Executive Summary
An estimated 1.7% of youth (aged 13-19) and 0.3% of adults in the United States identify as transgender. Applying these percentages to the number of youth and adults living in Tennessee indicates that the state is home to approximately 10,000 transgender youth aged 13-19, and 14,700 adults aged 20 and older.
House Bill 2414 requires public educational institutions to restrict students’ use of restrooms according to the sex assigned on their birth certificates. This policy is in conflict with several federal laws, and, if enacted, could lead to loss of federal funding, administrative enforcement proceedings, and litigation, which could result in costs and lost revenue to the State of Tennessee.
The potential fiscal impact of the bill includes:
- Loss of federal educational funding of up to $1.2 billion annually as a result of Title IX violations;
- Loss of federal contracts to educational institutions of up to $3 million to $9 million annually as a result of Executive Order 13672 violations;
- Costs incurred as a result of litigation and federal administrative enforcement.
Loss of Federal Educational Funding Under Title IX
Title IX & Gender Identity Discrimination
Title IX of the Education Amendments of 1972 prohibits discrimination based on sex in all federally funded education programs and activities. Title IX applies broadly to educational institutions, prohibiting discrimination in all operations by state, local, and private schools that receive federal funding, with a few limited exceptions.
The U.S. Department of Education has interpreted Title IX to prohibit discrimination based on gender identity. Consistent with this interpretation, the U.S. Department of Education’s Office of Civil Rights has resolved complaints of gender identity discrimination in favor of transgender students. These resolutions have required school districts to allow transgender students to access restrooms and other facilities that correspond to their gender identity. The Office of Civil Rights has explicitly determined that permitting a transgender student to use a separate, gender-neutral facility (such as a single-stall faculty restroom) does not absolve a school district of Title IX liability.
Rather, the Office for Civil Rights has interpreted Title IX to require that schools allow students to access shared restrooms and facilities that correspond to their gender identity.
Fiscal Impact of Title IX Violations
Tennessee’s public educational institutions are at risk of losing federal funding under House Bill 2414 because the bill requires public schools to restrict student’s use of restrooms based on the sex stated on their original birth certificate. This policy is in conflict with the Department of Education’s interpretation of Title IX to require public schools to allow transgender students to access restrooms and other facilities consistent with their gender identity. The Department of Education may revoke or withhold funding from educational institutions that violate Title IX and refuse to correct the violation.
Tennessee’s fiscal year 2016 budget includes $1,233,138,700 in federal funding for public educational institutions. Of this total, $1,014,040,800 is allocated to K-12 schools and $219,097,900 is allocated to institutions of higher education. Federal funding to educational institutions in Tennessee represents 12.6% of the state’s budget for public education; and 3.6% of the state’s total annual budget. House Bill 2414 would put this funding at risk of being revoked or withheld by the Department of Education.
Loss of Federal Contracts Under Executive Order 13672
Executive Order 13672 & Gender Identity Discrimination
Executive Order 13672, which amends Executive Order 11246, prohibits federal contractors that receive more than $10,000 in federal contracts annually from discriminating against their employees and job applicants based on gender identity. The U.S. Department of Labor’s Office of Federal Contracts Compliance Programs has made clear that Executive Order 13672 applies to student employees consistent with the principles established under Title VII.
The Office of Federal Contract Compliance Programs has issued guidance stating that “contractors must allow employees and applicants to use restrooms consistent with their gender identity,” and defines gender identity as “one’s internal sense of one’s own gender. It may or may not correspond to the sex assigned to a person at birth, and may or may not be made visible to others.”
Fiscal Impact of Title IX Violations
House Bill 2414 would put educational institutions that hire student employees at risk of losing federal contracts and being banned from bidding on future opportunities because the bill requires schools to discriminate against student employees in violation of Executive Order 13672.
Over the past few fiscal year periods, public institutions of higher education in Tennessee have received between $3.4 million and $8.2 million in federal contracting dollars.
- In fiscal year 2015, public institutions of higher education in Tennessee received a total of $8.2 million in federal contracting dollars. Contracts were awarded to the University of Tennessee, East Tennessee State University, Middle Tennessee State University, Nashville State Technical Community College, Southwest Tennessee Community College, Tennessee State University, Tennessee Technological University, and the University of Memphis.
- In fiscal year 2014, public institutions of higher education in Tennessee received a total of $4.5 million in federal contracting dollars. Contracts were awarded to the University of Tennessee, East Tennessee State University, Nashville State Technical Community College, Southwest Tennessee Community College, and the University of Memphis.
- In fiscal year 2013, public institutions of higher education in Tennessee received a total of $3.8 million in federal contracting dollars. Contracts were awarded to the University of Tennessee, East Tennessee State University, Nashville State Technical Community College, Southwest Tennessee Community College, Tennessee Technological University, and the University of Memphis.
As a result of House Bill 2414, Tennessee’s educational institutions could be at risk of losing an estimated $3 million to $9 million in federal contacts annually and may be debarred from receiving future contracts, assuming that educational institutions in Tennessee continue to receive federal contracting dollars in amounts similar to that received over the past several years. This analysis considers only the impact of loss of federal contracts to public institutions of higher education because K-12 schools generally do not hire student employees.
Litigation and Enforcement Actions
Tennessee’s educational institutions will incur the costs of individual lawsuits and administrative enforcement actions under Title IX and Executive Order 13672 as a result of the law.
Individuals can file administrative complaints of discrimination under Title IX and Executive Order 13672. Under Title IX, any individual is permitted to file a complaint alleging that a school policy violates the law; the person need not have experienced discrimination under the policy. Complaints filed under Title IX or Executive Order 13672 trigger administrative enforcement procedures, such as investigations and compliance reviews. These procedures may be burdensome to schools, particularly those that are under-resourced and understaffed. Both Title IX and Executive Order 13672 also allow the Department of Justice to bring suit against entities that fail to comply with the laws.
In addition, Title IX provides a private right of action, allowing individuals who have been discriminated against to file lawsuits alleging discrimination directly in court. Public schools are not immune from these suits, as Congress has abrogated states’ Eleventh Amendment immunity under Title IX by statute. A case recently filed in Virginia demonstrates that parents and legal organizations are willing to take schools to court for not allowing transgender students to use the restroom consistent with their gender identity. With thousands of transgender youth and college students in Tennessee, the cost of these suits could be significant.
Conclusion
House Bill 2414 conflicts with the gender identity non-discrimination requirements of federal laws including Title IX and Executive Order 13672 by restricting restroom access students based on the sex on their birth certificates. As a result, state and local government entities in Tennessee are at risk of losing an estimated $1.2 billion in federal funding for education and $3 million to $9 million federal contracts. In addition, the legislation would likely give rise to litigation and administrative enforcement proceedings that impose burdens and costs on the state.