Wheeler v. Barrera 417 U.S. 402 (1974) MR. JUSTICE BLACKMUN delivered the opinion of the Court. Title I of the Elementary and Secondary Education Act of 1965, as amended, 20 U.S.C. sec. 241a et seq., provides for federal funding of special programs for educationally deprived children in both public and private schools. This suit was instituted on behalf of parochial school students who were eligible for Title I benefits and who claimed that the public school authorities in their area, in violation of the Act, failed to provide adequate Title I programs for private school children as compared with those programs provided for public school children. The defendants answered that the extensive aid sought by the plaintiffs exceeded the requirements of Title I and contravened the State's Constitution and state law and public policy. First Amendment rights were also raised by the parties. The District Court, concluding that the State had fulfilled its Title I obligations, denied relief. The United States Court of Appeals for the Eighth Circuit, by a divided vote, reversed. 475 F.2d 1338 (1973). We granted certiorari to examine serious questions that appeared to be present as to the scope and constitutionality of Title I. 414 U.S. 908 (1973). I Title I is the first federal-aid-to-education program authorizing assistance for private school children as well as for public school children. The Congress, by its statutory declaration of policy, and otherwise, recognized that all children from educationally deprived areas do not necessarily attend the public schools, and that, since the legislative aim was to provide needed assistance to educationally deprived children rather than to specific schools, it was necessary to include eligible private school children among the beneficiaries of the Act. Since the Act was designed to be administered by local public education officials, a number of problems naturally arise in the delivery of services to eligible private school pupils. Under the administrative structure envisioned by the Act, the primary responsibility for designing and effectuating a Title I program rests with what the Act and the implementing regulations describe as the "local educational agency." This local agency submits to the "State educational agency" a proposed program designed to meet the special educational needs of educationally deprived children in school attendance areas with high concentrations of children from low-income families. The state agency then must approve the local plan and, in turn, forward the approved proposal to the United States Commissioner of Education, who has the ultimate responsibility for administering the program and dispensing the appropriated and allocated funds. In order to receive state approval, the proposed plan, among other requirements, must be designed to provide the eligible private school students services that are "comparable in quality, scope, and opportunity for participation to those provided for public school children with needs of equally high priority." United States Office of Education (USOE) Program Guide No. 44, para. 4.5 (1968).... The questions that arise in this case concern the scope of the State's duty to insure that a program submitted by a local agency under Title I provides "comparable" services for eligible private school children. II Plaintiff-respondents are parents of minor children attending elementary and secondary nonpublic schools in the inner city area of Kansas City, Missouri. They instituted this class action in the United States District Court for the Western District of Missouri on behalf of themselves and their children, and others similarly situated, alleging that the defendant-petitioners, the then State Commissioner of Education and the members of the Missouri Board of Education, arbitrarily and illegally were approving Title I programs that deprived eligible nonpublic school children of services comparable to those offered eligible public school children. The complaint sought an injunction restraining continued violations of the Act and an accounting and restoration of some $13,000,000 in Title I funds allegedly misapplied from 1966 to 1969. In what perhaps may be described as something less than full cooperation by both sides, the possibility of providing "comparable" services was apparently frustrated by the fact that many parochial schools would accept only services in the form of assignment of federally funded Title I teachers to teach in those schools during regular school hours. At the same time, the petitioners refused to approve any program providing for on-the-premises instruction on the grounds that it was forbidden under both Missouri law and the First Amendment and, furthermore, that Title I did not require it. Since the larger portion (over 65%) of Title I funds allocated to Missouri has been used to provide personnel for remedial instruction, the effect of this stalemate is that substantially less money per pupil has been expended for eligible students in private schools, and that the services provided in those schools in no sense can be considered "comparable." In response to petitioners' argument that Missouri law forbids sending public school teachers into private schools, the court held that the state constitutional provision barring use of "public" school funds in private schools had no application to Title I funds. The court reasoned that although the Act was generally to be accommodated to state law, the question whether Title I funds were “public," within the meaning of the Missouri Constitution,9 must necessarily be decided by federal law. Id., at 1351-1352. Finally, the court refused to pass on petitioners' claim that the Establishment Clause of the First Amendment would be violated if Title I, in fact, does require or permit service by public school teachers on private school premises. The reason stated for the court's refusal was that since no plan had yet been implemented, the court "must refrain from passing upon important constitutional questions on an abstract or hypothetical basis." Id., at 1354. The Missouri Constitution, Art. 9, sec. 5, provides: "The proceeds of all certificates of indebtedness due the state school fund, and all moneys, bonds, lands, and other property belonging to or donated to any state fund for public school purposes, and the net proceeds of all sales of lands and other property and effects that may accrue to the state by escheat, shall be paid into the state treasury, and securely invested under the supervision of the state board of education, and sacredly preserved as a public school fund the annual income of which shall be faithfully appropriated for establishing and maintaining free public schools, and for no other uses or purposes whatsoever." (Emphasis supplied.) The Constitution, Art. 9, sec. 8, also provides: "Neither the general assembly, nor any county, city, town, township, school district or other municipal corporation, shall ever make an appropriation or pay from any public fund whatever, anything in aid of any religious creed, church or sectarian purpose, or to help to support or sustain any private or public school, academy, seminary, college, university, or other institution of learning controlled by any religious creed, church or sectarian denomination whatever; nor shall any grant or donation of personal property or real estate ever be made by the state, or any county, city, town, or other municipal corporation, for any religious creed, church, or sectarian purpose whatever." Finally, the Constitution's Bill of Rights, Art. 1, sec. 7, provides: "That no money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, sect or denomination of religion, or in aid of any priest, preacher, minister or teacher thereof, as such; and that no preference shall be given to nor any discrimination made against any church, sect or creed of religion, or any form of religious faith or worship." In Special District v. Wheeler, 408 S. W. 2d 60, 63 (1966), the Supreme Court of Missouri held that “the use of public school moneys to send speech teachers... into the parochial schools for speech therapy" was not a use "for the purpose of maintaining free public schools," within the meaning of Art. 9, sec. 5, of the State's Constitution, and therefore was a practice "unlawful and invalid.” That case did not involve federal funds. . . . III In this Court the parties are at odds over two issues: First, whether on this record Title I requires the assignment of publicly employed teachers to provide remedial instruction during regular school hours on the premises of private schools attended by Title I eligible students, and, second, whether that requirement, if it exists, contravenes the First Amendment. We conclude that we cannot reach and decide either issue at this stage of the proceedings. A. Title I requirements. As the case was presented to the District Court, petitioners clearly had failed to meet their statutory commitment to provide comparable services to children in nonpublic schools. The services provided to the class of children represented by respondents were plainly inferior, both qualitatively and quantitatively, and the Court of Appeals was correct in ruling that the District Court erred in refusing to order relief. But the opinion of the Court of Appeals is not to be read to the effect that petitioners must submit and approve plans that employ the use of Title I teachers on private school premises during regular school hours. The legislative history, the language of the Act, and the regulations clearly reveal the intent of Congress to place plenary responsibility in local and state agencies for the formulation of suitable programs under the Act. There was a pronounced aversion in Congress to "federalization" of local educational decisions. It is the intention of the proposed legislation not to prescribe the specific types of programs or projects that will be required in school districts. Rather, such matters are left to the discretion and judgment of the local public educational agencies since educational needs and requirements for strengthening educational opportunities for educationally deprived elementary and secondary school pupils will vary from State to State and district to district. H.R. Rep. No. 143, 89th Cong., 1st Sess., 5 (1965); S. Rep. No. 146, 89th Cong., 1st Sess., 9 (1965). And 20 U.S.C. sec. 1232a provides, inter alia: "No provision of... the Elementary and Secondary Education Act of 1965... shall be construed to authorize any department, agency, officer, or employee of the United States to exercise any direction, supervision, or control over the curriculum, program of instruction, administration, or personnel of any educational institution, school, or school system...." Although this concern was directed primarily at the possibility of HEW's assuming the role of a national school board, it has equal application to the possibility of a federal court's playing an overly active role in supervising the manner of Title I expenditures. At the outset, we believe that the Court of Appeals erred in holding that federal law governed the question whether on-the-premises private school instruction is permissible under Missouri law. Whatever the case might be if there were no expression of specific congressional intent, Title I evinces a clear intention that state constitutional spending proscriptions not be pre-empted as a condition of accepting federal funds. 13 The key issue, namely, whether federal aid is money "donated to any state fund for public school purposes," within the meaning of the Missouri Constitution, Art. 9, sec. 5, is purely a question of state and not federal law. By characterizing the problem as one involving "federal" and not "state" funds, and then concluding that federal law governs, the Court of Appeals, we feel, in effect nullified the Act's policy of accommodating state law. The correct rule is that the "federal law" under Title I is to the effect that state law should not be disturbed. If it is determined, ultimately, that the petitioners' position is a correct exposition of Missouri law, Title I requires, not that that law be preempted, but, rather, that it be accommodated by the use of services not proscribed under state law. The question whether Missouri law prohibits the use of Title I funds for on-the-premises private school instruction is still unresolved. See n. 9, supra. 13During the debates in the House, it was generally understood that state constitutional limitations were to be accommodated. For example, at one point Congressman Goodell raised the possibility that state law would preclude certain forms of services to nonpublic schools. The response from Congressman Perkins, Chairman of the Subcommittee, was: "The gentleman is an able lawyer and he well knows you cannot do anything in this bill that you cannot do under the State law." 111 Cong. Rec. 5744 (1965). Responding to a later observation by Mr. Goodell that dual enrollment was prohibited by 28 States, Congressman Carey responded: "The prohibition applies to a single type of program. That is why we have a multiplicity of programs in this, so that they can choose one in helping the children who are disadvantaged in any one public school." Id., at 5758. Congressman Thompson subsequently observed: "Therefore, the provision about providing full assistance under title I is up to the public school district, subject to the laws of the States." Ibid. Furthermore, in the present posture of this case, it was unnecessary for the federal court even to reach the issue whether on-the-premises parochial school instruction is permissible under state law. The statelaw question appeared in the case by way of petitioners' defense that it could not provide on-the-premises services because it was prohibited by the State's Constitution. But, as is discussed more fully below, the State is not obligated by Title I to provide on-thepremises instruction. The mandate is to provide "comparable" services. Assuming, arguendo, that state law does prohibit on-the-premises instruction, this would not provide a defense to respondents' complaint that comparable services are not being provided. The choice of programs is left to the State with the proviso that comparable (not identical) programs are also made available to eligible private school children. If one form of services to parochial school children is rendered unavailable because of state constitutional proscriptions, the solution is to employ an acceptable alternative form. In short, since the illegality under state law of on-the-premises instruction would not provide a defense to respondents' charge of noncompliance with Title I, there was no reason for the Court of Appeals to reach this issue. By deciding that on-the-premises instruction was not barred by state law, the court in effect issued an advisory opinion. Even apart from traditional policies of abstention and comity, it was unnecessary to decide this question in the current posture of the case. See also id., at 5979 (remarks of Cong. Thompson); id., at 5757 (remarks of Cong. Goodell); id., at 5747 (remarks of Cong. Perkins). The Handbook clearly recognizes that state law is to be accommodated: "Many State departments of education found severe restrictions with respect to the kind of services that their respective State constitutions and statutes allowed them to provide to private school students, especially when those private schools were owned and operated by religious groups. "The following list illustrates the kind of pro- "*Dual enrollment may not be allowed. "*Equipment may not be loaned for use on "*Books may not be loaned for use on private school premises. "Transportation may not be provided to private school students. "Sometimes such prohibitions exist singly in a given State. Often, the prohibitions exist in combination. Discussion Notes 1. Does Title I reflect any evidence of the "Political Safeguards of Federalism"? 2. In SeaPak v. Industrial, Technical and Professional Employees, 300 F. Supp. 1197 (S.D. Ga. 1969), aff'd 423 F. 2d 1229 (5th Cir, 1970), aff'd, 400 U.S. 985 (1971), the court observed, at page 1201: After all, state prohibition of compul c. Congressional Displacement of State Constitutions 145 Congressional Record-House, P. 993 (daily ed. Feb. 29, 1979) Legislation to Bring Temporary Relief to Arkansas vis-a-vis Interest Rates Mr. ALEXANDER. Mr. Speaker, I rise today to join my colleagues from Arkansas (Mr. HAMMERSCHMIDT, Mr. ANTHONY, and and Mr. BETHUNE) in the introduction of legislation that will bring temporary relief to a situation existing in Arkansas. The legislation we are introducing today will allow national banks, federally chartered financial institutions, or federally insured savings and loan associations and savings banks to charge interest on business or agricultural loans in the amount of $25,000 or more, notwithstanding any State constitution or statute, at a rate of not more than 5 percent in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where the financial institution is located. Home mortgage, consumer, or other interest rate ceilings established by any State would not be disturbed. The legislation would expire on January 1, 1981. Mr. Speaker, this legislation will most significantly impact the State of Arkansas. Arkansas' constitution sets the maximum interest rate which may be charged by business borrowers at 10 percent. Most other States exempt business loans from usury ceilings or have ceilings at a level which do not create a problem under current economic conditions. In response to the credit problems that the Arkansas usury limitations caused in our State (and at that time in Tennessee and Montana as well), Congress enacted legislation in the 93d Congress, Public Law 93-501, the so-called Brock bill, which included a sory unionism is a Congressional dispensation of grace, not the imperious right of a state. 3. For an example of congressional legislation intended to clarify the issue of whether the National Labor Relations Act was intended to preempt state constitutional and statutory "right to work" provisions, see Retail Clerks International Assoc. v. Schermerhorn, 375 U.S. 96 (1963). provision to allow national banks and federally insured institutions to charge on business and agricultural loans of $25,000 or more interest at a rate of 5 percent in excess of the Federal discount rate, regardless of a State's usury laws. The bill had a duration of 3 years (it expired July 1, 1977) and did not affect consumer or home mortgage loans. At the time Congress passed the Brock bill, Arkansas' lending institutions were paying up to 13 percent for money bought through the Federal Reserve System. Although many of the State's financial institutions continued to make business loans in anticipation that the rates would go down, it was obvious that this practice could not continue over a long period of time and the financial institution remain solvent. Arkansas, with the expiration of Public Law 93-501, finds itself in a similar position today. Hardest hit by our usury limitations are construction, agricultural and small business firms who cannot channel funds into the State through corporate subsidiaries. Estimates are now being compiled to determine the actual economic loss to Arkansas because of the lack of relief since the expiration of Public Law 93-501. Arkansas is presently rewriting its State constitution which will be presented to the voters in the 1980 general election. The usury issue will be one addressed in the document. Given the credit crunch that our State's financial community finds itself in, it is the hope of the Arkansas delegation that Congress will approve this temporary legislation until such time as the Arkansas electorate has voted on a usury provision in the State constitution that will provide permanent relief. Mr. ANTHONY. Mr. Speaker, I, too, join my colleagues from the State of Arkansas in urging support of this bill. It is with reservation that I do so, however, and that reservation should be explained. In 1874, the people of the State of Arkansas created our State constitution. At that period in our history, over 100 years ago, it was deemed by the people that 10 percent interest was the most any person should have to pay for money borrowed. The impor tance of that conclusion was such that it was inserted in the constitution, not merely relegated to a rule of law passed by the State legislature or forged by decisions of our State supreme court. It is also important to emphasize, Mr. Speaker, that the Supreme Court of Arkansas has through the years steadfastly guarded the mandate of our constitutional prohibition against interest in excess of 10 percent. Time and time again the court has found that if a person is charged an amount for borrowing money it is interest, regardless of what it is called: time-price differential, commitment fee, and so forth. Also, it is the law in Arkansas that if a loan is found to be usurious, not only is the interest and principal of the loan forfeited by the lender, but the agreement itself is void. There have been instances in which the wronged borrower has not only been al Discussion Notes 1. With respect to this interest rate legislation, see Maxine Master Long, "Trends in Usury Legislation-Current Interest Overdue," University of Miami Law Review 34 (January 1980): 325; Note, McInnis v. Cooper Communities, Inc. 611 S.W. 2d 767 (Ark. 1981) HOLT, Justice. Appellants brought suit to have a note and mortgage declared usurious and void, in violation of Art. 19, sec. 13 of the Constitution of Arkansas (1874), which restricts the charge of interest to 10% annually. Appellee responded that the loan, bearing 12% interest, was valid, because it came within the preemptive provisions of the Depository Institutions Deregulation & Monetary Control Act of 1980, 94 Stat. 132. . . . Succinctly, the issue on rehearing is the validity of this congressional act which suspends a state's usury laws and, also, reserves to a state the right to veto by overriding the act. Further, if valid, is appellee's loan to appellant usurious? We hold the act valid and appellee's loan to appellants is not usurious. Under sec. 501(a)(1), the 10% usury limit in our state would not apply to any loan, mortgage, credit sale, or advance which is secured by a first lien on residential real property, among other things, that is made after March 31, 1980.... As indicated, we are of lowed to not pay back the loan and the interest there on, but has been allowed to keep the house, automobile, or whatever the collateral was that he borrowed the money to buy. So, Mr. Speaker, the usury law of the State of Arkansas is not something to be casually pushed aside. Arkansans overwhelmingly agree that 10 percent is enough, and I agree with them. Unfortunately, the economy of Arkansas is affected and determined from without as well as from within the State. The inflation ravaging this Nation has reached such proportions that the banking and lending community cannot continue to survive with the 10-percent limitation imposed on them. We are asking this Congress to give that lending community temporary relief until once again, in a Constitutional Convention, the people of our State can decide what is and what is not usary (sic). "Usury Legislation Its Effects on the Economy and a Proposal for Reform," Vanderbilt Law Review 33 (January 1980): 204-05. 2. Is Congressional legislation a generally recognized avenue of state constitutional change? the view appellee has sufficiently met the requirements of the act. We now consider whether this congressional act preempts our usury laws as to those areas covered by the act. Congress has power to do this by virtue of the Supremacy Clause, Art. 6, cl. 2, Constitution of the United States. Congress has broad powers to legislate under the Commerce Clause of our Federal Constitution, Art. 1, sec. 8, cl. 3, this power to legislate falling into, inter alia, the category concerning the regulation of activities affecting commerce.... Certainly, it cannot be disputed that congressional regulation of the availability and flow of money between the various states comes within the scope of the Commerce Clause. We now note that the testimony during the congressional hearings was that state usury laws have a significant impact on the economy by diverting credit out-of-state, stagnating the housing industry and resulting in the inability of the farmers and small businessmen to borrow, all of which distorts and adversely affects local and national economy. See 126 Cong. Rec.H. 2273-2275 (daily ed. March 27, 1980); 126 Cong.Rec.S. 3170-3176 (daily ed. March 27, 1980). The legislative history of an act, as reflected by congressional hearings, is most significant. In Stephens Security Bank v. Eppivic Corp., 411 F.Supp. 61 (W.D.Ark.1976) (affirmed 553 F.2d 102 |