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Will The State Supreme Court Overturn Education Savings Accounts?

The Nevada Supreme Court heard oral arguments Friday in the two cases that challenge the constitutionality of the Education Savings Accounts, a program enacted in 2015 that would allow parents to take the per pupil spending allotted by the state to pay for tuition at – presumably better - private schools.

More than 7,000 parents have applied to take advantage of the new law but they’re awaiting the Court’s decision to see if they will get the roughly $5,100 to pay the private institutions.

The law is being challenged on two fronts.

One, that it is unconstitutional because it was taken from the pot of money that is earmarked only for public school; and, two, that it is unconstitutional because public funding cannot go to religious institutions.

Most of the private schools in the state - not charter schools or magnet schools, which are public schools - are religious based.

The opposition says the savings accounts are not public, but are owned by the parents, and that the state pays for services from other religious institutions, like hospitals.

Amanda Morgan is an attorney with Educate Nevada Now, one of two groups behind the two lawsuits. She says the law violates the state constitution by creating a "spigot" that siphons off money from a "lock box" of public money.

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"So, for every student that applies for an ESA that's $5,100 to $5,700 that's coming out of that initial appropriation," she said, "And that's unconstitutional and of course that harms public schools because that's funding that should be going to public schools."

Predictably, supporters of the savings accounts look at it in a different way.

Michael Schaus is the communications director for Nevada Public Research Institute. NPRI supports the savings accounts.

Schaus and his group believe schools are funded on a per pupil basis anyway so simply having the money follow the student is not taking funding from a school. 

"If her argument is correct, then really anybody who moves out of the district, anybody who moves out of the state, anybody who moves their child to a public school reduces enrollment numbers therefore 'takes money away' from the school," he said.

But Morgan said the per pupil spending is both local funding and state funding. When a student leaves Clark County, CCSD loses about $2,200, which goes back to the state. But when a student uses and ESA, the district loses all of the $5,100 in funding. That's two and a half times as much.

Schaus said that argument is the equivalent of saying you're taking money away from a store if you walk in but don't buy anything.

In the oral arguments, the state's lawyer, Paul Clement, argued that while the money starts out as public funds it becomes parents money to use for education at any institution they want.

“It originated as state money” but it then becomes parents’ money, even though what they spend it on is restricted. From the parents’ point of view, Clement said, “It’s my money at some level.”

Amanda Morgan took issue with "at some level." 

"The fact that it is being taken away," Morgan said, "The money that the legislature appropriated first and the money the legislature deemed sufficient to operate public schools is being taken away, regardless of where it goes... it's not public education and therefore it's unconstitutional."

Morgan said allowing the savings accounts to go forward would allow public money to go to private institutions, which can discriminate on the basis of sexual orientation, gender identity or religious affiliation. 

"You're basically creating a parallel system of schools that are publicly funded," she said.

Schaus said the savings account still fund public education, just not public schools.

But there may be away around this case, which is called Lopez v. Schwartz. Chief Justice Ron Parraguirre brought up the idea during the oral arguments of the Legislature funding public education at a higher level, to account for money that would go towards ESAs. He also brought up the idea of creating a separate account for funding the savings accounts. Richard Katskee, who argued on behalf of the parents represented by Educate Nevada Now, said that would be acceptable.

Amanda Morgan agreed. "If there was a second appropriation... and there was full and open debate over whether we wanted to appropriate general fund money... to a voucher program, that's entirely different from what we have before us."

She pointed out, though, that the ability of schools to discriminate violates another part of the Constitution, which was part of her group's argument before the Court.

State Senator Scott Hammond helped craft the Education Savings Accounts law. He agrees that the public money is following the child and gives parents the ability to choose the education that best fits their child. 

"What I see is that we're diverting money towards the children," he said, "So wherever they're going to be educated, we, as the public, are financing that."

Hammond said that while much of the talk as been centered on private schools he believes the money parents will get in the accounts could be used in a variety of ways. And unlike school vouchers of the past, the money doesn't have to be used for a private school, but could be used for online programs or specialized schooling or even counseling.

"It is really about customizing education and wrapping those services around a kid," he said, "Parents know their children best and so the parents are going to be saying, 'This is the education I would like to see for my child.'"

The ACLU of Nevada does not see it as an issue of parents choosing the right school for their child, but rather an issue of public money going to religious institutions.

That is the basis of the second case that was argued in front of the Supreme Court on Friday.

"These are public funds," said Amy Rose, the legal director for ACLU of Nevada, "The Nevada Constitution specifically prohibits public funds from going to fund religion and that's exactly what this is."

She said that while a parent might be able to choose where the money goes, the rest of the choices about that money are made by the state, including when it is distributed, how it will be distributed and whether it will be distributed at all. 

Rose dismissed the idea - which was asked by Chief Justice Parraguirre during oral arguments -  that public money is already spent on religious institutions. He pointed to Health Savings Accounts, which might be used by public employees to go to a Catholic or other faith-based hospital. 

Rose said the way that money is collected and distributed is different. It comes out of the employee's paycheck, and it is unequivocally their money. She also pointed out that those hospitals don't distribute "Catholic medicine," but faith-based schools incorporate the faith's doctrine into the curriculum.

Schaus disagreed with that argument, and he believes the parents involvement in school choice is the key.

"When you give the decision on how to spend their money, that is enough of a disconnect between the state and the religious institution," he said, "And the reason why is because the state is not saying, 'You have to spend this on a Catholic school or a Jewish school...' It's the individual saying, 'I'm taking this money that is basically kind of like a tax rebate. I get to spend this how I want as long as it is for educational purposes.'"

As to what the Supreme Court will decide, no one is prematurely rejoicing. Two justices - Parraguirre and Justice Kristina Pickering seemed hostile to the plaintiffs arguing against the ESAs. Justices Michael Douglass ands Nancy Saitta seemed more sympathetic to the plaintiffs. Justice Hardesty seemed sympathetic to the plaintiffs in Educate Nevada Now's suit, but wondered about judging people for their religious beliefs in response to arguments from the ACLU. And two of the justices - Michael Cherry and Mark Gibbons - barely asked any questions. Cherry asked one.

But we may know what they think by the end of the week. Morgan said that the Court mentioned the urgency of making a decision before the school year starts. If they rule in favor of Educate Nevada Now, then the ESA program is effectively dead. The ACLU ruling is just an appeal of a dismissal by a lower court. So if the Supreme Court rules in their favor, they will have to go back to the lower courts.

Guests

State Senator Scott Hammond, R-District 18; Amanda Morgan, attorney Educate Nevada NowMichael Schaus, communications director, Nevada Policy Research Institute (NPRI); Amy Rose, legal director, ACLU of Nevada

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