In 2002 the Supreme Court ruled in the case of Zelman v. Simmons-Harris that, under certain conditions, communities may create a voucher program for use at a variety of schools without violating the U.S. Constitution, even if some of the vouchers are redeemed at religious schools.

Citing precedent, Chief Justice William Rehnquist’s plurality opinion looked first at the purpose of a voucher program: It must exist for a valid secular purpose and not to promote any particular religion, he wrote.

The Court's analysis then focused on whether a voucher program advances religion. The justices agreed that a neutral benefit program could be constitutional, even if religious institutions received some of the funds. Arguments occurred over the specifics of what constitutes a neutral program, and whether the funds could go directly to a religious group or if they must pass first through a private individual who would decide how to allocate the resources.

In both the plurality and concurring opinions, a majority of the Court focused primarily on whether or not a government benefit program was neutral on its face in matters of religion. In his plurality opinion in Zelman, Rehnquist said:

"[Previous cases] make clear that where a government aid program is neutral with respect to religion, and provides assistance directly to a broad class of citizens who, in turn, direct government aid to religious schools wholly as a result of their own genuine and independent private choice, the program is not readily subject to challenge under the Establishment Clause."

What does all of this mean? The Court indicates that communities must consider several factors when creating a voucher program:

1. Is the proposed voucher program neutral with respect to religion? If the plan favors one religion over another, or non-religion over religion, then it will violate the establishment clause of the First Amendment.
2. Will the vouchers be made available to students based on religiously neutral criteria? That would mean deciding who gets a voucher must be based on such non-religious bases as financial need or attendance at poorly performing school, etc. Also, the schools that are allowed or not allowed to receive vouchers must similarly be appraised on the basis of secular criteria, such as academic performance and ability to adhere to safety codes.
3. The voucher must be awarded to an individual, not the religious institution, and the individual must, through private choice, make the decision as to where the voucher is to go. The government cannot influence this decision. This is necessary to demonstrate the government voucher is going to benefit the individual — as opposed to benefiting religion. This last element was by far the most contentious issue for the justices in the Zelman decision.

While all of the above material focuses on whether a voucher program is legal under the federal establishment clause, states must also look at their state constitutions. Most states have their own constitutional prohibitions against providing public funds to religious entities. These restrictions are often more restrictive than the U.S. Constitution.

This issue has come to the forefront in Colorado, where, in May 2003, a group of taxpayers sued the state over a newly implemented voucher program. Many of the arguments are based on Colorado’s constitutional prohibitions against allowing public money to go to religious entities.

Other issues are also involved, many revolving around policy questions and political realities.