School Choice & Charters

School Choice Program’s Funding Source Unlawful, Nevada High Court Rules

By Arianna Prothero — September 29, 2016 3 min read
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The Nevada supreme court has ruled that the way the state’s groundbreaking school choice program is funded is unconstitutional.

Nevada’s education savings account program allows parents of public school students to pull their child out of a public school and take the state funding allocated to the child with them. They can then spend that money on private school tuition (including religious schools), home schooling materials, or a variety of other approved, education-related expenses.

The money is deposited in education savings accounts—thus the name.

Nevada’s ESA program is notable in its scope: Very few states have this type of program, and of those that do, they are limited to a small number of students—such as those with disabilities or from low-income families.

The program is open to all current public school students.

The supreme court’s decision is mixed news for both supporters and opponents of the program. The court took issue with the way the program was financed. It does not have its own dedicated funding source, and the court ruled it was illegal to take money allocated for public schools.

“It was unlimited, and it was diverting public school dollars toward private expenditures without budgeting for it,” says Tamerlin Godley, a partner with a Los-Angeles law firm, Munger, Tolles, and Olson. The firm represented a group of parents, on a pro bono basis, in one of the two lawsuits challenging the program on the funding issue, Lopez v. Schwartz.

“It had real potential to do harm to the public schools,” Godley says.

However, the court didn’t see a problem with other constitutional question brought by a separate lawsuit, Duncan v. State of Nevada: whether the state was unlawfully directing public money to private, religious institutions.

The program will remain suspended unless the funding source is changed. But that’s a relatively easy fix for state lawmakers, say school choice advocates.

“The court is basically saying, ‘Guys, this is constitutional; you just have to fund it a separate way,’ ” says Robert Enlow, the president and CEO of EdChoice, formerly the Friedman Foundation. “That’s huge news. That’s the first time a universal school choice program has been upheld in a state court.”

Proponents of the program may get their chance to tackle the funding issue sooner rather than later: The governor is expected to call a special legislative session in October to discuss funding for a new football stadium.

But Tod Story, the executive director of the American Civil Liberties Union of Nevada, which brought the other lawsuit against the program, says changing the funding source is a bigger hurdle than it may look.

“The only way they can fund this program would be to reduce public school funding or raise taxes, and I don’t think legislators will do that,” he says. “I don’t think that voters would be supportive of that—raising taxes to send kids to private schools. That’s what we have public schools for.”

Broader Impact?

To what extent the ruling could have an impact beyond Nevada is also up for debate.

Godley, the lawyer who represented the group of parents, said this sends a clear message to policymakers in other states to keep their hands off public school funding when crafting such sweeping school choice programs.

Jonathan Butcher, the education director at the Goldwater Institute, thinks the ruling is ultimately a positive step for the future of education savings accounts.

The Goldwater Institute came up with the idea for ESAs after the Arizona state supreme court struck down a voucher program in 2011 because it provided public dollars directly to private schools, and private schools only.

Butcher says the fact that the court didn’t take issue with parents using state funds for tuition at private, religious schools is what will matter most outside of Nevada.

“It should send a message that education savings accounts are distinctly different from other forms of school choice, private or public,” he said. “That another state’s high court found that it did not violate the state constitution, other lawmakers can gain some confidence from that.”

Around 8,000 students have applied for education savings accounts, and the state treasurer’s office, which manages the program, will continue accepting applications despite the court’s ruling.

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A version of this news article first appeared in the Charters & Choice blog.