An Arizona appellate court struck down two school voucher programs yesterday, finding that they violate a state constitutional prohibition against using public money to aid private or religious schools. The programs, serving disabled children and those in foster care, were unanimously ruled unconstitutional by a three-judge panel of Arizona’s Division Two Court of Appeals.

The ruling and the motivations behind the suit have been attacked by school choice groups, with the Alliance for School Choice calling it “shameful.” Praising the court’s decision, but doing little to allay concerns about the quality of public school instruction, John Wright, president of the Arizona Education Association, tautologically declared that “Arizonans understand that public schools are our pathway to great public schools.…”

What are the legal merits of this decision, and what does it mean for the affected kids and the school choice movement as a whole?

The ruling hinged on whether the vouchers in question can be considered aid to private and religious schools, because Article IX, paragraph 10 of the Arizona Constitution forbids the use of public money for that purpose. Choice advocates argued that the aid is being given to families and that the schools only benefit indirectly. The court found that while families are indeed aided, so too are the schools. However much I want all children to have access to a choice of independent schools competing to serve them, I find it hard to disagree with the court’s conclusion.

That doesn’t mean that the appellate court’s word is final. Choice advocates will no doubt appeal to the Arizona Supreme Court, which could agree with the narrower interpretation of the aid’s beneficiaries.

Even if it does not, yesterday’s ruling leaves open two paths for recreating the stricken programs in constitutionally acceptable fashion. The justices pointed explicitly to one obvious, if difficult, approach: seek an amendment to the state’s constitution that would strike or revise the “Aid Clause” ( Article IX, paragraph 10).

More helpfully, they also note that Arizona’s Supreme Court has already upheld the state’s education tax credit program in the face of an “Aid Clause” challenge (the Kotterman v. Killian ruling of 1999). As the appellate justices wrote yesterday:

Although Jordan and Kotterman… considered constitutional challenges based on this clause that to some extent foreshadowed the arguments presented here, the conclusions in both of those cases turned on facts clearly distinguishable from the facts of this case. In Kotterman, the court disposed of the Aid Clause challenge in a single paragraph, finding the tax credit there was neither an appropriation of public money nor the laying of a tax.

This is one of the reasons that Cato Institute scholars favor tax credit programs over voucher programs, as outlined in our Public Education Tax Credit model legislation and policy analysis. Reviving the two stricken voucher programs could thus be as simple as incorporating them into Arizona’s existing education tax credit program or reconstituting them as separate tax credit programs.

There will, however, be a temporary hitch to even that solution. The U.S. 9th Circuit Court of Appeals will soon be handing down a ruling that will likely strike down Arizona’s tax credit program under a clever, inventive, but thoroughly misguided interpretation of case law. This ruling, which could come down in the next several months, will almost certainly be overturned by the U.S. Supreme Court on appeal, as are so many of the 9th Circuit’s rulings.

Arizona’s disabled and foster children will ultimately enjoy meaningful educational freedom and choice, but they will sadly have to wait another year or two for a few remaining legal clouds to part. In the end, the sun will shine once more.