Montana Judge Blocks Education Savings Accounts for Students with Special Needs

A district court judge on Monday blocked Montana’s education savings account program for students with disabilities, ruling in favor of two Montana nonprofits that claimed that lawmakers did not fund the program when they created it.

House Bill 393, the Students with Special Needs Equal Opportunity Act passed by lawmakers in 2023, created Montana’s first education savings account (ESA) program. It allows parents of students with disabilities to redirect their child’s per-pupil school funding that normally goes to a public school district into an account administered by the Office of Public Instruction, the state agency that oversees K-12 schools. Parents could use the money — estimated to be between $5,000 and $8,000 per student per year — to cover private schooling, tutoring, specialized therapies, online programs and other approved educational expenses.

To participate in the ESA program, families must agree to release their local school district from its legal obligation to provide special education students with a free, appropriate public education. The students would still be counted toward a district’s enrollment — key to determining how much money the district receives from the state — but the district would send back the funding attached to the student to the Office of Public Instruction in monthly installments. OPI would deposit 95% of those funds into a student’s ESA and retain 5% for administration.

In his ruling, Lewis and Clark County District Court Judge Mike Menahan found the funding structure unconstitutional because it lacked a valid statutory appropriation, meaning lawmakers did not properly set up a funding process to pay for the program. The order states that HB 393 “does not meet the statutory requirements” for an appropriation “made by law,” as required under the Montana Constitution.  As a result, the court granted the plaintiff’s motion for summary judgment on that claim, blocking the program.

The lawsuit was filed by two Montana nonprofits, the Montana Quality Education Coalition and Disability Rights Montana. They maintained that the bill required families to waive significant educational rights in exchange for funding that often would not cover basic needs. It was against the state, governor, OPI, the state superintendent of public instruction and the lawmaker who carried the bill.

In a press release Tuesday, MQEC Executive Director Doug Reisig said that “taking money from public schools for vouchers without clear limits on how much and where that money will be spent is unconstitutional, pure and simple.”

Tal Goldin, advocacy director for Disability Rights Montana, added, “HB 393 was a lose-lose for students with disabilities.” 

The attorney for the plaintiffs, Rylee Sommers-Flanagan, founder and director of Upper Seven Law, stated that the decision reinforces constitutional requirements around public school funding in Montana.

“Siphoning public school money to unaccountable individual accounts is unconstitutional,” she said in a press release. “The legislature failed in the first instance to correctly appropriate funding for HB 393. And that is unconstitutional enough to stop it in its tracks.”

The judge rejected one of the plaintiffs’ other claims — that HB 393 infringed on the authority of local school boards — ruling in favor of the state and the bill’s sponsor, now-Sen. Sue Vinton, R-Billings, on that issue. While local trustees have “supervision and control” of public schools, the court found that the Legislature holds broad authority over how state education dollars are collected and distributed.

Another claim made by the plaintiffs remains unresolved. The plaintiffs argue that the program could create inequitable funding impacts, particularly for smaller rural districts. The judge cited conflicting expert testimony and found “genuine issues of material fact,” leaving that portion of the case for a potential trial.

Vinton expressed frustration with the ruling in an interview with Montana Free Press on Tuesday. “I am disappointed that he didn’t rule in favor of all the kids that are utilizing ESAs, and there is a large number of them that this is critical for,” she said.

For now, the program cannot operate unless lawmakers address the appropriation issue or if the ruling is appealed and a higher court reverses the decision. In a statement shared with MTFP, the head of OPI, state Superintendent of Public Instruction Susie Helden said that OPI “respects the role of the judiciary and will review the court’s decision carefully to determine next steps.”

This story originally appeared in the Montana Free Press, which can be found online at montanafreepress.org.