MEMORANDUM
TO:
FROM:
Sid Hemsley, Senior Law Consultant
DATE:
September 7, 2007
RE:
City Financed Scholarship Program for City Residents Attending University AA@
The City has the following question: Can it, either directly, or indirectly give college
scholarships to the citizens to attend only University AA@?
The answer is no. The city probably cannot directly or indirectly fund a scholarship for its
citizens to attend only University AA@.
A similar question arose to which I responded by e-mail dated July 19, 2007. However,
the question then, as I recall, was whether the city could fund a scholarship program to any higher
education institution. My answer to that question was that there Tennessee Code Annotated, ' 497-108 authorized municipalities and counties to make financial gifts to public institutions of higher
educations, and appeared to be broad enough to support a city scholarship program. I also pointed
out that a Tennessee Attorney General=s opinion opined that the establishment of an educational
foundation by the City of Knoxville and Knox County set up under the General Corporation Act to
loan money to college students was legal under state law.
But for reasons that I do not recall, I
did not analyze that opinion.
Because the question now is whether the City can fund a scholarship program only for
attendance at University AA@, I will start all over again on the question.
The key to any municipal expenditure (assuming it meets the public purpose doctrine of
Article II, Section 29, of the Tennessee Constitution) is statutory authority to support the
expenditure. There is no such statutory authority in the general law supporting direct scholarship
programs. Tennessee Code Annotated, ' 6-54-111, authorizes municipalities to give funds to
nonprofit charitable organizations and civic organizations. With respect to the former, the
organization must provide Ayear round services benefitting the general welfare of the residents of
municipalities.@ I doubt that language contemplates direct scholarships. There are provisions in
most municipal charters authorizing the municipality to operate educational institutions, but I have
never seen one that authorizes direct scholarship programs.
But even if there were statutory authority for such a municipal program, it would violate the
Establishment Clause of the First Amendment to the U.S. Constitution for limiting students to attend
only University AA@. It appears to me that is true whether the scholarship program is a direct one
under which the scholarships are awarded by the city, or an indirect one under which an
educational foundation or other entity of some kind is set up, and that entity awards the
scholarships.
Tennessee Code Annotated, ' 49-7-108 authorizes counties and municipalities to
contract with and make donations or contributions to any public or
tax-supported college, universities or other public institution of higher
education, or any nonprofit general welfare private corporation
established for the specific purpose of promoting and supporting
literary, scientific, educational scholarship, research, charitable and
developmental purposes and objects at or under the supervision of
such college, university or public institution whereby the college,
university or other public institution may provide programs of study
and research which will be of benefit to the counties and
municipalities and surrounding territory.
That statute appears broad enough to support about any kind of scholarship program, but it
plainly limits such municipal support to Apublic or tax-supported@ colleges, universities, etc.
Tennessee Attorney General=s Opinion U91-72 supports the opinion that counties (and by
extension, municipalities) cannot fund college scholarship programs absent statutory authority. That
opinion overlooks the existence of Tennessee Code Annotated, ' 49-7-108, but as pointed out
above, that statute is restricted to public and tax-supported higher education institutions.
Tennessee Attorney General=s opinion 85-292 opines that a corporation set up under the
General Corporations Act by Knox County to borrow money to make educational loans to college
students is legal. I haven't studied this opinion in great detail, but it does no appear to address the
question of whether that program is restricted only to public and tax-supported colleges and
universities. However, it does acknowledge and warn the reader that while such a program might
comply with state law, it may also violate the Establishment Clause of the First Amendment to the
U.S. Constitution.
I have studied the question of what constitutes the violation of the Establishment Clause
with respect to college scholarship programs. There are surprisingly few cases on that question,
and some of those are resolved under the constitutions of the states in which the question was an
issue. But the United States Supreme Court has spoken on the issue in Witters v. Washington
Department of Services For The Blind, 474 U.S. 481 (1986). In that case, the state=s vocational
rehabilitation assistance program denied assistance to a blind person who sought to study at the
Inland Empire School of Bible to become a pastor. The question was whether such aid would have
violated the Establishment Clause. The Court analyzed the question under its three-pronged A
Lemon Test@ [Lemon v. Kurtzman, 403 U.S. 602 (1971)].
Acknowledging the Court=s difficultly
in applying that test over the years, it concluded that giving aid to the plaintiff would not violate the
Establishment Clause because:
Prong 1- The state=s program must have a secular purpose.
The state=s program in this case plainly met that test; it had an unmistakably secular
purpose--the aid of handicapped students.
Prong 2- Its principal or primary effect must be one that neither advances nor inhibits
religion.
The state=s program passed test because:
...vocational assistance is paid directly to the student who transmits it
to the educational institution of his or her choice. Any aid provided
under Washington=s program that ultimately flows to religious
institutions does so only as a result of the genuinely independent
and private choices of aid recipients. Washington=s program is
made available generally without regard to the sectariannonsectarian, or public-nonpublic nature of the institution benefitted,
[Citation omitted by me] and is no way skewed toward religion. It is
not one the Aingenious plans for channeling state aid to sectarian
schools that periodically reach this Court,@ [Citation omitted by me].
It creates no financial incentive for students to undertake sectarian
education, [Citation omitted by me]. It does not tend to private
greater or broader benefits for recipients who apply their aid to
religious education, nor all the full benefits of the program limited, in
large part or in whole, to students at sectarian institutions...In this
case, the fact that aid goes to individuals means that the decision to
support religious education mis made by the individual, not the state.
[At 752]
Furthermore, said the Court, it was not likely that more than a minuscule amount of the
state=s aid to handicapped students would go to religious colleges.
Prong 3- The statute must not foster Aan excessive government entanglement with
religion.@
The Court declined to analyze the state=s program against this prong of the Lemon Test
because the court below did not do it. But the Court=s analysis of Prongs 1 and 2 indicate that the
program would easily have passed this test as well.
[Ironically, the plaintiff ultimately lost this case in the Washington Supreme Court, which in
Witters v. Commission for the Blind, 771 P.2d 1119 (Wash. 1989) held that, notwithstanding the
plaintiff=s victory in the U.S. Supreme Court, the state=s aid to him to attend a religious college
violated the state constitution, which prohibited any aid to religious instruction. However, there is
no such provision in the Tennessee Constitution.]
The city=s scholarship program to University AA@ would probably pass Prong 1 of the
Lemon Test, but would undoubtedly fail Prong 2 because the scholarship program would be
restricted to University AA@; scholarship recipients would have no choice as to where to attend
college.
A Tennessee case heard in the U.S. District Court for the Middle District of Tennessee
points to the same conclusion. In Americans United for the Separation of Church and State v.
Blanton, 433 F. Supp. 97 (M. Dist. Tenn.), judgment aff=d by U.S. Supreme Court, 434 U.S. 803
(1977), the Court upheld Tennessee=s Student Assistance Program against a challenge that it
violated the Establishment Clause. That program provided financial aid to needy Tennessee College
students who, upon obtaining aid under the program, could attend both public and private higher
education institutions. The Court quickly concluded that the program passed the first and third
prongs of the Lemon Test, and concentrated on the second prong: Did the program have a
Aprimary effect that neither advances nor inhibits religion@? [At 101]
In declaring that the answer was yes, the Court declared that:
The Tennessee Student assistance Program is not unlike the G.I.
Bill. The latter provides that eligible veterans are to receive an
educational assistance allowance; Ato meet, in part, the expenses of
the veteran=s subsistence, tuition, fees= supplies, books, equipment,
and other educational costs.@ 38 U.S.C. ' 1681. These costs are
virtually identical to those termed Aeducationally related expenses,@
under the Tennessee Student assistance Act. [At 104]
The Court further reasoned that:
In the instant case...the emphasis of the aid program is on the
student rather than the institution, and the institutions are free to
compete for the students who have money provided by the program.
No one religion is favored by the program, nor are private or
religious institutions favored over public institutions. [At 104.]
Finally, the Court concluded, in enacting the Student Assistance Program:
The Tennessee General Assembly sought to provide needy students
with the opportunity to attend the higher education institution of their
choice, be it public, private, sectarian, or nonsectarian. To ensure
that the neutral purpose would not be compromised, the General
Assembly enacted a student aid program rather than an institutional
aid program. The statute passes the relevant three-pronged inquiry,
and the Court finds that the program on its face in its application,
does not offend the values protected by the Establishment Clause.
[At 104]
It is important to note here that the same Court in Americans United For the Separation of
Church and State v. Dunn, 384 F. Supp. 714 (M.D. Tenn. 1974), had earlier struck down as
violating the Establishment Clause Tennessee=s Tuition Grant Program. Under that program,
students applied for assistance from the Tennessee Student Assistance Agency for tuition grants,
and if they were awarded such aid, the state paid the tuition directly to the public or private
(including religious-based) college.
Surprisingly, the Court refused to apply the U.S. Supreme Court=s Lemon Test, and
concluded that the program did not pass constitutional muster essentially because the statute which
established the program did not restrict the use of the tuition funds to non-religious purposes. The
Court reasoned that:
Thus, our constitutional inquiry is reduced to the factual question of
whether some of the schools eligible for participation in the Tuition
Grant program have this dual secular-sectarian function and engage
in religious activity. The evidence in this record overwhelmingly
demonstrates that certain of the eligible schools engage in
substantial religious activity, and the nature of such religious activity
includes compulsory chapel attendance, formal prayer before each
class, church membership requirements for faculty, and the like.
Given the presence of such activity at certain of the eligible schools
and the absence of restrictions in the statute, the only conclusions
are that the statute permits the use of State funds for religious
activity, and therefore, that the statute is unconstitutional as vocative
of the First Amendment. [Citations omitted by me.] [At 713]
It seems to me that the reasoning of that case was questionable even then because
students still made the choice as to which college they would attend. Be that as it may, a G.I. bill
type student choice is apparently the touchstone for whether a scholarship program will survive an
Establishment Clause challenge in Tennessee, and elsewhere, for that matter. Where the
scholarship program is restricted to one school with a religious foundation (even where there are no
religious requirements imposed on students), the scholarship program will not meet the second
prong of the Lemon Test.
Needless to say, a scholarship program restricted to University AA@ would not meet that
test.
I can think of no reason the Lemon Test, and its outcome under Blanton, above, would not
apply to any funds appropriated by the city to a foundation or other entity through which scholarship
aid was funneled to students to attend University AA.@