Major Case Involving Lutheran High School & Hillsdale College

Major Case Involving Lutheran High School & Hillsdale College December 6, 2023

If you don’t want government interference, don’t take government money.  That’s been the principle for Christian and conservative schools, colleges, and other institutions. But now that safeguard is in jeopardy.

A judge has ruled that not taking federal funds does not exempt a school from being subject to federal regulations.  This is because tax exempt status is the equivalent of a government subsidy.

This ruling, which could also affect churches and all non-profits, is under appeal.  At the center of the case is a high school of the Lutheran Church Missouri Synod.  And now the same legal principle is being used against Hillsdale College, the bastion of conservative academia.

In the case Buettner-Hartsoe v. Baltimore Lutheran High School Associationsome graduates of Concordia Preparatory School allege that they were sexually harassed and assaulted by other students but that the school did not follow the specific requirements for handling such cases mandated by Title IX, the federal regulation forbidding sex discrimination in schools.

Concordia Prep argued that they are not subject to Title IX because they do not receive any federal funding.  “Traditionally,” observes the Federal Society, “independent schools that do not receive federal financial aid have not been considered to be subject to Title IX’s requirements.”

But the Maryland district court ruled that Concordia Prep is subject to Title IX because it receives a federal tax exemption as a 501(c)(3) non-profit organization.  According to the judge, that is equivalent to receiving federal money.  In other words, not having to pay a tax is the same as receiving taxpayer money.

The ruling, which Concordia Prep is appealing, has inspired a similar action against Hillsdale College, which has long prided itself on not taking a penny in taxpayer dollars, not even in the indirect form of student loans or grants.  But two women have sued the school for not following Title IX in handling their complaint that they were sexually assaulted by two male students.

Hillsdale said that the school did address that misbehavior and did so, in the words of the schools’ lawyer, in a “stronger, quicker, and more confidential” way than Title IX would have.  In his Wall Street Journal article Title IX and the Assault on Hillsdale College [behind a paywall], Tunku Varadarajan quotes Hillsdale president Larry Arnn:

“The principle that because you have a tax deduction you’re spending government money can’t mean anything other than that all money, in principle, belongs to the government.” This “tax-deduction thing,” as he calls the argument, “would be a massive expansion of government authority in one go. And of course, there are many people who seek that in America.”

Such a ruling would “sweep into the government’s net hundreds of thousands of American institutions that have sought to stay out of it.”

Varadarajan also quotes Cato Institute fellow Walter Olson:

“The proposition that nonprofit tax status should subject private institutions to the regulations applied to government grantees would be a radical departure from longstanding tax and legal principles and would put at risk the fundamental independence of America’s private charitable and educational sectors, to say nothing of its religious institutions.”

It’s strange to me how the Lutheran Church Missouri Synod, for all of its Two Kingdoms aversion to church entanglement with government, has nevertheless been involved in so many key religious liberty cases (recently, Hosanna-Tabor Evangelical Lutheran Church and School v.EEOC [2012] and  Trinity Lutheran v. Comer [2016] and going back to Meyer v. Nebraska [1923]).  I shouldn’t be surprised, since the Two Kingdoms distinction cuts both ways and these cases involve the government’s entanglement with church.

Illustration via Rawpixels, CC0, Public Domain


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