STO that assists students at secular schools had a waiting list of 700 students.
If the allegations are correct, he explained, the law “skews aid in favor of religious schools, requiring parents who would prefer a secular private school but who cannot obtain aid from the few available nonsectarian STOs to choose a religious school to obtain the perceived benefits of a private school education.”
Fisher distinguished Zelman v. Simmons-Harris (2002) 536 U.S. 639, which upheld a state voucher program under which qualifying parents could use public money to send students to the private or public school of the parents’ choice. Arizona’s program, as alleged in the complaint, gives choices to taxpayers rather than parents.
“For example, by choosing to give state-reimbursed money to the Catholic Tuition Organization of the Diocese of Phoenix, which plaintiffs allege to be the largest STO, taxpayers can make their portion of the program aid available only to parents who are willing to send their children to Catholic schools,” the judge explained. “Although anyone may form a new STO devoted to funding scholarships at secular private schools, Section 1089 prohibits taxpayers from earmarking contributions for their own children. Thus, it is taxpayers who decide which STOs to fund and, consequently, who is eligible to receive STO provided scholarships according to the criteria of the designated STO.”
The opinion was joined by Senior Judge Dorothy W. Nelson and Judge Stephen Reinhardt.
The case is Winn v. Arizona Christian School Tuition Organization, 05-15754.
Copyright 2009, Metropolitan News Company