Are Private K-12 Schools Subject to Title IX and Title VI by Virtue of Their Federal Tax-Exempt Status?

Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, Case 1:20-cv-03214-RDB (D. Md. July 21, 2022).

By: Brett A. Sokolow, J.D., President, ATIXA; Chair of the Board, TNG*

Are private K-12 schools subject to Title IX if they don’t directly accept federal funds? According to Senior Federal District Judge Richard D. Bennett (a Republican, appointed by George Bush), the answer is a resounding yes, even if the school is religiously affiliated. If a school claims tax-exempt status under 26 USC § 501(c)(3), this federal tax exemption qualifies as federal financial assistance under Title IX. An appeal would not be surprising, given that this is really a case of first impression, at least as to this direct question.

Background

Five different women, all former students at Concordia Preparatory School (“CPS”), previously known as Baltimore Lutheran High School, made similar allegations of sexual assault and verbal sexual harassment by male students at the school dating back to 2016. They allege that school officials failed to adequately address their numerous complaints or take any meaningful action in response, thereby cultivating a hyper-sexualized culture at the school.

The issue before the court in this motion was whether CPS received federal financial assistance and was thus subject to Title IX at the relevant time periods in the women’s claims. As a religiously affiliated private school that is exempt from federal income taxes under 26 USC § 501(c)(3), CPS “contends that it is not subject to Title IX jurisdiction as it was not a direct recipient of federal financial assistance during the relevant time periods.” The “plaintiffs argue CPS’s tax-exempt status under 26 U.S.C. § 501(c)(3) represents federal financial assistance sufficient to subject the school to the requirements of Title IX.”

Analysis and Findings

Judge Bennett’s ruling on partial summary judgment against CPS will likely soon be sending shockwaves through private K-12 education, and religiously affiliated schools. Judge Bennett’s decision did not address the larger question of whether this analysis might apply to all 501(c)(3) organizations with an educational component, but it has that potential implication.

In his opinion, Judge Bennett stated, “The tax-exempt status of a private school subjects it to the same requirements of Title IX imposed on any educational institution. CPS cannot avail itself of federal tax exemption but not adhere to the mandates of Title IX.” Citing the Supreme Court’s decision in Regan v. Taxation with Representation, Bennett extended the Court’s analysis in that case to Title IX, quoting that “[b]oth tax exemptions and tax-deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income . . .”

Judge Bennett considered the analogue of Title VI in his decision, “[T]ax exempt organizations are subject to the requirements under Title VI of Civil Rights Act of 1964, 42 U.S.C. 2000d et seq.,” and noted that Title IX was modeled after Title VI. The court pointed to McGlotten v. Connally, holding that “assistance provided through the tax system is within the scope of Title VI of the 1964 Civil Rights Act,” and to Fulani v. League of Women Voters Educ. Fund, which noted that the League was subject to Title VI and Title IX enforcement because it “receive[d] federal assistance indirectly through its tax exemption and directly through grants” from federal agencies.

Fulani may provide some basis for the answer to the question posed above, about whether this decision could have wider implications for other non-profit organizations that are not schools, though the court in Fulani made a conclusory assumption of Title IX’s applicability without any analysis.

We will keep readers apprised as the CPS case continues to wind its way through the federal courts.

*Full disclosure: The author is serving as an expert witness on behalf of the plaintiffs in this case.

Read more Keeping Up With the Courts blogs here.