CEO Notebook

Defending Our Independence

If courts deem that independent schools receive federal funds simply due to our tax-exempt status, are we truly independent anymore?

Aug 9, 2022

It’s likely you and your colleagues in the independent school community have been feeling the shockwaves from recent judicial decisions regarding Title IX and independent schools. Just a little over two weeks ago, in the Buettner-Hartsoe v. Baltimore Lutheran High School Association case, a senior U.S. District judge in Maryland ruled that a tax-exempt private school is subject to the same federal Title IX requirements as public educational institutions. Specifically, the court held that Concordia Preparatory School (formerly Baltimore Lutheran High School) is a recipient of federal financial assistance solely because of its nonprofit 501(c)(3) status. Shortly thereafter, the U.S. District Court for the Central District of California issued a separate opinion with the same legal conclusion about nonprofit status in E.H. v. Valley Christian Academy.

These decisions represent a dramatic departure from the existing understanding of the law, which is that tax exemption as a 501(c)(3) organization, in and of itself, does not constitute receipt of federal financial assistance. 

I’m sure you share my deep concern and understand the potential harm these rulings may cause our independent school community and beyond this, all tax-exempt organizations. We all support the intention of Title IX, which protects students from discrimination based on sex in education programs or activities that receive federal financial assistance. Many of our schools conduct themselves in a manner that far exceeds the expectations of this regulation. However, fulfilling the many checkboxes related to legal compliance, such as hiring a Title IX coordinator, may become an undue financial burden on our schools. It is likely resources would be redirected from investments in more mission-aligned programs to meet this new compliance need.

Rose Neubert, chief financial and operating officer, Stuart Country Day School of the Sacred Heart, Princeton, New Jersey, and NBOA Board Chair, affirmed this line of thought: “By definition, a nonprofit is an organization that uses its income and profits for the organization’s main goal, which is to support their mission. Independent schools of all sizes exist to serve our many students. I am fairly certain that if schools may no longer rely on tax-exempt status that allows for each and every dollar to be reinvested in our missions and programs, many small and under-resourced organizations will cease to exist. At a time when students across the country are struggling due to the COVID-19 pandemic, and mental health issues are a real threat to our student learning, it would be irresponsible to create any obstacles that may harm these very students who rely on our schools to meet their needs.”

Due to the potential implications of these recent decisions, NAIS and NBOA are partnering with several regional and state independent school associations, with support from Venable LLP serving as our joint legal counsel, to defend the purpose and significance of independent schools’ tax-exemption and the independence of our member schools. Association partners are the Southern Association of Independent Schools (SAIS), Association of Independent Schools of Greater Washington (AISGW), Virginia Association of Independent Schools (VAIS) and Palmetto Association of Independent Schools-South Carolina (PAIS-SC), all of which have member schools under the jurisdiction of the 4th Circuit United States Court of Appeals that issued the ruling. The Association of Independent Schools of Maryland (AIMS), which accredits Concordia Preparatory School, is independently pursuing legal recourse.

The first step in this process is to file an “amicus brief,” which will be submitted this week by the partnering associations mentioned above. This “friend of the court” filing supports the motion for reconsideration of the initial ruling or expedited appeal to the Fourth Circuit. Members of the NBOA Board of Directors have been requested to provide testimonials to support this brief.

Ed Griffin, chief financial officer at Pomfret School, a boarding school in Pomfret, Connecticut, commented, “Our resources are limited, and we manage every dollar carefully in executing our mission of empowering students to pursue lives of meaning and purpose. If our tax-exempt status were to be considered federal financial assistance, I would worry about the ramifications not only for our school, which educates 360 high school-aged students, but also for our peer schools, many of which are more cash-starved than Pomfret School. Our school operates fairly, openly and with the student experience as our most important goal. Please do not jeopardize these objectives with an unfavorable ruling related to Title IX.”

Tom Arnold, chief financial and operating officer at Western Reserve Academy in Hudson, Ohio, shared, “By no means do I minimize the importance of that which is included in Title IX. I would suggest that independent schools are already working diligently in this space and in honor of the intent of the requirements.”

So, how should your school respond to or prepare for the potential implications of this ruling on independent schools? NAIS's Legal Bulletin explains, "It is important to note this opinion does not necessarily mean that all nonprofit schools must have Title IX programs today. The judges' decisions in these cases apply only to the parties involved. Any court (even a federal court in Maryland or California) hearing a subsequent case involving different parties will be free to make its own decision as to whether Title IX applies in the case before it. Courts, however, often rely on other courts' decisions if they agree with their reasoning or if they feel there is a consensus among other judges who previously decided the same issue, even though they are not required to follow those other courts. Other courts may use this decision to come to the same conclusion when presiding over claims alleging violations of Title IX against independent schools, and as a result, schools in Maryland and California may decide to exercise increased caution at this time. Nevertheless, it is important to remember that, given the school's motion in the Maryland matter, this case is ongoing and the decision may change or be overturned."

These are particularly challenging times for our schools. And at these moments, it is incumbent upon associations like NBOA to serve as the collective voice of independent schools. Working with partnering associations, we plan to vigorously pursue the immediate reconsideration of this ruling. NBOA will keep you apprised of our progress as we move forward. For further resources on Title IX and independent schools, see related content from NBOA below.

Jeff-Shields

Jeffrey Shields, FASAE, CAE

President and CEO

National Business Officers Association (NBOA)

Washington, DC

Jeffrey Shields, FASAE, CAE, has served as president and CEO of the National Business Officers Association (NBOA) since 2010. He is currently as a member of the American Society of Association Executives’ (ASAE) board of directors as well as a trustee for the Enrollment Management Association (EMA). Previously, he served as a trustee for One Schoolhouse, an innovative online school offering supplemental education to independent schools, and Georgetown Day School in Washington, DC. Prior to his current role, Shields was senior vice president and chief planning officer at the National Association of College and University Business Officers (NACUBO), where he worked for nearly 10 years.

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