Supreme Court Upholds ‘Decency’ Standard for Arts Grants; Other End-of-Term Rulings

As the Supreme Court ended its 1997-98 term last month, it made several rulings that directly affected non-profit groups, including a decision that upholds the ability of the National Endowment for the Arts to make grants only to projects that meet “decency” standards. Other rulings stripped a key source of income for legal-aid charities and upheld a tax exemption for church groups.

At issue in the three cases:

Review of arts proposals. In an 8-to-1 decision, the Court upheld a 1990 law that requires the National Endowment for the Arts to consider “general atandards of decency and respect for the diverse beliefs and values of the American public” when it decides which projects merit federal aid.

Congress added the decency provision after critics complained that money from the arts endowment should not have been used to pay for works such as Andres Serrano’s photograph of a crucifix immersed in urine.

Four artists who had been turned down for federal grants, including the performance artist Karen Finley, argued that the law was unconstitutional because it restricted free speech and was too vague.

But the Court upheld the law. Justice Sandra Day O’Connor, who wrote the opinion that was signed by four other justices, said the law was specific enough to pass constitutional muster and stopped “well short of an absolute restriction.”

Quoting a previous Supreme Court ruling, Justice O’Connor wrote that Congress may “selectively fund a program to encourage certain activities it believes to be in the public interest.”

Justice Antonin Scalia, joined by Justice Clarence Thomas, wrote a concurring opinion that agreed with the law’s constitutionality but disagreed with the view that it was merely “advisory,” as Justice O’Connor stated in her opinion.

The only dissenter in the case, Justice David H. Souter, wrote that he believed that the law violated the First Amendment’s protection of free speech. “Boiled down to its practical essence,” he wrote, “the limitation obviously means that art that disrespects the ideology, opinions, or convictions of a significant segment of the American public is to be disfavored, whereas art that reinforces those values is not.” The case is known as National Endowment for the Arts v. Finley, et al., No. 97-371.

Money for legal-aid groups. A major source of income for organizations that help the poor obtain legal services could be threatened under another Supreme Court ruling.

The case involved pooled bank accounts used by lawyers to hold certain kinds of deposits and other payments made by clients.

At issue in the case was the constitutionality of a Texas law that turned over interest from those accounts to legal-aid groups. All states and the District of Columbia have similar laws, which generate about $100-million a year for legal-aid charities, according to court documents.

In a 5-to-4 decision, the court ruled that the interest on the pooled accounts was the private property of the lawyers’ clients. Chief Justice William H. Rehnquist, writing the majority opinion, cited the rule that “interest follows principal.”

However, the court did not issue an opinion on whether state programs that funnel interest payments to legal-aid groups are constitutional, leaving the matter to the lower courts to decide.

The future of the state programs will now hinge on whether they represent an unjust “taking” of private property by the government, which is prohibited by the Fifth Amendment. The case is known as Phillips, et al. v. Washington Legal Foundation, et al., No. 96-1578.

Church tax exemptions.In a case involving a former Salvation Army employee, the Court let stand a provision that exempts churches from the Federal Unemployment Tax Act.

At issue was whether a Rhode Island woman, Guadalupe Rojas, should have been entitled to unemployment benefits after she was laid off from her job at the Providence affiliate of the Salvation Army.

The state of Rhode Island told Ms. Rojas that she was not entitled to unemployment compensation because her former employer, the Salvation Army, was structured as a church-operated organization and therefore exempt from participating in the state’s unemployment-payment program.

But lawyers for Ms. Rojas had argued that former employees of church-related groups should be eligible for the same benefits as employees who were laid off by non-religious charities.

The court, by deciding not to hear the case, upheld the exemption for churches. The case is known as Rojas v. Fitch, No. 97-1550.