Niehaus v. Huppenthal

Posted on November 21, 2011 | Type: Case
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In the 2011 legislative session, the Arizona legislature passed the Empowerment Scholarship Account program that allows parents of special-needs children to withdraw their children from public schools and use a portion of the money that would have gone to the local district to design their own educational plan. Only a few months later, various groups challenged the constitutionality of the program, including the Arizona Education Association and the Arizona School Boards Association. They argue the program violates state constitutional provisions that prohibit the expenditure of state funds for private or religious schools. The Goldwater Institute has joined the State in opposing the lawsuit in order to protect the right of parents to direct the education of their children.

Quick Status >>     


Last step: Victory! Court of Appeals upholds ESAs
Next step: AZ Supreme Court will decide whether to review


What happened to bring about this challenge?

In 2009, the Arizona Supreme Court struck down two school voucher programs, one designed to help students with special needs and another for foster children. The court found these programs violated the Arizona Constitution’s ban on aid for religious or private schools. The court reasoned that even though a tuition check was dispersed from the state to the parent, parents could only endorse the check to a private school of choice. The parents’ lack of control over the state funds meant the state was essentially writing tuition checks directly to private and sectarian schools.

Two weeks after the court’s ruling, the state legislature acted to rescue students in the voucher programs by passing a corporate tax-credit that provided scholarships to children with special needs and in the foster care system. The tax credit allowed many students formerly on the voucher program to remain in their school of choice, but its benefits are limited. There is a cap on the amount of tax credits the state will provide, and the economic downturn has prevented the program from reaching its potential.

After the ruling on the voucher programs, the Goldwater Institute continued to research and produce reports on the concept of an education savings account program for students in K-12, a program Goldwater first proposed in 2005. Unlike the voucher program, which only allowed parents to direct state funds to private school placements, as enacted, the Empowerment program deposits 90% of student funds in a private account controlled by parents and allows  parents to spend the money on a wide assortment of educational options, including tutoring, speech or instructional therapy, online programs, and tuition.

In short, the program was custom-made to maximize parental choices while also correcting the features the Arizona Supreme Court cited when it ruled the voucher programs unconstitutional. By giving parents direct and expansive control over how the money is spent, the state is sufficiently disconnected from the selection process and thus cannot be accused of directing money to private or sectarian schools.
The Arizona School Board Association, the Arizona Education Association, and their allies have challenged the constitutionality of the program in court. The Goldwater Institute had committed to defend the program if its constitutionality was challenged, and now it is delivering on that commitment alongside the Arizona Attorney General’s office and the Arizona chapter of the Institute for Justice. 

Who is the client?

The client in this case is the Goldwater Institute itself. As the originator and developer of the Empowerment Scholarship Account program, the Goldwater Institute has the legal right to join the lawsuit and fight to protect the program.

Who is the judge?

Maricopa County Superior Court Judge Maria Del Mar Verdin.

What are the key issues?

Aid Clause
Article IX, § 10 of the Arizona Constitution prohibits the “appropriation of public money made in aid of any church, or private or sectarian school, or any public service corporation.” Plaintiffs argue that because parents may use Empowerment Account funds to purchase tuition at a private or sectarian school, the state is appropriating funds to private or sectarian schools.
This argument fails. First, the court’s concern in Cain v. Horne was that parents had no control over how the money was spent and were, therefore, merely inactive middlemen between the state and the private schools. Here, once parents receive the Empowerment Account funds, they have wide discretion to spend those funds on an assortment of educational options.
Second, the Arizona Supreme Court has long applied the “true beneficiary” test to determine whether the entity being aided is an individual (permissible) or a private organization (prohibited). Here, even when parents direct funds to private schools, the children who receive the purchased tuition are the true beneficiaries of the funds, not the schools. 

Religion Clause
Article II, § 12 forbids public funds “appropriated for or applied to any religious worship, exercise, or instruction.” Plaintiffs argue that because some parents may direct Empowerment Account funds to religious schools, part of the funds will be used for religious instruction and thus the program violates the Religion Clause.

The counterarguments under the Aid Clause apply here as well: because parents are given the funds and have wide latitude on how the money is spent, the state has no part in directing any funds to religious instruction.

Furthermore, the federal counterpart to Arizona’s Religion Clause is the Establishment Clause, which prohibits the government from favoring one religion over another and religion over nonreligion. Under that clause, the Supreme Court has held constitutional “programs of true private choice, in which government aid reaches religious schools only as a result of the genuine and independent choice of private individuals.” Because such “genuine and independent choice” occurs here, the program does not violate the Religion Clause.  

Unconstitutional Conditions
Before parents can be accepted into the Empowerment Account program, they must agree to not enroll their child into a public school. This requirement prevents taxpayers from paying twice for the same student in the same year—once for the Empowerment Account and then again for public school services for that student. Plaintiffs argue that it is an unconstitutional condition because parents are required to waive their child’s constitutional right to a public education in order to receive a public benefit.
This argument fails for two reasons. First, because none of the Plaintiffs in this case intend to participate in the program, none of them will ever confront this condition, and thus none of them have a legal right to allege any harm from the condition.

Second, the doctrine of unconstitutional conditions does not apply in this case. The doctrine applies in circumstances where the government’s offer limits the citizens’ options and makes the citizen worse off. Here, the offer expands options and can only make parents and their children better off. The doctrine also applies when the citizen should, practically speaking, be able to have the constitutional right and the government benefit at the same time. But in this case students cannot, practically speaking, have a full public school education and a full replacement education at the same time.

Case Documents

Complaint (9/26/2011)
Application for Preliminary Injunction (9/26/2011)
Partial Motion to Dismiss (10/13/2011)
Response to Application for Preliminary Injunction (10/28/2011)
Maricopa County Superior Court Ruling (1/25/2012)
Answering Brief (7/9/2012)
Court of Appeals Decision (10/1/2013)

Case Timeline

September 26, 2011: Complaint filed against Superintendent of Education John Huppenthal by Sharon Niehaus, Arizona School Boards Association, Arizona Education Association and Arizona Association of School Business Officials.
November 28, 2011: A final hearing on the merits, consisting of a 90 minute oral argument, Maricopa County Superior Court, 125 W. Washington Street, Phoenix, Judge Del Mar Verdin, Courtroom #303, 9:30 a.m.
January 25, 2012: Maricopa County Superior Court upholds education savings accounts.
February 13, 2013: Court of Appeals hears oral argument
October 1, 2013: Court of Appeals upholds education savings accounts

The Legal Team

Clint Bolick is the Goldwater Institute’s litigation director. He has extensive success before trial judges and appellate courts. He was lead attorney for parents in Zelman v. Simmons-Harris in 2002, in which the U.S. Supreme Court ruled that school vouchers were constitutional, and Kotterman v. Killian in 1997, in which the Arizona Supreme Court upheld private school scholarship tax credits under the Arizona Constitution.

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