Background

In early March, South Carolina’s Governor, Henry McMaster, issued a State of Emergency following the President’s national emergency declaration due to the public health risks posed by the coronavirus. By the end of March, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which appropriated $30.75 billion to the Education Stabilization Fund, was passed by Congress and signed by the President.[1] One of the provisions in the Act ordered the Secretary of Education to allocate money to the Governor’s Emergency Education Relief (“GEER”) Fund.[2] The Governor applied for a GEER Fund grant, and South Carolina was awarded $48,467,924 from the Department of Education.[3] The Governor later announced the creation of the Safe Access to Flexible Education (“SAFE”) Grants Program, which used $32,000,000 of the CARES award “to provide one-time, need-based grants of up to $6,500 per student to cover the cost of tuition for eligible students to attend participating private or independent schools in South Carolina for the 2020-2021 academic year.”[4] Following the initiation of the program, public educators challenged the program as violating Article XI, Section 4 of the South Carolina Constitution, which prohibits public funding of private schools.[5] In early October of this year, the South Carolina Supreme Court issued an opinion addressing these claims in Adams v. McMaster

Standing

The first issue considered by the court was whether petitioners—a group of public school teachers—had standing to sue. The Governor moved to dismiss the petitioners’ claims because they lacked standing. Specifically, the Governor asserted that petitioners failed to identify a statute that would give them standing, and he argued they lacked constitutional standing because they could not demonstrate an injury-in-fact. Petitioners claimed they had standing under the public importance exception, which does not require a showing of a concrete or particularized injury. The court found that petitioners established public importance standing because of the nature of the case. The court reasoned, “[t]he COVID-19 pandemic that has plagued our State in recent months has posed unprecedented challenges in every area of life and severely disrupted essential governmental operations.”[6]

Constitutionality under Article XI, Section 4

The next issue before the court was whether the Governor’s use of GEER funds for the SAFE Grants Program violated Article XI, Section 4 of the South Carolina Constitution because it allocated public funds to the direct benefit of private schools. Pursuant to Article XI, Section 4, “[n]o money shall be paid from public funds nor shall the credit of the State or any of its political subdivisions be used for the direct benefit of any religious or other private educational institution.”[7]

a. Public Funds

The court first looked to whether the GEER Funds constituted “public funds” within the meaning of the constitutional provision. Petitioners argued that since the state code required the money to be deposited in the state treasury, this indicated that the GEER Funds were “public funds.”[8] Additionally, petitioners argued the funds were not passively flowing through the state, but that the state—through the Governor—was actively using the funds for the purpose of funding the SAFE program.[9] The court agreed with this rationale and found that “when the GEER funds are received in the State Treasury and distributed through it, the funds are converted into ‘public funds’ within the meaning of Article XI, Section 4.”[10]

b. Direct Benefit

The most controversial component of the constitutional issue before the court was whether the GEER Funds issued to benefit students who chose to attend private schools directly benefitted the private institution. Petitioners claimed the Governor’s allocation of the GEER funds to create grants for students to attend private schools violated the Constitution’s prohibition on using public funds for the “direct benefit” of a “private educational institution.”[11] The Governor claimed the SAFE Grants Program did not benefit participating private schools but instead, provided a direct benefit to the student recipient and his or her family. The Governor argued that Article XI, Section 4 did not prohibit this sort of benefit and that it was, in fact, amended in 1972 specifically to remove a prohibition on indirect financial aid.[12] The Governor’s position was reiterated in several amicus briefs, including those submitted by the American Center for Law and Justice (ACLJ) and the Institute for Justice, which emphasized that the students were the ones who directly benefitted from the funds, not the schools.[13] The court rejected the Governor’s argument based on the fact that the SAFE grants were not transferred directly to the student, but instead were transferred from the state treasury to the selected school. Further, it explained that the direct payment to private schools was contrary to the framers’ intention not to grant public funds “outrightly” to such institutions.[14]

Lastly, the Governor claimed the CARES Act granted him absolute discretion in using the GEER funds such that the federal law preempts the state constitutional provision under the Supremacy Clause. In its amicus brief, the ACLJ supported this position and argued that “[the Governor’s] actions were precisely within the intent of Congress in passing the CARES Act.”[15] The language establishing the GEER Fund provides that the funds may be available to an “education related entity within the State that the Governor deems essential for carrying out emergency educational services to students.”[16] The Governor claimed this language illustrated the intent of Congress to grant him broad discretion in distributing the funds.[17]

However, the court held that “there is no clear congressional intent in the education provisions of the CARES Act to allow the Governor to allocate the GEER funds in his discretion in contravention of our State Constitution.” [18] “If that were the case, Congress certainly understood how to make such intention clear . . . .”[19] Accordingly, the court found the Governor’s SAFE Grants Program to be in violation of Article XI, Section 4 of the state’s constitution.[20]

Conclusion

The Governor’s use of GEER funds for the SAFE Grants Program was ultimately deemed to be in violation of the South Carolina constitution. The South Carolina Supreme Court found that despite giving students the ability to choose which private school they wished to attend, the schools were being directly benefited because the funds were transferred from the state treasury directly to the private institution. Finally, the court held that Congress did not intend to allow Governor McMaster to distribute GEER funds at his discretion in contravention of the state constitution.

 

Note from the Editor:

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[1] Pub. L. No. 116-136, 134 Stat. 281 (2020).

[2] See id. at 564.

[3] Adams v. McMaster, No. 2020-001069, 2020 WL 5939936, at 2 (S.C. 2020).

[4] Id.

[5] S.C. Const. art. XI, § 4.

[6] Adams, 2020 WL 5939936, at 3.

[7] S.C. Const. art. XI, § 4.

[8] Adams, 2020 WL 5939936, at 3.

[9] Id.

[10] Id. at 4.

[11] Id.

[12] Adams, 2020 WL 5939936, at 4.

[13] See Brief for the American Center for Law & Justice as Amicus Curiae, at 1, Adams v. McMaster, 2020 WL 5939936 (S.C. 2020); Brief for the Institute for Justice as Amicus Curiae, at 6, Adams v. McMaster, 2020 WL 5939936 (S.C. 2020).

[14] Adams, 2020 WL 5939936, at 5.

[15] Brief for the ACLJ as Amicus Curiae, supra note 13, at 3, Adams v. McMaster, 2020 WL 5939936 (S.C. 2020).

[16] Pub. L. No. 116-136, 134 Stat. 281 (2020).

[17] Adams, 2020 WL 5939936, at 5.

[18] Id.

[19] Id.

[20] Id.