Nevada Supreme Court Rules ESAs Constitutional, Orders Funding Change

Published October 18, 2016

The Nevada Supreme Court declared the state’s education savings accounts (ESA) program constitutional while ruling the legislature must find a different way to fund it.

Nevada launched its ESA program in January 2016, granting parents access to a portion or all of the money allocated for their child’s public school education to spend on learning alternatives such as private school tuition, textbooks, or tutoring. EdChoice, formerly the Friedman Foundation for Educational Choice, reports Nevada’s ESA program is “the nation’s first universal ESA program,” meaning nearly all students in the state are eligible (96 percent at present). “Students qualify if they attended a Nevada public school for at least 100 days immediately prior to establishing an ESA,” EdChoice reports.

In August 2015, the American Civil Liberties Union (ACLU) of Nevada filed a lawsuit, Duncan vs Nevada, alleging the ESA program was unconstitutional because it used public funds for religious purposes. At the center of ACLU’s lawsuit was a Blaine amendment to the Nevada Constitution, which prohibits use of public money to fund religious schools.

In September 2015, the group Educate Nevada Now led a separate lawsuit, claiming in Lopez v. Schwartz the ESA program was unconstitutional because it diverted money intended to fund public schools exclusively.

In its September 2016 decision, the state Supreme Court ruled the ESA program was constitutional but the funding mechanism specified was unconstitutional. In Lopez v. Schwartz, the court ruled funds allocated for public schools cannot be diverted to private ESAs. If ESA funds come from a different government program, they can be used for ESAs, the court said.

The ESA program is suspended until lawmakers approve an alternative funding mechanism. More than 8,000 students had applied for an ESA at the time of the court’s ruling.

‘A Decisive Win’

Robert Enlow, president and CEO of EdChoice, says the funding technicality is not indicative of a nationwide problem with the constitutionality of ESAs.

“It’s important to note that this funding requirement is unique to Nevada and does not affect other states,” Enlow said. “The Nevada ruling is a decisive win against so-called Blaine amendments, which were added to many state constitutions in the late 1800s to prevent public funding from going to faith-based schools. The amendments were specifically targeted toward Catholic schools. The Nevada Supreme Court clearly stated that education savings account funding flows to parents, not schools, and parents are empowered to choose whatever educational options they want.”

Michael Schaus, communications director for the Nevada Policy Institute, says the ruling sets a positive precedent for other such programs.

“The ruling is essentially positive for other ESA programs throughout the nation,” Schaus said. “The funding issue, the only part with which the Supreme Court took issue, is such a technical constitutional violation, it doesn’t really have much teeth in other states. This ruling affirms the concept of broad-based educational choice as constitutional, a very positive win for other states that are looking for precedent.”

Problem with Appropriations Bill

Schaus says the court’s ruling was based on a highly technical budgetary detail.

“The court is fine with public monies being used for ESAs, but they took issue with the way in which it was done,” Schaus said. “Essentially, the issue is that the court believes the ESA program requires its own appropriations bill, thus denying the treasurer the ability to use money that has already been appropriated for ‘public education.’

“Nevada has a fund called the Distributive School Account, from which funds are distributed to school districts using a per-pupil funding calculation,” Schaus said. “ESAs were designed to be funded using money from this account, but the court said that because the appropriations bill for that fund did not specify ESAs, such a funding mechanism would violate Nevada law. Just to give you an idea of how technical this is, had the bill for ESAs been signed before the appropriations bill for the Distributive School Account, there might not have been any constitutional violation, as the legal team could have argued that the legislature knew these funds would be used for ESAs.”

‘A Frustrating Situation’

Enlow says the lawsuits made things difficult for parents and students who want school choice.

“While we are thrilled with the decision, it is a frustrating situation for the more than 8,000 students who have been waiting for nine months to use these accounts,” Enlow said. “But there’s light at the end of the tunnel if lawmakers and the governor come together to find another way to make this program operational. We know parents want these choices, and we know families deserve to be in the driver’s seat. Now we just have to make sure that becomes a reality in Nevada.”

Internet Info:

John Nothdurft, “Nevada Education Savings Accounts,” Research and Commentary, May 29, 2015: