Mike Kadas


The Montana Department of Revenue officially adopted a proposed rule that would cut schools with religious affiliations out of a new tax credit program, sparking an almost-certain legal challenge.

The rule angered the law’s authors and resulted in a rare poll of the Legislature, in which most lawmakers opposed the department’s stance in voting that almost mirrored party lines.

The Pacific Legal Foundation, a California-based law firm that often represents school-choice advocates, said that it will be filing suit “very soon” after Jan. 1.

“We thought the department would go ahead with its action,” said attorney Wen Fa. “We still plan on challenging the discriminatory regulations.”

Fa was one of dozens of people who testified at a Nov. 5 hearing on the rule, which drew opponents and supporters of the rule.

The Department of Revenue has maintained that a provision in the Montana Constitution that prohibits “any direct or indirect appropriations or payment” from the government to religious institutions or religiously affiliated schools requires the exclusion of religious schools from the pilot program. The department's notice of adoption posted on its website is dated Dec. 14.

The new law allows tax credits for donations of up to $150 a year to scholarships to private schools or to innovative educational programs in public schools. The annual limit is $3 million.

The rules excluded religious schools from the program, surprising and outraging many of the program's supporters who had tracked the bill through the state Legislature earlier this year.

“These rules do not reflect the legislative intent,” Sen. Llew Jones, who authored the Senate bill, previously told The Gazette.

Eric Feaver, who leads the MEA-MFT teachers union, argued that the bill itself states the administration of the tax-credit program must comply with the sections of the Montana Constitution that restrict appropriations for sectarian purposes at the November hearing. Bob Vogel of the Montana School Boards Association delivered similar comments.

In the rule adoption notice, the department responded to Fa’s testimony at the hearing.

“The department does not agree that the proposed rules violate the U.S. Constitution,” the notice states. “The rules follow the instructions of the Legislature to implement the bill in accordance with the Montana Constitution. Additionally, the proposed rules do not interfere with an individual's right to choose to attend a particular school.”

“That just seems very clear to us,” Department of Revenue Director Mike Kadas previously told The Gazette. “(But) I fully expect the issue to be litigated.”

Fa said that a suit would be filed in federal court representing parents of students at religiously affiliated schools who want to participate in the tax credit program and religiously affiliated schools that are excluded.

He said that the firm had been “in contact with allies in Montana to see if there are people in Montana that would like to challenge these regulations,” and has had people reach out to the firm.