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WHAT IS “FEDERAL FUNDING” FOR PURPOSES OF TITLE IX?

Litigation By Binnall Law Group - 2024/05/01 at 11:10am

Title IX provides simply that “No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance…” 20 U.S.C. §1681. This means that Title IX, with all of its requirements related to athletics and regulations about sexual harassment, does not apply to schools that do not receive any form of federal financial assistance. But what does “federal financial assistance” mean? Certainly, when a university receives direct federal assistance through acceptance of Title IV funds (federal student loans), that qualifies as “federal financial assistance.” 34 C.F.R. §106.2(g). But what about other, more indirect ways in which it could be supposed that the federal government assists educational institutions financially; for example, tax exempt status? The United States Court of Appeals for the Fourth Circuit recently answered that question and held that tax exempt status does not qualify as “federal financial assistance.”  

In Buettner-Hartsoe v. Baltimore Lutheran High Sch. Ass’n, No. 23-1453, 2024 WL 1289592 (4th Cir. Mar. 27, 2024), Judge Thacker wrote for a unanimous panel of the Fourth Circuit and held that tax exemption does not qualify as “federal financial assistance.” In that case, the plaintiffs had sued a private Lutheran prepatory school that did not receive any federal funding but was registered as a 501(c)(3) tax exempt institution. The plaintiffs argued that because the government exempted the school from federal income tax, the amount of taxes the school would have paid was a “monetary benefit” from the government and was therefore some form of “federal financial assistance.” Id., at *5. The court disagreed. It wrote that “‘assistance’ means ‘aid, help, or support,’ which all connotate financial grants. Tax exemption, however, is the withholding of a tax burden, rather than the affirmative grant of funds. Thus, tax exemption is not ‘Federal financial assistance.’” Id.  

This holding means that for private schools in the Fourth Circuit (Maryland, Virginia, West Virginia, North Carolina, South Carolina) that do not receive federal funding, they will not be subject to the requirements of Title IX, absent a Supreme Court reversal of the now-controlling opinion on the matter. This holding will also likely be instructive for the other Circuits across the country because, at the very least, sister Circuits will be hesitant to create a circuit split with the Fourth Circuit concerning an issue as fundamental as whether Title IX applies to the operations of a school or a category of schools.  

If you have a novel appellate issue, or a statutory interpretation question, our experienced attorneys at Binnall Law Group can help. Please reach out today.