I 437 May 30, 1985 CRAFTING A COURT -PROOF EDUCATION VOUCHER INTRODUCTION Althou gh public education continues to serve nine out of ten of the nation's students, dismay over what they regard as its declining quality has prompted many parents to consider private schools as an alternative. To many families, however, the cost of private s chool tuition has been an insurmountable financial barrier. As a result, parents and policy makers have explored ways to make the private school alternative affordable to working and middle-class Americans. Two proposed methods are tuition tax credits and educational vouchers A tuition tax credit is a direct reduction in the amount of taxes owed by a family after all income adjustments have been made. Unlike a tax deduction, the cash value of a credit is the same for every taxpayer--assuming that he or she has a tax liabil ity at least equal to the credit. legislation have been introduced repeatedly in Congress, most seriously in 1978 and 19

81. The measure has yet to win congres sional approval.

An educational voucher, on the other hand, does not involve an adjustment to a family's tax liability, but instead is a fixed sum of money'from the government, which a parent can use only to purchase'l education at a primary or secondary school of that parent's choice. manner and method of operation, yet the goal i n each case has been to enhance a family's freedom of choice in selecting the school that it feels will benefit its children most Proposals for tax credit Proposed voucher systems have varied in their Opponents of tuition tax credits and educational vouch e rs warn that such devices would spur, among other things, increased segregation, abandonment of the public schools, and fiscal irre- sponsibility. These practical arguments have been answered 2 effectively by a number of scho1ars.l But there remains the n a gging question of constitutionality. This,was answered for Mueller v. Allen, upheld the constitutionality of a Minnesota tax deduction for elementary and secondary educational expenses tuition tax credits in 1983 when the U.S. Supreme Court, in Vouchers a re a more complicated matter for they represent in effect, money that is actually provided by the government.

This raises serious questions concerning indirect federal funding of schools. The issue has been argued in the courts for four decades At times vo uchers seem to be ruled acceptable, while at other times they have been rejected as unconstitutional or have been used to raise the specter of sweeping federal regulation of private schools. The latter issue was raised in the 1984 U.S Supreme Court ruling on the Grove City case, in which a college was not allowed to use grant money given to students unless it followed federal procedures for assurance of compliance with federal regulations.

The Grove City decision does not necessarily establish constitution al guidelines for educational vouchers. Analysis of court decisions indicates that, as long as the language creating vouchers is carefully drafted to preempt unwanted government intrusions, emphasize equal access to other school systems promote improved q u ality of education as well as freedom of choice, there is a good chance that vouchers will pass the consti tutional test. Congressional advocates of vouchers should study the court decisions before they design vouches legislation. And even if there are ea r ly failures, much can be learned from them in crafting an ultimate, court-proof education voucher THE HISTORICAL IMPACT OF THE FIRST AMENDMENT Since the vast majority of private schools are religious in orientation, the constitutionality question generall y revolves around interpretation of the First Amendment. Both tuition tax credits and vouchers involve a government action that provides financial aid to parents. If religious schools are the primary beneficiaries of this aid, does this mean that governmen t is in the business of promoting an establishment of religion? Much current discussion, as well as nearly every Supreme Court decision in the past 40 years, has ignored the historical context of the First Amendment. At the nation's founding, the American p eople clearly considered government aid to religion an exemplary use of See Thomas W. Vitullo-Martin The Impact of Taxation Policy on Public and Private Schools in Robert B. Everhart, ed., The Public School Monopoly San Francisco: Pacific Institute for Pu b lic Policy Research, 1982 Jeremy Rabkin Educational Choice vs. Racial Regulation: Non-Discrimina tion Safeguards and the Tuition Tax Credit Bill Washington D.C LEARN, Inc Lawrence A. Uzzell Issue Brief: Tuition Tax Credits Washington, D.C LEARN, Inc 3 its power--not something to be avoided at all cost according to the founders, was an essential ingredient in a civilized nation his Commentaries on the Constitution 1833) that "An attempt to level all religions, and to make it a matter of state policy to hold all in utter indifference, would have created universal disapprobation, if not universal indignation.Il2 Confederation period, the Northwest Ordinance linked religion with good government.3 The Land Ordinance of 1785 even set apart one plot in each townsh ip in the new territories for the erection of a school, in many cases established by a church group.

After ratification of the Constitution, there was little protest when Congress provided lands for churches in the West subsidized missionaries among the In dians, and maintained chaplains in the Armed Forces--a practice that continues today, as does the opening of congressional sessions with prayer states made grants to private schools, most of which were church related did not b,an any aid or any religion i n general.4 1920s and 1930s, as the Court began to incorporate the Bill of Rights into the Fourteenth Amendment's due process clause, was the corner turned on the question of government aid to religion.5 ment clause of the First Amendment was in the 1947 E v erson case 156 years after the amendment was added to the Constitution. In this decision, Justice Hugo Black argued for a wall of separation between church and state that was to remain "high and impregnable He asserted that government cannot pass laws tha t "aid one reli gion, aid. all religions, or prefer one religion over another.

Black's wall of separation and his insistence that government cannot aid any religions at all have since become the cornerstone of all Supreme Court decisions on the establishme nt of religion clause of the First Amendment. The trouble is, explains constitu tional scholar Walter Berns, that Everson was based upon a faulty reading of history arguments made by the American Civil Liberties Union, which assumed that Thomas Jefferson a nd James Madison were the guiding lights in the formulation of the First Amendment Religion Supreme Court Justice Joseph Story noted in The words were backed up by government action: during the In addition The predominant interpretation of the First Amend m ent only in the The first direct instance of the Court acting on the establish Berns explains that Black relied on the Were that Walter Berns The Confusion of Political Choices and Constitutional Reauirements: The Perspective of a Legal Historian in Edwar d McGlynn Gaifney, Jr., ed., Private Schools and-the Public Good tives for the Eighties (University of Notre Dame Press, 1982) p Daniel D. McGarrv The Advantages and Constitutionality of Tuition Tax Policy Alterna 194 4 Credits, I' Educational Freedom, Spr i ng-Summer 1982, p. 38 Ibid Thomas Ascik The Role of the Courts in A New Agenda for Education Washington D.C McGarry, op. cit p. 17 The Heritage Foundation, 1985 pp. 4-5 4 true, then Jefferson's attitude (he first advanced the idea of a ltwall would have b e en widely disseminated at the time. The truth is that he did not make that statement until 1802, eleven years after the amendment was added. Madison's input, meanwhile also was minimal.7 Since American federal and state governments gave financial aid to r e ligion prior to the Everson decision, and Everson is based on faulty history, the Supreme Court has been gravely mistaken in its conclusions about the relation of government to religion that, as long as government.does not set up one religion or denominat i on as the officially sanctioned state religion; public aid to religion in general should be considered constitutional.8 An examination of the early history of America reveals TUITION TAX CREDITS Despite the faulty basis of Court decisions, legislators who favor tuition tax credits and voucher programs must deal with the reality of today's interpretation. They must find ways to phrase legislation to escape the stricture of the courts so that the law will not be overturned.

Among the roadblocks thrown in the way of tuition tax credits are: dire predictions of renewed segregation, talk of the demise of the public school system, and warnings that the credits will drain the federal treasury. Perhaps the most threatening argument has been the contention that a t ax credit is the same as federal funding of private schools, thus bringing it into conflict with the First Amendment's establishment clause.

Tax Breaks and Subsidies A tax break, whether in the form of a deduction or a credit is not the same as a direct go vernmental subsidy. The only way it could be the same would be if it were argued that all income belongs to the government and that any money left in a citizen's pocket after taxes amounts to a subsidy As education analyst Lawrence Uzzell has remarked We m ust reject the proposition that there is no moral or economic distinction between policies which let people keep their own earnings and policies which grant them the earnings of others is not the same thing as giving me a free lunch."g support the positio n that tax benefits are not the same as direct subsidies. Whereas all federal agencies dispensing financial aid are required to devise regulations concerning that assistance To refrain from stealing my sandwich The rules by which the Internal Revenue Servi c e operates Berns, op. cit pp. 192-194; McGarry, op. cit p 39 Berns, op. cit p. 185 Uzzell, op. cit p. 1. 5 the IRS has never been asked to do so. Tax deductions and credits are clearly not considered the equivalent of direct aid.1 The Supreme Court Walz d e cision of 1970 found that state tax exemptions for religious institutions were constitutional because the absence of government oversight of church finances actually reduced the involvement of church and state. This Walz verdict made a clear distinction b e tween tax exemptions and government funding, stating categorically that tax exemptions were not grants and did not represent government funding.ll A consistent application of the tenets in Walz should have rendered tuition tax credits unnecessary. Since t h e Court has declared that church schools are integral parts of churches and that the schools' mission is the same as that of the churches these schools should have the same legal status as the churches themselves, able to receive funds from parents as tax - deductible contributions. Were this the case, there would be no need to wrangle over tuition tax credits.12 Constitutionality of Credits It was not until the 1983 case of Mueller v. Allen that the The case challenged the constitutionality of constitutiona lity of tuition tax credits was formally tested in the Supreme Court income tax credits for education allowed by the state of Minnesota.

The Minnesota law covered all educational expenses for all children in elementary and secondary education judgment, the Court declared the law valid, opening the way for future tuition tax credit measures.

In a slim five to four In his majority opinion, Justice William Rehnquist cited five reasons for allowing the tax credit 1 The benefits would meet the test of legitimat e tax deduction--they would contribute to the public welfare (by promot ing education) and reduce involvement between church and state, a reference to the Walz decision The credits would benefit church schools only indirectly the parents would receive the tax relief and would make the decision where to send their children, thereby eliminating any government partiality toward religion The class benefiting is broad--the law applied to all parents of school-age children, whether they sent the children to publ i c or private schools private schools--in consideration of the fact that "they bear a 2 3 4 The law provided equity for parents of children in lo Rabkin, op. cit p. 4 l1 McGarry, op. cit p. 18 l2 Ibid p. 33 lo Rabkin, op. cit p. 4 l1 McGarrv. OD. cit D. 18 L I* l2 Ibid p. 33 6 particularly great financial burden in educating their children and 5) lar religion.

The law was no danger as an establishment of any particu Because of this decision, boundaries are set for proponents of tuition tax credits. The llsa fell ground is to ensure that any proposed law would apply to parents of public school as well as private school children. Tax credit proponents, moreover, can take comfort in Rehnquistls remarks concerning equity for parents who choose private schools an d in the assurance that the Court did not consider these benefits to be an establishment of religion.

EDUCATIONAL VOUCHERS The Mueller decision did not settle the issue for vouchers since they require government funding. With a tax credit, the government simply does not take a person's money; with a voucher money that already is collected is then disburse d for the purpose of meeting educational expenses. Such disbursal requires govern ment oversight and hence raises the specter of possible entangle ment of government and religion.

The legal question turns on who receives the voucher payments. If they were to go directly to a private school, this surely I could be considered government advancement of religion, an action prohibited by Everson voucher money provided to the parents. They then could decide whether to cash the voucher and which school would rece ive the benefit. This would be a form of indirect funding to private schools, with the schools receiving funds only by the parents free choice This would not be the case were the As such, the Court should have no problem with it.

The Legal History The 1947 Everson case, the initial ruling on the establishment clause of the First Amendment, provides the first indication of how the Court views indirect funding. In Everson, the Court approved state reimbursement to parents of children in nonpublic schools for costs of transportation, stating that since the aid went to the parents, rather than the schools, it did not violate the establishment clause. Everson thus allows indirect aid to parents of children in private schools.

Then in the 1948 McCollum decision, the Court touched on the issue, disallowing religious instruction on school grounds during school hours, even though the instruction was diversified and voluntary. Because the instruction was taking place in a building receiving public funds, the Court vi e wed it as indirect government l3 Daniel D. McGarry The Mueller v. Allen Case, 1983 Educational Freedom Spring-Summer 1983, pp. 1-5. 7 sponsorship of religion. In this case, the indirect connection was not allowed In the 1952 Zorach decision, however, the Court allowed released time for religious instruction off school grounds during school hours. This amounts to indirect funding of religious instruction since government-sponsored lltimelf was involved the Zorach decision, Justice William

0. Douglas signif icantly modified Justice Black's Everson opinion on the separation of church and state. Douglas commented The First Amendment does not say that in every and all respects there shall be a separation of Church and State We are a religious people whose insti t utions presuppose a Supreme Being When the state encourages religious instruction or cooperates with religious authorities by adjusting the schedule of public events to sectarian needs, it follows the best of our traditions.lI In In the 1963 Schempp case, daily Bible reading and prayer in public schools were declared unconstitutional because they in fringed on the rights of those in the classroom who were not religious. The basis for the decision was that the schools were funded by government, and any fund s going to aid a certain reli gious viewpoint would be wrong, as stated in Everson.

The central importance of Schempp, however, was the Court's ruling that government funds for schools must have a secular purpose and that the primary effect should neither advance nor inhibit religion. For the remainder of the 1960s, these two tests were regarded as the signposts to follow regarding constitu tionality. As such, in the 1968 Allen case the Court allowed New York State to loan state-selected and state-approved textbooks to children in private schools that were church connected rationale for this decision was that the aid directly benefited the parents and students, not the church school. Here again indirect funding seemed acceptable The Other landmark cases in the early 1970s, such as Lemon 1971) and Nyquist (1973 dealt primarily with direct subsidies or with the issue of tax exemptions. Consequently, the decision on indirect funding in Allen remains the standard for analyzing voucher proposals.

The Grove City College Case Early last year, the Court's ruling in Grove City College v. Bell led to a fundamental reexamination of the status of vouchers.

Grove City College is a private, religiously oriented institution that always has refused to accept direct aid from the government.

About 140 of its 2,200 students, however, were receiving Basic Educational Opportunity Grants, while 342 had taken out Guaranteed Student Loans. Such indirect assistance may be similar to the proposed educational vouchers because the mone y went to the students rather than to the college.14 l4 U.S. Supreme Court Reports, Vol. 79 L Ed. Zd, 4/13/84, pp. 516, 534. 8 But the Carter Administration Department of Education decided that Title IX of the Education Amendments of 1972 made the college a recipient of federal funds through these indirect grants. The Department then ordered the college to complete the forms used to assure compliance with Title IX regulations or else the students would risk losing their federal grants.

Grove City contested the Department of Education's interpre tation of the matter and thus refused to file the forms. In response, the Department started proceedings to declare the students ineligible to receive the funds. The case was carried to the Supreme Court, which rule d that Title IX requires Grove City to provide assurance of compliance. The Court added, however that federal government oversight can apply only to the college's financial aid department rather than the college as a who1e.l extension of government regulat i on over indirect assistance, for the Court ruled that assistance to a student implied assistance to at least part of the institution itself. Does this mean that when parents receive voucher money and spend it at the school of their choice, the government t hen gains some control over the private schools receiving the voucher payments To be sure, the Grove City case does not parallel exactly the proposed voucher systems. The Court ruling, for example, was based narrowly on the wording of Title IX of the Educ ation Amendments of 19

72. The case also concerned college level education rather than elementary or secondary schools. Still, Grove City could be seen as setting a precedent, which government agencies may try to apply to vouchers The decision has raised d isturbing questions about the I I IMPLICATIONS OF COURT DECISIONS Interpreting the twists and turns of the Supreme Court concerning church-state relations is clearly complicated. Despite its weaving over the past four decades, the Court has established a t hree-part test to determine the constitutionality of aid to religion 1) All government funding must have a secular purpose 2) Its primary effect must not be the advancement of reli gion; and 3 It must not entangle the state excessively in church affairs.1 6 The Secular Purpose Test As determined in the Mueller verdict, the'education of American citizens, whether in a public or a private school, has a l5 Ibid -9 PP- 532-533. 9 distinctively secular purpose, even though a religious motivation might also exist lightened citizens who can be trusted to make intelligent deci sions on the governance of the country and voucher proposals would meet this criterion The object of education is to produce en Both tuition tax credit The Primary Effect Test It is undeniable that, simply by making religious schools more accessible to those with lower incomes, tuition tax credits and vouchers might incidentally advance religion object of both proposals is to make alternative education available to families and, especially in t he case of the tax credits, to recompense parents who choose a private school but must continue to pay taxes for the public'system. Justice Rehnquist in his Mueller opinion described the issue as a matter of equity.

Mueller also indicates that tuition tax credits are acceptable if they allow all parents to claim deductions or credits for educa tional expenses, whether their children attend private schools or not In this way, the credits are not solely for the benefit of those parents who patronize religiou s schools. Vouchers naturally would include all students Yet the primary The Entanglement Test Tuition tax credits require no government oversight and according to Walz, actually reduce church-state involvement. Entanglement, however, could create problems for vouchers. If Grove City becomes the standard for indirect funding, then the government will have a right to intervene in the affairs of all private schools that accept vouchers.

Grove City case do not necessarily cover all or even most voucher situati ons Yet the conditions of the DESIGNING VOUCHER LEGISLATION In the Chapter One Program for Disadvantaged Children, the To Reagan Administration has tried to create a voucher.system allowing parents to use the money at the school of their choice counter th e possible charges that these vouchers are federal assistance to private schools, the Program is worded carefully stating Payments made by a local educational agency to a private school or to another local educational agency pursuant to an educational vouc h er program under this chapter shall not constitute Federal financial assistance to the local educational agency or private school receiving such payments, and use of funds under this chapter l6 Roger A. Freeman Educational Tax Credits in Everhart, op. cit p 474. 10 received in exchange for a voucher to a private school or by a public school located outside of the school district in which the eligible child resides shall not constitute a program or activity receiving Federal financial assistance.

The Chapter One voucher proposal is still before Congress It is a promising attempt to bring the voucher concept in line with Supreme Court rulings. Another approach is that of equal access. Congress recently passed legislation giving religious groups the same right of access to public school facilities as other student groups enjoy. It thus could be argued that all students.need equal access to all types of schools in order for them to be certain of obtaining the best education available.

To meet the tests implied by the various Court rulings, the quality of education must be central to every voucher proposal.

Vouchers must continue to have as their primary goal improved education for all American children. Vouchers would help achieve this because they wo uld force schools to demonstrate competence to attract students. The virtual monopoly currently enjoyed by the public school would be challenged, stimulating competition that would revitalize public education.

Finally, a successful voucher proposal must s tress the virtues of freedom of choice. It must be emphasized that, because of financial constraints, far too many parents cannot choose where to educate their children. Result: many children suffer from poor education. Vouchers would alleviate that situa tion.

CONCLUSION The benefits of education vouchers are so apparent that the By making sure that nation must try to establish such a system it serves secular purposes, does not mainly advance religion, and avoids entangling the state excessively in church affairs, a voucher program should meet the standards established by the Constitution and thus survive predictable challenges in the courts At worst, if certain aspects of a voucher system were declared unconstitutional, the reasons for the ruling could be used to craft a better approach. The system is too important to the U.S. education system for its proponents to be intimidated by threats of a challenge in the Supreme Court A voucher program ultimately can be crafted to meet that challenge.

Prepared for The Heritage Foundation by K. Alan Snyder Director of the Historical-Political Research Services in Fairfax Station Virginia