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First Amendment suit challenging Charter School Act proceeds

November 30, 2017

A federal lawsuit alleging Indiana’s Charter School Act violates the First Amendment Establishment Clause will proceed after a district court judge declined to dismiss a portion of the complaint against a Monroe County charter school.

Chief Judge Jane Magnus-Stinson of the U.S. District Court for the Southern District of Indiana allowed the Coalition for Public Education’s federal Establishment Clause claim against Seven Oaks Classical School, Inc. to proceed in a Wednesday decision. The coalition — which is comprised of Monroe County public school employees, parents and taxpayers who advocate against the diversion of state funds to private and charter schools — filed suit against the charter school and other state defendants in April, alleging the Indiana Charter School Act unconstitutionally allows religious educational institutions to authorize charter schools and provides public funding to those institutions for administrative fees.

Specifically, the act allows the mayor of Indianapolis, the Indiana Charter School Board and state and nonprofit colleges to authorize “nonsectarian and nonreligious” public charter schools. Once an authorizer grants a charter, the State Board of Education can only revoke it if a school fails to meet certain academic standards.

Additionally, the charter schools receive public funds in the same way as all other Indiana public schools. The act permits an authorizer to collect up to 3 percent of those funds as an administrative fee, provided the authorizer creates an annual report summarizing how those fees were spent.

In the instant case, Seven Oaks in Ellettsville received authorization from Grace College, a private religious institution. The complaint alleges Grace College governing board approved the charter during a closed meeting and “has not made any information publicly available regarding its procedures and criteria for authorizing Seven Oaks.”

The coalition filed its complaint after Seven Oaks was chartered, alleging the act violates the Establishment Clause by permitting religious school such as Grace to authorize charter schools and receive public funds as a result of making such authorizations. Additionally, the coalition alleged the school’s collection of public funds violates a similar provision of the Indiana Constitution. After being granted permission to intervene, Seven Oaks moved to dismiss each of those claims.

Magnus-Stinson rejected both arguments related to Grace or another religious school’s collection of fees, writing, from a federal perspective, that the fees are directly proportional to the number of students who choose to attend a charter school, meaning the provision “includes a substantial element of private choice.” Similar logic was used to uphold a state-reimbursed voucher program in Zelman v. Simmons-Harris, 536 U.S. 659, 648-49 (2002), Magnus-Stinson said.

Further, the “administrative” activity tied to the funds is the authorization of charter schools, which is secular, so the act does not violate the Establishment Clause on those grounds, either, the chief said. And from a state Constitution perspective, she concluded the Indiana Supreme Court would uphold the act as constitutional based on its precedent in cases such as Meredith v. Pence, 984 N.E.2d 1213 (Ind. 2013), which upheld a religious school voucher program.

However, Magnus-Stinson denied the motion to dismiss Establishment Clause count of the complaint, finding that “the allegations in the Complaint support a reasonable inference that the Charter School Act permits a religious authorizer to accept any application it chooses.”

“Authorizers make important decisions about who may establish charter schools and under what circumstances a charter school may be established, which includes details such as the educational methodology the school will employ,” the chief judge wrote. “Additionally, charter schools are publicly funded and, insofar as they draw students from public school corporations, their funding may result in a shift of public funds away from other schools. These decisions, when made by a religious institution, may raise Establishment Clause concerns, as recognized by decisions such as (Larkin v. Grendel’s Den, Inc., 459 U.S. 116 (1982)). Based on state funding formulas, public schools receive about $6,500 per year per student.

“However, Larkin also left room for constraints on a religious institution’s discretion to ensure that any delegated power will be used for secular purposes,” Magnus-Stinson continued. “The Court may not draw adverse conclusions on these issues with the case in the current procedural posture… .”

Magnus-Stinson then vacated a previously entered discovery stay and ordered a magistrate judge to hold a conference with the parties. The case is Indiana Coalition for Public Education – Monroe County and South Central Indiana, Inc. v. Jennifer McCormick, James Betley, 1:17-cv-01295.

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