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SB 410, passed by the 2015 Legislature, established a tax credit for individuals wishing to contribute to K-12 public schools and K-12 private, non-parochial schools.  The bill calls for the program to be established in accordance with Article V, Section 11(5) and Article X, Section 6(1) of the Montana Constitution, which prohibit the direct or indirect appropriations or payment from any public fund to any sectarian or religious purpose.  Accordingly, the Department of Revenue adopted rules that manage the program and exclude church-affiliated schools from participation.

Click on the image to see current information about SB 410 donations for tax year 2017.

Click on the image to see current information about SB 410 donations for tax year 2017.

The Department of Revenue rules were challenged in both Federal Court (Armstrong et al. v. Mike Kadas) and State Court (Espinoza et al. v. Montana Department of Revenue). MQEC has also filed suit in this matter (MQEC v. State of Montana and Montana Department of Revenue).

Synopsis and Current Status of SB410 Litigation (follow links for detailed case information_:

Espinoza et al.: The case was heard in Flathead County District Court. Judge Heidi Ulbricht ruled in favor of the plaintiffs, permitting the tax  credit to be applied toward private, parochial education. The Department of Revenue has appealed the decision to the Montana Supreme Court. Briefs in the appeal are due to the Court by Wednesday, November 22. There is no timeline for the court to rule on the appeal. MQEC has been active in this case and has filed briefs in support of the Department of Revenue. (Updated November, 2017)

Armstrong et al.: The case was filed in Helena Federal District Court at the same time that Espinoza was filed. Judge Sam Haddon dismissed the case without prejudice, anticipating the resolution of Espinoza could address the Armstrong arguments. Armstrong et al. has appealed the dismissal to the U.S. Ninth Circuit Court of Appeals. Briefs have been filed by both parties and the appeal is awaiting scheduling for oral arguments, tentatively in February-April 2018. MQEC is closely monitoring this case. (Updated November, 2017)

MQEC v. State of Montana and DoR: The case was filed in Lewis & Clark County District Court. The case is inactive at this time, pending resolution of Espinoza and/or Armstrong.



Espinoza et al. v. Montana Department of Revenue Timeline

10/11/17: The Montana Supreme Court grants MQEC's unopposed motion to file amicus curiae brief in Espinoza et al. Read the order here.

8/17/17: The Montana Department of Revenue files Notice of Appeal to the Montana Supreme Court re: Espinoza et al. Read the notice here.

5/23/17: Judge Heidi Ulbricht rules in favor of Plaintiffs' Motion for Summary Judgement, leaving in place the ability for Student Scholarship Organizations to distribute funds to sectarian schools. Read the ruling here.

3/7/17: Motions for Summary Judgement are heard by Judge Heidi Ulbricht in Flathead County District Court.

1/19/17: Montana Department of Revenue files Motion for Substitution of Judge and Motion to Vacate Hearing. View the Motion to Substitute and the Motion to Vacate here.

11/29.16: MQEC files Amicus Curiae Brief in Flathead County District Court. View the brief here.

11/10/16: Judge David Ortley grants MQEC's Motion for Leave to File Amicus Curiae Brief in Espinoza et al. Judge Ortley sets a submittal deadline of November 29, 2016. View the order here.

10/31/16: MQEC files Motion for Leave to File Amicus Curiae Brief in Espinoza et al. View the motion here.

10/27/16: The Montana Supreme Court denies MQEC's Petition for Writ of Supervisory Control and is in unanimous agreement that MQEC should be permitted to file an amicus brief at the District Court level. View the decision here.

9/26/16: The Montana Department of Revenue responds to the Petition for Writ of Supervisory Control, supporting MQEC's request for intervention. View the response here.

9/23/16: The Institute for Justice responds to the Petition for Writ of Supervisory Control, stating that intervention by MQEC will delay resolution of the proceeding.  View the response here.

9/15/16: Judge David Ortley informs the Montana Supreme Court that he does not intend to respond to the Petition for Writ of Supervisory Control and that his original order sufficiently states his reasons for denying our motion to intervene. View the communication here.

8/25/16: The Montana Supreme Court orders (1) that all interested parties file a response to MQEC's Petition for Writ of Supervisory Control, and (2) that all proceedings in Espinoza et al are stayed (suspended) until the Petition for Writ of Supervisory Control is decided. View the order here.

8/19/16: MQEC files a Petition for Writ of Supervisory Control with the Montana Supreme Court, asking that Judge Ortley's decision be overturned and MQEC be allowed to intervene in Espinoza et al. View the petition and exhibits here.

8/4/16: Flathead District Court Judge David Ortley denies MQEC's Motion to Intervene in State suit (Espinoza et al.), finding "there is no basis [to] conclude that MQEC is either entitled to intervene or should be allowed to do so." View the order here.

7/6/16: Montana Department of Revenue responds to Plaintiffs' Motion for Summary Judgment, opposing the motion. The Department also files a Cross-Motion for Summary Judgment to enforce the Religious School Ban and dismiss the case. View the response, the cross-motion, and exhibits here.

6/7/16: MQEC files response to Plaintiffs' response re: Motion to Intervene. View the response here.

6/1/16: Plaintiffs file response to MQEC Motion to Intervene, stating no opposition to the motion provided intervention does not delay resolution of the proceeding. View the response here.

5/20/16: MQEC files Motion to Intervene in Espinoza. View the motion, brief, and affadavit here.

5/13/16: Plaintiffs file Motion for Summary Judgment to permanently prevent enforcement of the Religious School Ban and dismiss the case. This would permit religious schools to receive distributions from student scholarship organizations. View the motion and brief here.

5/11/16: Montana Department of Revenue Answers Plaintiff's' Complaint. View the document here.

3/31/16: Preliminary injunction issued preventing enforcement of the Religious School Ban. This is a setback for the Department of Revenue. View the order here.

3/8/16: Hearing scheduled in re: motion to dismiss.

2/1/16: MT Department of Revenue files motion to dismiss Espinoza. View the motion and supporting brief, as well as the plaintiffs' response.

1/28/16: Plaintiffs file motion for preliminary injunction requesting the Court enjoin the Department of Revenue from enforcing Rule 1 re: exclusion of church-affiliated schools. View the motion and supporting brief, as well as the DoR's response.

12/16/15: Three plaintiffs file suit in Flathead County District Court against the MT Department of Revenue and Director Mike Kadas. Plaintiffs are represented by the Institute for Justice (Arlington, VA) and Holland & Hart, LLP (Billings, MT). View the complaint here.

12/15/15: Department of Revenue adopts final rules regarding administration of SB 410 tax credits. Parochial schools are not permitted to receive funds from school scholarship organizations. The adoption notice includes DoR responses to public comment from the November 5 hearing.

12/1/15: Results of Legislative Poll released. 89 legislators stated the proposed rules are contrary to legislative intent and 51 legislators stated the proposed rules are consistent with legislative intent.10 legislators did not respond to the poll. Individual votes on the poll are available here.

11/17/15: Montana Attorney General's Office writes letter to Department of Revenue opposing the proposed administrative rules.

11/10-11/24/15: The Revenue and Transportation Interim Committee conduct a poll regarding whether the proposed Department of Revenue rules to implement SB 410 is consistent with or contrary to legislative intent. This background material on SB 410 was provided to all Legislators.

11/5/15: Public hearing held on proposed administrative rules. MQEC, MEA-MFT, MTSBA, and SAM, among others, testify in support of proposed rules.

10/5/15: Montana Department of Revenue releases proposed administrative rules pertaining to implementation of SB 410, specifically regarding tax credits for contributions to qualified education providers and student scholarship organizations. The rules define a "qualified education provider" in accordance with Art. V, Section 11(5) and Art.X, Section 6(1) of the Montana Constitution, which prohibits the direct or indirect appropriations or payment from any public fund to any sectarian or religious purpose. The Department of Revenue rules exclude church-affiliated schools from "qualified education provider" status.


Armstrong et al. v. Montana Department of Revenue Timeline

8/24/17: U. S. Ninth Circuit Court of Appeals notifies parties that oral arguments will be heard. Possible court dates are February-April, 2018.

11/8/16: Armstrong's reply brief is filed. View the brief here.

10/26/16:  Montana Department of Revenue files answering brief. View the answering brief here.

8/29/16: Armstrong appeals dismissal to U.S. Ninth Circuit Court of Appeals, submits initial brief. View the initial brief here.

5/18/16: Federal Judge Sam Haddon affirms dismissal of Armstrong suit. View the order here.

4/20/16: Federal suit (Armstrong) is dismissed without prejudice. This is not unusual when both a State suit and Federal suit address the same issue. The federal suit can be refiled if deemed necessary, after conclusion of the State suit. View the order here.

2/12/16: Plaintiffs in Federal suit (Armstrong) file motion for preliminary injunction requesting the Court temporarily enjoin the Department of Revenue from enforcing the Religious School Ban. View the brief here.

2/9/16: MT Department of Revenue files motion to dismiss the Federal suit (Armstrong). View the brief and supporting affadavit.

12/28/15: Two plaintiffs (Armstrong) file suit in U.S. District Court against MT Department of Revenue Director Mike Kadas. Plaintiffs are represented by the Pacific Legal Foundation (Sacramento, CA). View the complaint here.


MQEC v. State of Montana and Department of Revenue Timeline

6/26/17: MQEC files suit against the State of Montana and the Montana Department of Revenue challenging SB 410 based on Article V, Section 11(5) and Article X, Section 6 of the Montana Constitution. The suit is filed in Lewis & Clark County District Court and is assigned to Judge Mike Menahan. Read the complaint here.