Schwartz v. Lopez

382 P.3d 886

132 Nev. Adv. Op. 73

Dan Schwartz, in His Official Capacity as Treasurer of the State of Nevada, Appellant,

v.Hellen Quan Lopez, individually and on behalf of Her Minor Child, C.Q.; Michelle Gorelow, individually and on behalf of her minor children, A.G. and H.G. ; Electra Skryzdlewski, individually and on behalf of Her Minor Child, L.M.; Jennifer Carr, Individually and on Behalf of Her Minor Children, W.C., A.C., and E.C.; Linda Johnson, Individually and on Behalf of Her Minor Child, K.J.; and Sarah Solomon and Brian Solomon, Individually and on Behalf of Their Minor Children, D.S. and K.S., Respondents.

Ruby Duncan, an individual; Rabbi Mel Hecht, an individual; Howard Watts, III, an individual; Leora Olivas, an individual; and Adam Berger, an individual, Appellants,

v.The State of Nevada Office of the State Treasurer; The State of Nevada Department of Education; Dan Schwartz, Nevada State Treasurer, in His Official Capacity; Steve Canavero, Interim Superintendent of Public Instruction, in His Official Capacity; Aimee Hairr; Aurora Espinoza; Elizabeth Robbins; Lara Allen; Jeffrey Smith; and Trina Smith, Respondents.

No. 69611

No. 70648

Supreme Court of Nevada.

FILED SEPTEMBER 29, 2016

Adam Paul Laxalt, Attorney General, Lawrence VanDyke, Solicitor General, Joseph Tartakovsky, Deputy Solicitor General, and Jordan T. Smith, Assistant Solicitor General, Carson City; Bancroft PLLC and Paul D. Clement, Washington, D.C., for Dan Schwartz, Steve Canavero, the Nevada Office of the Treasurer, and the Nevada Department of Education.

Wolf, Rifkin, Shapiro, Schulman & Rabkin, LLP, and Don Springmeyer, Justin C. Jones, and Bradley S. Schrager, Las Vegas; Munger, Tolles & Olson LLP and Tamerlin J. Godley, Thomas Paul Clancy, and Samuel T. Boyd, Los Angeles, California; Education Law Center and David G. Sciarra and Amanda Morgan, Newark, New Jersey, for Jennifer Carr, Michelle Gorelow, Linda Johnson, Hellen Quan Lopez, Electra Skryzdlewski, Brian Solomon, and Sarah Solomon.

American Civil Liberties Union of Nevada and Amy M. Rose, Las Vegas; Americans United for Separation of Church and State and Richard B. Katskee and Gregory M. Lipper, Washington, D.C.; American Civil Liberties Union Foundation and Daniel Mach and Heather L. Weaver, Washington, D.C.; Covington & Burling LLP and Nitin Subhedar and Samuel Jacob Edwards, San Francisco, California, for Adam Berger, Ruby Duncan, Mel Hecht, Leora Olivas, and Howard Watts, III.

Kolesar & Leatham, Chtd., and Matthew T. Dushoff and Lisa J. Zastrow, Las Vegas; Institute for Justice and Timothy D. Keller and Keith E. Diggs, Tempe, Arizona, for Lara Allen, Aurora Espinoza, Aimee Hairr, Elizabeth Robbins, Jeffrey Smith, and Trina Smith.

Ashcraft & Barr LLP and Jeffrey F. Barr, Las Vegas; Eric C. Rassbach, Diana M. Verm, and Lori H. Windham, Washington, D.C., for Amicus Curiae The Becket Fund for Religious Liberty.

Muehlbauer Law Office, Ltd., and Andrew R. Muehlbauer, Las Vegas; Wisconsin Institute for Law & Liberty and Richard M. Esenberg and CJ Szafir, Milwaukee, Wisconsin, for Amici Curiae The American Federation for Children, Hispanics for School Choice, School Choice Wisconsin, Dr. Patrick J. Wolf, and Wisconsin Institute for Law & Liberty.

Sande Law Group and John P. Sande, IV, and Victor Salcido, Las Vegas, for Amicus Curiae Friedman Foundation for Educational Choice.

Lemons, Grundy & Eisenberg and Robert L. Eisenberg, Reno, for Amici Curiae National School Boards Association and Nevada Association of School Boards.

Leon Greenberg Professional Corporation and Leon M. Greenberg and Julie Underwood, Las Vegas, for Amici Curiae Association of Wisconsin School Administrators, Horace Mann League, Network for Public Education, Wisconsin Alliance for Excellent Schools, and Wisconsin Association of School District Administrators.

Dyer, Lawrence, Penrose, Flaherty, Donaldson & Prunty and Francis C. Flaherty and Casey A. Gillham, Carson City; National Education Association and Kristen L. Hollar, Washington, D.C., for Amici Curiae National Educational Association and Nevada State Education Association.

Reisman Sorokac and Joshua H. Reisman and Heidi J. Parry Stern, Las Vegas, for Amici Curiae Baptist Joint Committee for Religious Liberty and Hindu American Foundation.

Marquis Aurbach Coffing and Micah S. Echols, Las Vegas; Wilmer Cutler Pickering Hale and Dorr LLP and Todd Zubler, Daniel Hartman, and Kevin Gallagher, Washington, D.C., for Amicus Curiae Foundation for Excellence in Education.

Woodburn & Wedge and W. Chris Wicker, Reno, for Amici Curiae Mexican–American Legal Defense and Educational Fund, Las Vegas NAACP, and Southern Poverty Law Center.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

In 2015, the Nevada Legislature passed the Education Savings Account (ESA) program, which allows public funds to be transferred from the State Distributive School Account into private education savings accounts maintained for the benefit of school-aged children to pay for private schooling, tutoring, and other non-public educational services and expenses. Two separate complaints were filed challenging the ESA program as violating several provisions of the Education Article in the Nevada Constitution. In one case, the district court rejected all of the constitutional claims and dismissed the complaint. In the other case, the district court found that one of the constitutional challenges had merit and granted a preliminary injunction. These appeals were brought, and because they share common legal questions as to the constitutionality of the ESA program, we resolve them together in this opinion.

We are asked to decide whether the ESA program is constitutional under Nevada Constitution Article 11, Section 2 (requiring a uniform system of common schools), Section 6 (obligating the Legislature to appropriate funds to operate the public schools before any other appropriation is enacted for the biennium), and Section 10 (prohibiting the use of public funds for a sectarian purpose). We must emphasize that the merit and efficacy of the ESA program is not before us, for those considerations involve public policy choices left to the sound wisdom and discretion of our state Legislature. But it is the judiciary's role to determine the meaning of the Constitution and to uphold it against contrary legislation. Thus, the scope of our inquiry is whether the ESA program complies with these constitutional provisions.

For the reasons set forth in this opinion, we conclude that Article 11, Section 1 does not limit the Legislature's discretion to encourage other methods of education. Based on that reasoning, the ESA program is not contrary to the Legislature's duty under Article 11, Section 2 to provide for a uniform system of common schools. We also conclude that funds placed in education savings accounts under SB 302 belong to the parents and are not “public funds” subject to Article 11, Section 10.

The issue remaining relates to the funding of the education savings accounts. Based on the State Treasurer's concession that SB 302 does not operate as an appropriation bill, and that nothing in the legislative measure creating the State Distributive School Account funding for public education provides an appropriation for education savings accounts, we must conclude that the use of money that the Legislature appropriated for K–12 public education to instead fund education savings accounts undermines the constitutional mandates under Sections 2 and 6 to fund public education. Accordingly, we affirm in part and reverse in part the district court orders in both cases, and we remand each case for the entry of a final declaratory judgment and a permanent injunction enjoining the use of any money appropriated for K–12 public education in the State Distributive School Account to instead fund the education savings accounts.

I.

A.

The ESA program is contained in Senate Bill (SB) 302, passed by the Nevada Legislature in 2015. It allows grants of public funds to be transferred into private education savings accounts for Nevada school-aged children to pay for their private schooling, tutoring, and other nonpublic educational services and expenses. The ESA program provides financial resources for children to pay for an alternative to education in the public school system. SB 302 was passed by the Legislature on May 29, 2015, and signed into law by the governor on June 2, 2015. 2015 Nev. Stat., ch. 332, at 1824.¹

An education savings account is established when a parent enters into an agreement with the State Treasurer for the creation of the account. NRS 353B.850(1). To be eligible for an account, a child must have been enrolled in public school for 100 consecutive days immediately preceding the account's establishment. Id. The accounts are administered by the Treasurer and must be maintained with a financial management firm chosen by the Treasurer. NRS 353B.850(1), (2) ; NRS 353B.880(1). Once an account is created, the amount of money deposited into it by the Treasurer each year is equal to a percentage of the statewide average basic support guarantee per pupil: 100 percent for disabled and low-income children ($5,710 for the 2015–16 school year) and 90 percent for all other children ($5,139 for the 2015–16 school year). NRS 353B.860(2) ; 2015 Nev. Stat., ch. 537, § 1, at 3736. The money is deposited in quarterly installments and may be carried forward from year to year if the agreement is renewed for that student. NRS 353B.860(5), (6). An ESA agreement is valid for one school year but may be terminated early. NRS 353B.850(4). If the child's parent terminates the ESA agreement, or if the child graduates from high school or moves out of state after an account is created, unused funds revert to the State General Fund. NRS 353B.850(5) ; NRS 353B.860(6)(b). The statutory provisions governing the ESA program contain no limit on the number of education savings accounts that can be created and no maximum sum of money that can...