One in the win corner. . .

Court Rules That Religious Schools’ Tax-Exempt Status Does Not Make Them Subject to Title IX

Title IX was passed as a component of the federal Education Amendments of 1972, signed into law by President Richard Nixon, and has been a major factor in U.S. education law and policy ever since.

Good news!  A federal appeals court has ruled that an institution’s tax-exempt status does not qualify as “federal assistance” under federal law, reversing a lower court ruling ordering a religious school to comply with federal Title IX regulations.  The case involved a former student of Concordia Prep, a Lutheran school serving grades 6–12 in Towson, Maryland, who brought suit against the institution in 2020, claiming that she had suffered bullying and sexual harassment at the school during her time there and that the school had violated Title IX federal sex-discrimination laws in its handling of those claims.

The school argued it was not subject to Title IX regulations since it does not accept federal financial assistance.  A lower court had ruled against the school by invoking the school’s tax-exempt status which, in and of itself, constituted a form of federal funding or subsidy. But a three-judge panel at the U.S. Court of Appeals for the 4th Circuit reversed that decision, saying in a ruling last week that a 501(c)(3) tax-exempt status “does not constitute receipt of federal financial assistance.”  “[T]he phrase ‘receiving federal financial assistance’ means taking or accepting federal financial aid, help, or support,” the judges said. “Thus, the plain text of Title IX contemplates the transfer of funds from the federal government to an entity.”

Furthermore, the judges called the whole idea that tax exemption constitutes federal funding “a novel concept."  Overall, not a bad day for those who are tax exempt.