Constitutionality of Providing Tax Credits or Grants for Tuition Payments to Nonpublic Elementary and Secondary Schools ( 1978 )

March 16, 1978
78-19 MEMORANDUM OPINION FOR THE
ATTORNEY GENERAL
Constitutional Law— First Amendment—
Establishment Clause— Nonpublic
Elementary and Secondary Schools—
Tuition— Tax Credits
You have asked for our opinion concerning the constitutionality, under the
Establishment Clause of the First Amendment, of providing either tax credits or
grants for tuition payments to nonpublic elementary and secondary schools.
You referred to two specific proposals providing such grants or credits: the
Packwood-Moynihan bill, S. 2142, which would give limited income tax relief
in the form of a credit for tuition payments to nonpublic schools; and the
extension of the Basic Educational Opportunity Grant program to include
nonpublic elementary and secondary school education.
In our opinion, under existing Supreme Court decisions both proposals
would violate the First Amendment guarantee against establishment of religion.
The controlling decisions on tuition grants and credits for nonpublic elementary
and secondary education are Committee fo r Public Education v. Nyquist, 413
U.S. 756 (1973), and Sloan v. Lemon, 413 U.S. 825 (1973), a companion
case.
In Nyquist, the Court invalidated a New York tuition reimbursement and tax
relief plan. The plan provided limited tuition reimbursements to low-income
families with children attending nonpublic elementary and secondary schools.
Families failing to qualify for tuition reimbursement were allowed tuition tax
credits in varying amounts depending upon adjusted gross income. The Court
found both facets of the program unconstitutional under the three-part Estab­
lishment Clause test enunciated in Lemon v. Kurtzman, 403 U .S. 602, 612
(1971):
First, the statute must have a secular legislative purpose; second, its
principal or primary effect must be one that neither advances nor
inhibits religion . . .; finally, the statute must not foster “ an excessive
entanglement with religion.” [Citations omitted.]
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The Court acknowledged that the purposes of the State in enacting the
measures— to preserve a healthy, safe educational environment for all
schoolchildren, to promote pluralism and diversity in education, and to prevent
further overburdening of the public school system— were secular and not
inappropriate legislative goals. It held, however, that the tuition grants and
credits failed the second prong of the test because a primary.effect of the plan
was to aid religious education. The Court noted additionally that the plan
created the prospect o f politically divisive church-state entanglement. Adoption
of programs assisting sectarian education would generate ongoing controversy
along religious lines over continuing or enlarging available relief.
In Sloan, the Court held that a Pennsylvania tuition reimbursement program
was constitutionally indistinguishable from the New York program invalidated
in Nyquist. Since the Pennsylvania program had the effect o f advancing
religion, it, too, infringed upon the Establishment Clause guarantee.
The Packwood-M oynihan bill provides an income tax credit for tuition
payments to elementary and secondary schools as well as vocational schools,
colleges, and universities.' The amount o f the credit is 50 percent of tuition up
to a total of $500 per student. If the credit to which the taxpayer is entitled
exceeds his tax liability, the difference is refunded to him. We believe that the
tax relief provided in the bill for tuition payments to nonpublic elementary and
secondary schools falls within the scope o f Nyquist.
Although we have considered carefully possible arguments distinguishing
the Packwood-M oynihan tax credit from the New York tax relief program
struck down by the Supreme Court, we do not believe the differences are of
constitutional dim ension. It might be argued that the facially neutral, broad-
based tax relief provided in the bill prevents it from having a “ primary effect”
of advancing religion. According to that argum ent, aid accruing to nonpublic
elementary and secondary schools would be only “ incidental” to an otherwise
neutral plan, and therefore would be constitutionally permissible under
Nyquist. 413 U .S. at 771, 782 n. 38; Walz v. Tax Commission, 397 U .S. 664
(1970). A realistic appraisal o f the tax credits proposal, however, indicates that
it is not so neutral or broad based as it might appear. In analyzing the effect of
the tuition tax credit under the Establishment Clause, it is necessary to separate
the elementary and secondary school and higher education components of the
bill.2 Recent Supreme Court decisions have consistently distinguished aid to
college-level institutions from aid to lower-level schools, pointing out that
'W e u n d e rsta n d th at th e bill as re p o rte d o u t o f the S e n a te F in an ce C o m m itte e w as a m e n d ed in a
n u m b e r o f w a y s b u t th at th e b a sic tax c re d it p ro v isio n s re m a in u n ch an g e d .
2W e u n d e rsta n d th at a se v e ra b ility c la u se w as a d d e d to the bill as recen tly re p o rte d out o f the
S e n a te c o m m itte e .
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religiously affiliated institutions at the college level are less often so “ pervasively
sectarian” as schools educating younger students and that older students are
generally less impressionable. See, e.g ., Roemer v. Board o f Public Works o f
Maryland, 426 U.S. 736 (1976); Hunt v. M cNair, 413 U .S. 734 (1973);
Committee fo r Public Education v. Nyquist, 413 U .S ., at 111, n. 32; Tilton v.
Richardson, 403 U .S. 672, 685 (1971).
Once the focus is on elementary and secondary school tuition credits alone, it
is evident that the effect on sectarian education is not merely incidental. Not
only would the credits benefit institutions whose role is to emphasize religious
training and beliefs, but they would also benefit sectarian schools in significantly
larger numbers than nonsectarian schools. The high percentage of sectarian
elementary and secondary schools in New York State— approximately 85
percent o f all nonpublic schools— was one factor influencing the C ourt’s
decision in Nyquist.
Current statistics on nonpublic schools nationally show that nearly 17 percent
of the Nation’s elementary and secondary schools are nonpublic. O f that
percentage, 85 percent are religiously affiliated. U.S. Department of Health,
Education, and W elfare, National Center for Education Statistics, Nonpublic
School Statistics, 1966-77. According to the most recent statistics available,
87.5 percent of nonpublic schools at the elementary level and 70.2 percent o f
nonpublic schools at the secondary level are sectarian.3 U.S. Department of
Health, Education, and W elfare, National Center for Education Statistics,
“ Statistics of Nonpublic Elementary and Secondary Schools, 1970-71.” A l­
though sectarian secondary schools do not dominate nonpublic education to the
same extent as sectarian elementary schools, we believe that their number is
sufficiently substantial so that no meaningful distinction between credits for
elementary and secondary schools can be drawn.
It might be argued that the availability of credits for public elementary and
secondary school tuition under the provisions of the bill would significantly
affect those statistics. The Court has repeatedly made the point, however, that
the actual impact or “ effect” of the program is the controlling determinant, not
its hypothetical consequences. The simple fact is that most public schools are
supported by State funds, not tuition payments, and there is no evidence of
which we are aware that the structure of State funding is likely to change
radically as a result of this legislation. Thus, it appears that the tax credits here,
S ta tis tic s sh o w in g the b re a k d o w n o f sch o o ls at th e e le m en ta ry an d sec o n d a ry school levels fo r
the 1976-77 a ca d e m ic y e a r h av e not y et b e en c o m p le te d . P relim in ary statistics o n stu d en t
en ro llm e n t d u rin g 1976-77 are a v a ila b le , h o w e v e r, w h ic h , alth o u g h c o m p ile d usin g a so m ew h a t
d ifferen t form at th a n e a rlie r s ta tistic s , su g g est th at th e p e rc en tag e s o f n o n p u b lic sch o o ls h av e not
c h an g e d rad ically o v e r th e last 6 y ears.
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like the tax reductions in Nyquist, have a primary effect of benefiting parents of
children attending sectarian, nonpublic schools.4
The neutrality argum ent deserves elaboration because it is the most plausible
basis for distinguishing the bill from the statute at issue in Nyquist and Sloan.
The argument rests primarily on language in Mr. Justice Powell’s opinion for
the Court in Nyquist, in which he distinguished Walz v. Tax Commissioner, 397
U.S. 664 (1970). In Walz, the Court upheld the constitutionality of property tax
exemptions for churches. The N yquist Court distinguished the earlier case on
several grounds, one o f which was the broad-based and neutral class of
property exempted:
The exemption challenged in Walz was not restricted to a class
composed exclusively or even predominantly of religious institu­
tions. Instead, the exemption covered all property devoted to reli­
gious, educational, or charitable purposes. As the parties here must
concede, tax reductions authorized by this law flow primarily to the
parents of children attending sectarian, nonpublic schools. Without
intimating whether this factor alone might have controlling signifi­
cance in another context in some future case, it should be apparent
that in terms of the potential divisiveness of any legislative measure
the narrowness o f the benefited class would be an important factor.
[413 U .S ., at 794]
At the end of the above discussion the Court added a footnote referring back
to a similar point made earlier, which stated:
[W]e need not decide whether the significantly religious character of
the statute’s beneficiaries might differentiate the present case from a
case involving some form o f public assistance (e.g., scholarships)
made available generally w ithout regard to the sectarian-nonsectarian
or public-nonpublic nature o f the institution benefited. [413 U .S., at
783 n. 38]
An argument could be made, on the basis of those remarks, that the present
bill is valid because it would benefit a large, diverse class and would not in its
4W e sh o u ld e m p h a siz e th a t th e C o u rt in Nyquist m a d e c le a r th a t a law co u ld o ffen d the
E s ta b lish m en t C la u se e v en if aid to re lig io n w as not the p rim ary effe c t but w as o nly one o f several
c o n se q u e n c e s o f th a t law . A n a d d itio n a l N ew Y o rk S ta te p ro g ram c o n sid e re d by the C o u rt in
Nyquist p ro v id e d “ m a in te n a n c e a n d re p a ir g r a n ts " to n o n p u b lic sch o o ls, lim itin g those g ra n ts to 50
p e rc e n t o f th e m a in te n a n c e a n d re p a ir c o sts o f p u b lic s ch o o ls. E ven th o u g h it w as c le a r that m ost o f
th e fu n d s w o u ld b e u sed fo r n o n s e c ta ria n p u rp o s e s, th e C o u rt h e ld the g ra n ts u n c o n stitu tio n a l. T h e
flaw in th e p ro g ram w as th a t it p ro v id e d n o m ean s o f e x clu d in g S tate fu n d s from ben efitin g
re lig io n . 4 1 3 U .S ., at 7 7 8 -8 0 . P o ssib ly a c le a re r e x a m p le m a y be fo u n d in the F ederal h ig h er
e d u ca tio n c o n stru c tio n g ra n ts in v o lv e d in Tilton v. Richardson, supra. In that c ase , ev en th o u g h it
w as c le a r th at th e c o n stru c te d fa c ilitie s w o u ld be u sed p re d o m in a n tly fo r se c u la r p u rp o se s, the fact
th at th ey co u ld be u sed fo r s e c ta ria n p u rp o s e s 20 y e a rs a fte r th e ir c o n stru c tio n w as e n o u g h to ren d er
th at p o rtio n o f th e law u n c o n stitu tio n a l in th e u n a n im o u s v ie w o f the C o u rt. In d e e d , the C ourt
stru c k th e p ro v isio n d o w n o n th e g ro u n d th a t th e 2 0 -y e a r lim itatio n " w ill in part h av e the e ffe c t o f
a d v an c in g re lig io n ," 4 0 3 U .S ., at 6 8 3 [e m p h a sis a d d e d ], not b e ca u se th at e ffe c t w as p re d o m in a n t.
N o o n e c o u ld h av e c la im e d th e re th at the la w ’s c e n tra l e ffe c ts w e re sec u la r. O n ly w h en the
sec ta ria n e ffe c ts m a y b e c h a ra c te riz e d fa irly as m e re ly “ in c id e n ta l” c an a fu n d in g p ro g ra m w hich
b e n efits re lig io n be u p h eld .
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operation draw distinctions based upon the religious character of institutions.
This contention may be maintained, however, if no line is drawn between
elementary and secondary school and higher education tuition credits. We think
the bill cannot be viewed in this manner for several reasons. First, as we noted
above, the Supreme Court has repeatedly drawn a distinction between grants to
sectarian colleges and universities and similar grants at the precollege level.
Second, the history o f education in this country has evolved along lines
distinguishing between universal free and mandatory public education at the
elementary and secondary level and nonmandatory, and rarely free, educational
offerings by the States at the higher education level. Because of these
differences, the effect o f the bill’s tax credit provisions will be decidedly
different for parents of public schoolchildren than for those whose offspring are
enrolled in colleges and universities. Third, comments and testimony submitted
on the bill leave little doubt that Congress is aware o f the differences between
tuition tax credits for the families of college students and credits for those
families of elementary and secondary schoolchildren who desire a private
school alternative.5 See, e.g ., letter dated December 21, 1977, to Senators
Packwood and Moynihan from Professor Freund of Harvard Law School.
Finally, we do not think that broadening the class of beneficiaries to mesh
elementary and secondary students with college and university students
obscures the fact that one of the “ primary effects” of the bill is to aid sectarian
education. The Court has stated clearly that to constitute a “ primary effect” a
law need not result exclusively or even predominantly in religious benefits.
Rather, a primary effect can exist even where there are any number of other
appropriate and praiseworthy consequences of the legislation. Given these
considerations, we do not think it reasonable to contend that the provisions of
the bill pertaining to tuition for elementary and secondary schools would
survive on “ neutrality” grounds.6
An alternative argument in support of the bill is that Federal tax relief is
fundamentally different from similar State measures. If the States promote the
education of elementary and secondary schoolchildren through the provision of
free public schools, the primary effect of any State tax relief for elementary and
secondary school tuition is to assist the sectarian schools which make up the
bulk of educational institutions charging tuition. It is argued that the Federal
Government, on the other hand, does not provide elementary and secondary
5W e note th at the rep o rt o f th e S en a te F in an ce C o m m itte e o n the b ill, as a m e n d e d , sep a ra te ly
d iscu sses e le m en ta ry an d sec o n d a ry sch o o l tu itio n c re d its an d c o lle g e tu itio n c re d its. S. R ept. N o.
9 5 -6 4 2 , 9 5 th C o n g ., 2d sess. 2-3 (1 9 7 8 ).
6S u p p o rters o f th e bill w h o seek to d istin g u ish Nyquist m ake o ne o th e r g e n eralize d c la im . T h e
a ssertio n is m ade th at the C o u rt's p re c ed e n ts in the E sta b lish m en t C la u se are a o f First A m e n d m e n t
law have b een so fle x ib le an d u n p re d ic ta b le th at little s ig n ific a n ce m ay be a tta ch e d to recen t
h old in g s. In o u r v iew th at re a d in g o f th e c ase s is u n fa ir. C e rta in ly , as the C o u rt h as freely
ack n o w le d g e d , the lines are n o t e a s y o n e s to d ra w . T h e C o u rt h a s, h o w e v e r, d e v e lo p e d — and
a dhered to— the th re e -p a rt te st o u tlin e d a t len g th 8 y e ars ag o in Lemon v. Kurtzman. supra.
T h at test has c o m m a n d ed the v o tes o f e v ery Ju stic e o f the C o u rt w ith the e x c e p tio n o f Ju stic e s
W hite an d R eh n q u ist. M o re o v er, w e k n o w o f n o reaso n to a rg u e th a t Nyquist and Sloan, the
p re c ed e n ts d ire c tly p e rtin e n t h e re , are o f d o u b tfu l v ita lity .
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schooling, and can attempt effectively to promote the education of schoolchildren
only through generally applicable tax relief measures. This argument ignores
the focus of Nyquist. Although the purpose underlying a tax-benefit plan may
be both secular and laudable, the effect of the plan may be impermissibly to
advance or inhibit religion. As we have said, it is our opinion that the effect
upon nonpublic elem entary and secondary schools of the Packwood-Moynihan
tax credit would be constitutionally indistinguishable from the effect of the
Nyquist tax reduction legislation.7
Our comments with respect to the proposed extension of the Basic Educational
Opportunity Grant (BEOG) program 8 to include nonpublic elementary and
secondary education follow the same vein. Under the present program grants
are awarded to students enrolled at institutions of higher learning on the basis of
need. The amount o f the grant is determined by a number o f factors including
family size, income, and tuition costs. The proposed extension would make
those grants available to pupils in nonpublic elementary and secondary schools
as well. Both Nyquist and Sloan hold that tuition grants for nonpublic
elementary and secondary education infringe upon the Establishment Clause
guarantee if a primary effect o f the grant or reimbursement plan is to aid
sectarian schools. Given the predominantly sectarian affiliation of nonpublic
elementary and secondary schools nationally, any broadening of the BEOG
program into elem entary and secondary education would appear to have a
primary effect nearly identical to the tuition reimbursement plans invalidated in
Nyquist and Sloan.
Finally, we note that the problem o f entanglement in the form of politically
divisive activity described by the Court in Nyquist would exist under both
tuition relief proposals. Insofar as the programs have a primary effect upon
sectarian elementary and secondary schools, controversy is predictable. As the
Court stated:
[W]e know from long experience with both Federal and State Govern­
ments that aid programs o f any kind tend to become entrenched, to
escalate in cost, and to generate their own aggressive constituen­
cies. . . . In this situation, where the underlying issue is the deeply
7W e b e lie v e , h o w e v e r, th at th e P a c k w o o d -M o y n ih a n tax c re d it w ould be c o n stitu tio n a l w ith
re sp ec t to c o lle g e a n d u n iv e rsity tu itio n . It a p p e a rs th at th e b e n efits o f a h ig h e r e d u ca tio n tax cre d it
w ou ld flo w to a b ro a d c la ss o f in d iv id u a ls , an d n o t, as w ith e le m e n ta ry and sec o n d a ry school
c re d its , p rim a rily to in d iv id u a ls a ffilia te d w ith sec ta ria n in s titu tio n s. A s the C o u rt n o ted in Nyquist.
n o th in g in its d e c isio n c o m p e ls th e c o n c lu sio n that a g e n e ra lly a v ailab le fo rm o f ed u ca tio n
a ssista n c e , su ch as th e “ G .I . B i l l , " 38 U .S .C . § 16 5 1 , im p e rm issib ly a d v an c e s re lig io n . 4 1 3 U .S .,
a t 7 8 3 , n. 38. O u r v ie w s on th e c o n stitu tio n a lity o f th e c o lle g e tu itio n tax c re d it are b u ttresse d by
the C o u rt’s recen t su m m a ry a ffirm a n c e o f a c a se in v o lv in g an E sta b lish m e n t C la u se c h a lle n g e to a
T e n n e sse e p ro g ram p ro v id in g g ra n ts to s tu d e n ts in p u b lic a n d p riv a te c o lle g es. Americans United
fo r the Separation o f Church and State v. Blanton. 4 3 4 U .S . 8 0 3 , (1 9 7 7 ), a ff g 4 33 F. S u p p . 97
(M .D . T e n n . 1977). T h e d is tric t c o u rt, re ly in g in p art o n th e Nyquist fo o tn o te m en tio n e d a b o v e,
c o n c lu d e d that the b ro a d T e n n e ss e e c o lle g e s c h o la rs h ip p ro g ra m , w ith its e m p h a sis o n the student
ra th e r th a n the in stitu tio n , d id n o t h a v e th e e ffe c t o f fa v o rin g p riv a te o r sec ta ria n institu tio n s o v e r
pu b lic in stitu tio n s an d th e re fo re d id not c o m p ro m is e E s ta b lish m en t C la u se v a lu e s. W e b eliev e that
the sam e ra tio n a le is a p p lic a b le to F e d e ra l tax c re d its fo r c o lle g e and u n iv e rsity tuitio n .
“T h a t p ro g ram is set o u t at 20 U .S .C . § 107a (1 9 7 5 S u p p .), as a m e n d ed by 2 0 U .S .C .A . 1070a
(1 9 7 6 ).
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emotional one of Church-State relationship, the potential for seriously
divisive political consequences needs no elaboration. [413 U.S. at
797]
In conclusion, it is our opinion that both the proposed extension of the BEOG
and the provisions o f the Packwood-M oynihan bill which would provide relief
for tuition payments to nonpublic elementary and secondary schools are
unconstitutional under the decisions of the Supreme Court in Nyquist and
Sloan.
Jo h n M . H a rm o n
Assistant Attorney General
Office o f Legal Counsel
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