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Religious schools, government money? Supreme Court hears Arizona case.

The Supreme Court must decide if an Arizona program that gives tax credits for private school donations favors religion, or if participants in the program are just exercising personal choice.

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He said it would be like after accepting a 10 percent senior discount at a restaurant, hearing the cashier advise you to be careful how you spend her money.

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At issue in the case is a private school tuition tax credit system set up in 1997 by the Arizona legislature. The system is designed to encourage parents and other Arizona residents to contribute to private school education in the state.

The program requires that donations be made to a School Tuition Organization (STO), which are private, non-profit groups set up to award scholarships from the donated funds. In 2009, there were 53 STOs. They received $51 million in donations.

Here’s the controversial part: Roughly half of the STOs only award scholarships to religious schools. In addition, most of the donated money flows through STOs that award scholarships at religious schools.

The key question in the case is whether Arizona’s program amounts to a government benefit program that favors religion, or whether it is a private choice program (set up by government) in which it is the private actors whose personal choices favor religion.

Justice Kennedy asked Paula Bickett, a lawyer for Arizona, whether all the government-imposed rules for STOs might not render their subsequent decisions the equivalent of government action in support of religion.

Justice Elena Kagan followed up with a similar query. How is it possible, she asked, that the STOs are able to use religious criteria to award scholarships, when it would be clearly unconstitutional for the state to do so?

“The state is not making those decisions,” Bickett replied.

In 2002, the Supreme Court upheld a school voucher program in Cleveland that provided assistance directly to parents to place their children in the school of their choice. The high court said the fact that some parents would choose to use the government money for a religious school did not violate the establishment clause.

The decision that directed the money to a religious school was a private decision, not a government decision, the court said.

The same question arises in the Arizona case.

A federal judge upheld the Arizona tax credit program, but a panel of the Ninth US Circuit Court of Appeals reversed. The appeals court ruled that the Arizona program was not one of “true private choice.”

US Solicitor General Neal Katyal urged the court to uphold the tax credit program. He said the Arizona taxpayers challenging the case lacked legal standing to bring their lawsuit. Their challenge is merely a policy dispute by Arizona residents who object to the state’s program, he said. “Their complaint is that somebody else’s money is not being spent enough."

The case before the high court was consolidated from two lawsuits. They are Arizona Christian School Tuition Organization v. Winn (09-987) and Garriott v. Winn (09-991).

A decision is expected by the end of the term in June.