ESA - Appeals Court Hearing

The Tennessee Court of Appeals hears arguments on the constitutionality of the state's Education Savings Account pilot program via Zoom on Wednesday, Aug. 5, 2020.

(The Center Square) – A panel of three judges on the Tennessee Court of Appeals heard arguments Wednesday challenging a lower court’s order to halt Tennessee’s Education Savings Account school-choice program.

A lower court ruled the program unconstitutional in May under the Home Rule Amendment of the Tennessee constitution. Appealing the court’s decision, the state and intervening attorneys asked the Court of Appeals to reverse the lower court’s ruling.

“Until the ruling below, your honors, no Tennessee court has ever construed the text of the Home Rule Amendment so expansively as to empower counties to extinguish the direct state benefits of their own constituents,” argued Arif Panju, an attorney with the Institute for Justice, which intervened in the case representing families eligible to benefit from the ESA program.

The Home Rule Amendment prohibits Tennessee’s state legislature from passing laws that apply narrowly and supersede the authority of counties in how they govern. Plaintiffs argued that since the ESA pilot program would operate only in Davidson and Shelby counties, and directly affects the counties’ role in public education, the court of appeals should agree with the previous ruling that the program is unconstitutional.

“The ESA act applies to only two counties, and it has a substantial effect on those counties’ finances and sovereignty,” argued Robert Cooper, director of law for Metropolitan Government of Nashville and Davidson County, representing the plaintiffs, Davidson and Shelby county.

“The act changes the nature of the education partnership itself by requiring that the counties and their school districts participate in a program of privatizing public education,” Cooper said.

“It thereby deprives the counties of local sovereignty and the ability to operate a system of common, public schools like every other county and city in the state.”

The program would provide state-funded scholarship grants of about $7,000 to low-income students in Davidson and Shelby Counties to enable them to attend a private school of their choice as an alternative to public schools in either county.

The state argued education policy is the responsibility of the state Legislature, not the counties.

“The ESA program does not legislate regarding a matter of local affairs, it legislates in the area of education policy, which is a state function,” Jim Newsom of the Tennessee attorney general’s office said.

“The Legislature’s authority over education policy has long been recognized,” Newsom added, citing a 1928 Supreme Court decision. “A school system, like a highway system, a penal system, or public health, is not a purely local, but a state concern.”

Arguments centered on the administration of state and local funding in the program. School districts are funded by a combination of state and local dollars, mixed in a funding pool known as the Basic Education Program, or BEP.

“Under the ESA act, the state will give each participating student an annual amount equal to the average state and local per-pupil funding under the Basic Education Program,” Cooper said. “Then, the state takes the full amount of that award – both the state and local shares – out of the money it would otherwise pay to the school district. In other words, what the state gives to the student, it takes back from the school district.”

Attorneys defending the state’s program argued the cost to school districts will remain the same when the ESA program is implemented.

“The amount they pay for students is exactly the same, whether the child goes to a county public school, a county public charter school, the achievement school district, or now, the ESA pilot program,” argued Brian Kelsey, an attorney with the Liberty Justice Center, a nonprofit law firm that has intervened on behalf of parents in Shelby County. “It doesn’t affect them at all.”

“[Counties] simply have an education mandate,” Kelsey said. “They have to pay the local portion of the BEP for every school-aged child in the county, period. If that child goes to the county school system, they pay the local portion, the state pays the state portion. If that same child receives an ESA under the statute, it’s exactly the same: they pay the local portion, and the state pays the state portion. That’s why the legislative fiscal review committee report … calls it a ‘shift in funds’. It’s not a new expenditure on behalf of the local government, it’s the same money that is shifted.”

The time frame for a ruling from the Court of Appeals is unknown, but the court is expected to make a decision soon because of the time-sensitive nature of the case. Regardless of the ruling, the case is expected to be appealed to the Tennessee Supreme Court.

Staff Reporter

Vivian Jones reports on Tennessee and South Carolina for The Center Square. Her writing has appeared in the Detroit News, The Hill, and publications of The Heartland Institute.