Wake county judge refuses to vouch for school vouchers

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North Carolina’s Opportunity Scholarship Program (“OSP”) has been ruled unconstitutional by the Honorable Robert Hobgood, Wake County Superior Court Judge, for funneling taxpayer money to private schools.

In 2013, the Current Operations and Capital Improvements Appropriations Act of 2013 was signed into law.  OSP was adopted as part of the Act (S.L. 2013-360, Section 8.29) and partially codified in N.C. Gen. Stat. § 115C-562.1 et. seq.  The program was scheduled to start in the 2014-2015 school year, but by the end of 2013, the constitutionality of the OSP was challenged by twenty-five plaintiffs from across the state.

OSP appropriated $10 million in taxpayer money to fund scholarship vouchers that could be redeemed at private schools to reduce the cost of tuition.  A maximum of 2,400 eligible students would be provided with these vouchers for up to $4,200 annually.  The vouchers could not be redeemed at traditional public schools or public charter schools.  In addition, some private schools eligible to redeem the vouchers planned to subsidize the remaining tuition balance.

To qualify for a voucher, students must have been enrolled in a North Carolina public school the previous semester.  Additionally, the students’ household income must have been at the federal level eligible for subsidized lunches ($36,612 for a family of three).

Judge Hobgood observed that OSP does not require recipient schools to “provide their students with instruction in any subject,” or that teachers or principals “be trained, certified, or qualified,” or for the schools to be “certified by any public or private agency.”  Essentially, OSP would pay for students to attend private schools that are not obliged to meet state curriculum requirements.

Over 5,000 applications were received for OSP before February 2014.  Judge Hobgood froze the program by issuing a preliminary injunction that month, but the North Carolina Supreme Court reversed the preliminary injunction in May.  OSP launched the following month with plans to release the vouchers on Friday, August 15.  The legislature appropriated an additional $840,000 in early August.

A technical glitch prevented the first wave of payments from being disbursed, according to Elizabeth McDuffie, Director of Grants, Training and Research at the North Carolina State Education Assistance Authority.  Attempts to disburse the funds continued the following Monday with hopes of funding seventy-eight private schools with $724,947 for 363 students by the end of the week.

The disbursements were halted, however, after Judge Hobgood ruled the OSP unconstitutional on the morning of Thursday, August 21.  By that time, 1,878 applicants had accepted the scholarship voucher and 206 had declined.  Seventy percent of the vouchers awarded had been affiliated with religious institutions.

Judge Hobgood stated in his ruling that the program violates the North Carolina Constitution.  First, there is a violation of the State’s duty to guard and maintain the right to the privilege of education.  Judge Hobgood agreed with the plaintiffs’ argument that State’s Constitution limits the General Assembly’s educational spending power exclusively to free public schools:

• “The people have a right to the privilege of education, and it is the duty of the State to guard and maintain that right”  (emphasis added) (see N.C. Constitution Article I, Section 15).

• “The General Assembly shall provide by taxation and otherwise for a general and uniform system of free public schools”  (see N.C. Constitution Article IX, Section 2(1)).

• “The proceeds of all lands […] shall be paid into the State Treasury and, together with so much of the revenue of the State as may be set apart for that purpose shall be faithfully appropriated and used exclusively for establishing and maintaining a uniform system of free public schools” (emphasis added) (see N.C. Constitution, Article IX, Section 6).

Judge Hobgood cited Leandro v. State to clarify that the North Carolina Constitution “guarantee[s] every child of this state an opportunity to receive a sound basic education in public schools.”  The argument is that students enrolled in public schools would be substantially undermined if public educational resources, which are already scarce, were diverted to private schools.

Accordingly, the court’s holding prohibits the OSP from appropriating and/or transferring public funds that belong exclusively to free public schools to private schools for primary and secondary education.  Judge Hobgood stated that the “General Assembly fails the children of North Carolina when they are sent with public, taxpayer money to private schools that have no legal obligation to teach them anything.”

Violations continued through the public purpose clause of the taxing and spending power in Article V:

• “The power of taxation shall be exercised in a just and equitable manner, for public purposes only, and shall never be surrendered, suspended, or contracted away” (emphasis added) (see N.C. Constitution Article V, Section 2(1)).

• “The General Assembly may enact laws whereby the State, any county, city or town, and any other public corporation may contract with and appropriate money to any person, association, or corporation for the accomplishment of public purposes only” (emphasis added) (see N.C. Constitution Article V, Section 2(7)).

“Appropriating taxpayer funds to unaccountable schools does not accomplish a public purpose,” Hobgood said in his ruling.

The State further argued that the General Assembly’s plenary power is not limited to public education when considering Article IX, Section 1 of the North Carolina Constitution which states that, “Religion, morality, and knowledge being necessary to good government and the happiness of mankind, schools, libraries, and the means of education shall forever be encouraged” (emphasis added).

The Attorney General’s Office and parents argue that the OSP “serves to supplement the general and uniform system of public schools by providing low-income families additional educational opportunities for their children, similar to the charter schools that this Court found to supplement the traditional public schools.”  The Attorney General, legislative leaders, and many parents have asked the North Carolina Court of Appeals to make an emergency ruling to permit disbursement of funds for the 1,878 school children who accepted the grants for the 2014-2015 school year.

While OSP may violate the North Carolina Constitution, such measures do not violate the United States Constitution.  In 2002, the Supreme Court of the United States ruled in Zelman v. Simmons-Harris that a school voucher program in Cleveland did not infringe upon the requisite separation of church and state.  This interpretation set the outer boundaries for church-state relations, so state constitutions may be interpreted to require an even greater degree of separation.

As the legal battle continues, the court may look to similar litigation in other states.  In 2006, Florida’s school voucher program was struck down.  Arizona followed the trend and struck down its voucher program in 2008.  There has been a split between similar cases so far this year with school voucher programs being upheld by the Supreme Court of Indiana and struck down by the Supreme Court of Louisiana.  The parents and children of North Carolina will have to wait a while longer to get a final answer on the vouchers they are hoping to receive.