Last year, the Texas Supreme Court paused a Harris County program that would have given cash to poor residents, citing preliminary concerns about whether it was compatible with a state constitutional restriction on gifting money to individuals.
The pending Senate Bill 2 would create thousand-dollar savings accounts for private school students and homeschooled kids, to be used on tuition or school supplies. If that bill becomes law, would it be vulnerable to a similar legal challenge?
For now, it’s an open question, but it’s clear that political and logistical differences would complicate a similar approach for the pending policy.
What is Uplift Harris?
Two years ago, Harris County established a new guaranteed program called Uplift Harris. It appropriated about $20 million in federal coronavirus relief money to directly provide 1,928 poor individuals with $500 monthly stipends, with “no strings attached” except for prohibitions on anything involving criminal activity, supporting terrorism or harming the safety and security of others.
Proponents of guaranteed income programs, also called universal basic income programs, argue that they can offer stability to participants who may struggle to find dependable housing. And because the programs don’t prescribe how the money must be spent, they give participants flexibility to address problems as they see fit — whether that’s covering child care, paying down student loan or credit card debt or keeping utilities on.
More than 50 cities and counties across the country have implemented similar programs, including Austin and San Antonio. And last year, El Paso County was preparing to debut its own program, Houston Landing reported.
The Constitutional Argument
In April, shortly before the Harris County program was set to begin, Texas Attorney General Ken Paxton sued Harris County over the program.
Calling it a “welfare scheme” in his initial press release, he argued, in part, that the program clearly ran afoul of the Texas constitution’s “gift clauses” prohibiting transfers of public money to private individuals or organizations.
The first of those two clauses, Article III, Section 51 of the Texas constitution, states that “The Legislature shall have no power to make any grant or authorize the making of any grant of public moneys to any individual, association of individuals, municipal or other corporations whatsoever; provided that the provisions of this Section shall not be construed so as to prevent the grant of aid in cases of public calamity.”
Article III, Section 52(a) of the Texas constitution specifies that “the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever…”
In order to be constitutional under the Texas Supreme Court’s 2002 precedent for those clauses, both parties agreed, the program would need to satisfy the following:
1. Its “predominant purpose” must be “to accomplish a public purpose, not to benefit private parties;”
2. It must “retain public control over the funds to ensure that the public purpose is accomplished an to protect the public’s investment;” and
3. It must “ensure that the political subdivision receives a return benefit.”
Split interpretations
The state argued that Uplift Harris would not satisfy any of those criteria, and partly on those grounds, asked for an injunction to prevent the county from distributing the first round of checks until the case had been decided.
Attorneys for the county disagreed. Helping poor families with public money has been a longstanding government policy, clearly meeting the first need, they argued. To the third requirement, the county would study the effects of the policy on its participants, and cited evidence that guaranteed income programs produce happier, healthier and more productive residents.
As for the standard of “public control,” the county argued that its eligibility requirements and its “exhaustive review process” for applicants offered “sufficient controls” to meet the second standard of the “gifts clauses.”
“In addition, Harris County retains sufficient controls over GiveDirectly to ensure proper administration of the program like the ability to control the transfer of funds and terminate the contract if necessary,” the county added in its April 17 filing.
Uplift-Harris-district-court-opposition-filingUltimately, Harris County 165th District Court Judge Ursula Hall denied the state’s request. She was convinced by the county’s arguments that Uplift Harris would provide a benefit to the general public that the program was constitutional because it offered a benefit to the general public, and that there is “sufficient evidence” of the efficacy of guaranteed income programs, according to Houston Landing.
Paxton appealed the decision to the state appeals court, which again sided with the county and declined to block the program.
Finally, Paxton appealed the injunction decision — not the case itself — to the Supreme Court of Texas. It granted the state’s request to block the program while litigation proceeded.
Though the court didn’t rule that the program itself actually would be unconstitutional, it expressed skepticism that it would be protected if the full case was appealed to the state Supreme Court.
“Although we make no definitive statement about the merits, the State has raised serious doubt about the constitutionality of the Uplift Harris program, and this potential violation of the Texas Constitution could not be remedied or undone if payments were to commence while the underlying appeal proceeds,” the court wrote in its opinion.
The Supreme Court also was skeptical that the payments would serve the general public welfare by boosting economic development, as the county’s attorneys argued.
“Under the County’s permissive reading of section 52-a, nearly any direct gift of public money that will likely be spent by the recipient could qualify as ‘economic development’ — on the theory that any boost in overall consumer spending is good for the economy,” the court wrote. “If this is right, then section 52-a comes close to repealing the Gift Clauses’ ban on ‘gratuitous payments to individuals.’ … Such payments could nearly always be portrayed as good for the economy in some sense.”
Senate Bill 2
So how does Senate Bill 2 fit into all of this?
Last week, Senate Republicans passed a $1 billion measure that would let students who have applied to a private school get $10,000 “education savings accounts” that could be used for tuition and school supplies — but only if they choose not to attend public school. Students with special needs would get an extra $1,500 in their accounts on top of that, while homeschooled students would get $2,000 accounts for educational materials.
Those savings accounts would be managed by the state comptroller’s office, and the money would be restricted to educational uses.
Though in common parlance the term “voucher” is an apt descriptor of how the bill awards money to families — “a written authorization or certificate, especially one exchangeable for cash or representing a credit against future expenditures,” per the American Heritage Dictionary — proponents of SB 2 have argued that the initialism “ESA” is the only accurate way to describe the program. In the language of private school subsidy bills, they’ve argued, vouchers are essentially free money that could be spent at will by parents without oversight from the state.
SB 2’s appropriation of public taxpayer money for private school tuition has led some, including West Texas’s Republican 143rd Judicial District Attorney Sarah Stogner, to draw parallels with the state’s argument against Uplift Harris.
But politically and legally, any challenge to the Senate bill would look quite different from the state’s suit against Harris County.
Political Winds
Private School subsidies have been a top priority for Republican Gov. Greg Abbott for the past two sessions. He has received more than $10 million in donations from Pennsylvania multimillionaire Jeff Yass to support that policy, and last year he funded primary challengers to oust more than a dozen rural Republicans who voted against the private school subsidies. (Public schools can be huge employers in small towns, and many rural students wouldn’t live close enough to a private school to attend even with a subsidy.)
As a result, the subsidies in SB 2 now are a focus for Texas Republicans, even getting an endorsement from Republican President Donald Trump.
Paxton, a Republican and a staunch ally of Abbott, is no stranger to politics. He used biting partisan language in the state’s Harris County suit, calling the program the “Harris Handout” throughout the initial filing and describing it as a “socialist experiment by [Harris County Judge] Lina Hidalgo and the progressive democrats responsible for the Harris County disaster.”
But with SB 2, Paxton is a member of the party that’s fighting for the bill. If those legal problems persist, Paxton would represent the state in litigation — provided that someone sues the state over it. Without a legal challenge, those subsidies would remain in place, even if they eventually are found to also violate the “gifts clauses.”
Even if a suit is brought against the state, the Republican Supreme Court is one of the most conservative in the country, and could be sympathetic to upholding a key plank of the party platform.
In Texas, judges run in partisan public elections, which in recent decades has meant that the state Supreme Court nearly always is affiliated with judges aligned with the party that controls Texas. All nine of its members are Republicans, and six were appointed by Abbott, himself a former member of the high court.
Meanwhile, district judges in large cities and blue parts of the state tend to be Democratic, which can produce split readings of cases between the low and high courts. (With that in mind, perhaps it’s unsurprising that the Texas Supreme Court disagreed with District Judge Hall, a Democrat, even if politics wasn’t the sole reason for their philosophical divergence.)
Legal differences
The other potential difference is that SB 2 would be administered differently, aiming to serve the public in a different way and with different controls over how its money is spent.
Charles W. “Rocky” Rhodes, a constitutional law professor at the South Texas College of Law Houston, said on Friday that he hasn’t had time to analyze the voucher bill in depth but said “it’s possible” that SB 2 would be vulnerable to the same constitutional problem, “depending on the constraints on the vouchers and educational savings and the assurances that it will be used for the public purpose of education.”
Asked about that same legal vulnerability, a spokesperson for Sen. Brandon Creighton, R-Conroe, the primary author of SB 2, sent a 2023 opinion from Paxton “affirming that education savings accounts are constitutional.”
That 2023 opinion argues that the subsidies also present under SB 2 would not violate the Free Exercise or Establishment clauses of the First Amendment of the U.S. Constitution, and that they would be allowed under the Texas Constitution if they are not funded by the Permanent School Fund or the available school fund.
The opinion does not reference the constitution’s “gifts clauses.”
And it’s not even clear whether the possible constitutional issues with Uplift Harris would apply to any guaranteed income program.
The City of Austin has expressed confidence that its program is fully legal because it uses “data gathering and performance measures to ensure compliance.”
As of last year, Paxton had not contacted Austin or San Antonio about the legality of their programs.
