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ACSTO: So what did the Supreme Court think?

By David A. Cortman posted on:
October 17, 2017

Last week the United States Supreme Court heard arguments in ADF’s case ACSTO v Winn, which concerns an ACLU challenge to Arizona’s tuition tax credit program.   To those not familiar with the case, it is essentially about two issues:  1) parents’ rights to choose the best education for their own children, and 2) whether the ACLU and its clients have the right to sue to challenge the school choice program in the first place.

Gavel & FlagThe argument was enlightening, especially with the court’s most recent addition.  Justice Kagan was more of a force right out of the gate and several times rescued the ACLU’s attorney from difficult questioning about whether it was private money involved in the program, as opposed to “government” money.  And Justice Kennedy, the possible swing vote, asked both sides very intriguing questions.  (For some quick background information, an STO is a School Tuition Organization which is a private 501(c)(3) that anyone may set up to accept donations from private citizens, who then may take a tax credit up to a certain limit.  The STOs then provide scholarships to parents who choose for their children to attend any of the hundreds of private schools throughout the state that the STO supports).  To the attorneys defending the program, Justice Kennedy asked whether an STO would be permitted to discriminate based on race.  His hypothetical assumed that no federal or state laws forbid such actions (which they do).  He was asking whether STOs are government entities because there are “rules” with which they must comply.  Short answer, no.  Longer answer, no.  First, the program itself forbids any discrimination based on race.  Second, all 501(c)(3)s have rules, as do all financial institutions, insurance companies… you name it.  Do these government regulations (which are much more extensive than those found in the program here) turn a private organization into a government organization?  Nope.  Third, the Supreme Court already held years ago that the IRS could revoke the tax-exempt status of an organization that discriminated based on race.  Without tax-exempt status, an organization cannot be an STO.  Problem solved.  Or was it?

Was he trying to get at something else?  Maybe.  Part of the ACLU’s argument was that STOs “discriminate” based on religion.  Well that sounds bad, doesn’t it?  Not when you look at the facts.  Like not only the fact that STOs are private organizations that are funded by private donations, but maybe even more important is the fact that no STO actually discriminates based on religion.  That’s right.  The ACLU thinks that simply because it says it is so, it must be.  STOs do not take the students’ religion into account at all when it comes to awarding scholarships.  They do associate with like-minded private schools—whether they are secular, religious, or cater to American Indians, the homeless, or special needs, etc.  But not one of them considers an applicant’s religion.  So where does the “fact” that STOs discriminate based on religion come from?  It is entirely made up.

Lastly, the parents decide which school their child will attend, and then apply for a scholarship.  Not a dime of the donated money may go to any school—religious or secular—unless it is awarded to a student through a scholarship.  And it is the private school which decides who may attend.

So Justice Kennedy’s concerns about such “discrimination” by STOs should be alleviated by the facts (it doesn’t even exist), the law (the program forbids it), and Supreme Court precedent (501(c)(3) status forbids it).

School ChoiceTo learn more about what's at stake in the ACSTO v. Winn case, please visit our resource page, School Choice: A Parent’s Right under Attack.


David A. Cortman

David A. Cortman

Senior Counsel, Vice President of U.S. Litigation

David A. Cortman serves as senior counsel and vice president of U.S. litigation with Alliance Defending Freedom.


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