School Choice Scholarship Programs Would Not Violate the First Amendment of the U.S. Constitution

Nov 6th, 2012
by Jeanette Doran

this report.

School Choice Scholarship Programs Would Not Violate the First Amendment of the U.S. Constitution 

November 6, 2012

North Carolina Institute for Constitutional Law1

Proponents of education reform have long urged tax credits or other assistance for parents who send their children to nonpublic schools. In a new twist on that idea, during the last session of the General Assembly, House Bill (HB) 1104 or the “Scholarship Funding Corporate Tax Credit,” would have created a tax credit for corporations that donate money for scholarships to enable students to attend nonpublic schools. Although HB 1104 was not enacted, supporters of education reform are likely to push for tax credits and scholarships for nonpublic education expenses or for tax credits for corporations donating to scholarship programs, or both in the next General Assembly. Critics of such programs condemn them as voucher programs; many maintain scholarship and tax credit programs violate the First Amendment because students often use the funds to attend religious schools. Arguably, the goal of both scholarship tax credits for corporations and tax incentives or assistance programs for parents is to help children receive the best possible education. Below is a brief rebuttal to those critics who argue that school choice programs, like scholarships and tax credits, are unconstitutional.

Failed First Amendment Challenges

North Carolina’s most recent notable foray into the debate over scholarships for nonpublic education was HB 1104, introduced in May 2012, which would have created tax credits for corporations donating to scholarship programs which could be used to pay for nonpublic school expenses. Some critics claim scholarship tax credits for corporations will have an effect similar to a voucher program. National Conference of State Legislatures, Tuition Tax Credit, The difference between the tax credit proposal and voucher programs is notable. With a voucher program, public money goes to schools selected by students and their parents. National Conference of State Legislatures, Education Program, research/educ/school-choice-vouchers.aspx. With a scholarship tax credit for corporations, public money would not go to nonpublic schools. Rather, corporations would donate to scholarship funding organizations which would provide scholarships to fund nonpublic education. In addition to the question of whether scholarship tax credits equate to voucher programs, some questioned whether the scholarship tax credit would violate the Establishment Clause of the First Amendment. One critic reportedly described the program as a “constitutional money laundering scheme” because the scholarships would enable students to attend religious schools and thereby promote or subsidize religion. (last visited November 6, 2012); however, a review of relevant cases reveals HB 1104 or measures similar to it would be unlikely to face serious challenges on that ground.

Applying the reasoning and test from Zelman v. Simmons-Harris, 536 U.S. 639 (2002), a landmark school choice case, to various school choice initiatives including scholarship programs and scholarship tax credit programs like that proposed in HB 1104 reveals there is little to worry supporters of such programs. In Zelman, the United States Supreme Court upheld a voucher program which allowed for direct payment to nonpublic schools. Scholarship tax credit programs, unlike a voucher program, would create a tax credit for corporations donating to scholarship funds—thus, further attenuating the relationship between government and religious schools than what the Supreme Court has upheld.

In Zelman, Ohio state taxpayers brought an action challenging the voucher portion of the Ohio Pilot Scholarship Program, on the grounds that the voucher program violated the Establishment Clause of the First Amendment. The Ohio Pilot Project Scholarship Program was established to give tuition aid for students in the Cleveland City School District to attend private schools or out of district public schools and to pay for tutorial aid for those students who chose to remain in public school in Cleveland. The students were given tuition aid depending on their parents’ financial needs. Participating parents were given checks for tuition assistance; they, in turn, endorsed the check to the chosen private school. Id. at 646. The program allowed religious and non-religious private schools and schools outside of Cleveland’s district to participate. In the 1999–2000 school year, 82% of the participating private schools had a religious affiliation and 96% of the students participating in the scholarship program were enrolled in religiously affiliated schools; in addition, 60% of the students receiving tuition aid were from families at or below the poverty line. Id. at 647.

The Supreme Court, in its review of the case, evaluated the constitutionality of the school choice program by asking if granting aid to a religious private school would advance or inhibit religion. The Supreme Court reviewed its precedent and reiterated that a government aid program is not subject to challenge under the Establishment Clause if it is “neutral with respect to religion and provides assistance directly to a broad class of citizens who, in turn, direct government aid to religious schools, wholly as a result of their own genuine and independent choice.” Id. at 652. The Supreme Court determined that the Ohio program was entirely neutral with respect to religion and reversed the lower court’s decision. The Justices found that the program provided benefits directly to a wide spectrum of individuals, defined by financial need and residence in a particular school district. Further, the Court determined that the program allowed individuals to exercise genuine choice among public and private schools, secular and religious. Id. at 662.

Zelman thus stands for the proposition that public funds may be used to pay for scholarships to private schools. But, what does it mean for scholarship tax credit programs for corporations? In comparing the merits of scholarship tax credit programs to the voucher program at issue in Zelman, both allow students to receive more educational opportunities than otherwise would be available. Provided that a scholarship tax credit program is neutral as to religion insofar as the tax credit would be available for scholarship donations that enable students to attend any qualifying nonpublic school, regardless of religious affiliation or non-affiliation, the First Amendment would be no obstacle. Considering as an example HB 1104, no single religious institution would be advanced or inhibited, nor would any single group of people be excluded from taking advantage of what the bill has to offer. HB 1104 would have promoted educational opportunities without violating the Establishment Clause.

In a precursor to Zelman, the Supreme Court reviewed the case of Mueller v. Allen, 463 U.S. 388 (1983) in which the constitutionality of a Minnesota tax deduction statute was challenged under the Establishment Clause because state taxpayers, in figuring their state income tax, were permitted to deduct expenses incurred in providing “tuition, textbooks and transportation” for their children attending elementary or secondary school. Id. at 391. The Supreme Court held that the statute allowing tax deductions did not violate the Establishment Clause because the law satisfied the three part test created in Lemon v. Kurtzman, which was the standard for evaluating an alleged violation of the Establishment Clause. The Minnesota tax credit statute fulfilled the test from Lemon, through the following: first, the tax deduction in question had the secular purpose of ensuring that Minnesota’s citizens were well educated, Id. at 395; second, the tax deduction statute did not have the primary effect of advancing the sectarian aims of nonpublic schools and was available for educational expenses incurred by all parents, whether their children attended public schools or private sectarian or nonsectarian private schools Id. at 398-99; finally, the statute did not “excessively entangle” Minnesota with a religious doctrine or institution. Id. at 403.


At the most basic level, school choice programs, including scholarships and individual tax credits for education expenses and scholarship tax credits for corporations, would provide North Carolina’s students more choice and control in their education and opportunities that may not have existed, without the benefit of scholarships or vouchers. In Zelman the Supreme Court upheld the use of public money for nonpublic schools, including religious schools, selected by parents. It is most likely that the courts would uphold both scholarship programs for students and scholarship tax credit programs for corporations in which the relationship between government and religious schools is even more remote than the direct relationship created by so-called voucher programs. The Supreme Court has a history of considering the role that a state’s government plays in the education of children as contradistinguished from the independent judgment of parents when the Court evaluates First Amendment challenges to both vouchers and tax credit programs. If a court were to apply the three-prong test from Lemon and the precedents set in both Zelman and Mueller to scholarship programs, individual tax credits or scholarship tax credits for corporations, any such program would likely survive constitutional scrutiny provided the state remains neutral as to the use of vouchers or scholarships for religiously affiliated schools and otherwise avoids entangling government with religion.



For more information, please contact Jeanette Doran, executive director, at 919-838-5313 or