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Home » Archives » News Archives » 2007 » California Supreme Court Approves Inclusion of Religious Schools

California Supreme Court Approves Inclusion of Religious Schools

By Alan J. Reinach, Esq.

California Supreme Court Approves Inclusion of Religious Schools In Tax Exempt Bond Funding Scheme

In a 4-3 decision, the California Supreme Court held that Azusa Pacific University, California Baptist University and Oaks Christian School may participate in the issuance of tax exempt development bonds, and that this did not violate either the state or Federal constitution's prohibition on giving financial aid to religion. The bonds are intended to finance the construction of classrooms, dorms, athletic facilities and administrative offices.

The Church State Council joined a friend-of-the-court brief filed by Sidley Austin, LLP for the three schools, Loma Linda University, and others, in arguing that the tax exemption program did not provide any financial aid to the schools in violation of constitutional prohibitions. The program made a tax benefit available to the schools equally with other schools, but the state did not fund the program's expenses, guarantee the bonds, or otherwise provide direct funding to the schools.

The California Supreme Court compared this tax exempt bond issuance program favorably to the public provision of police and fire services to a religious institution. Many such services do require the expenditure of public funds, which provide an incidental benefit to religion. The bond issuance program, by contrast, requires no expenditure of public funds, while also providing an incidental benefit to religion.

The Court remanded the case to the lower court for hearings to determine that the secular curriculum at these schools was "typical" of that provided in non-religious schools. If subjects such as math, chemistry or Shakespeare's writings were treated comparably in these religious schools, then the secular public purpose of the tax exempt bond issuance program is met, and these schools may participate.

However, a school that qualifies to participate in the bond program operates under certain legal restrictions. In facilities constructed with the proceeds of the tax exempt bonds, the Court held that "a class that includes as part of the instruction information or coursework that promotes or opposes a particular religion or religious beliefs may not be taught." Clearly, this decision deserves very careful scrutiny before any religious school agrees to abide by its terms.

Our very sincere appreciation and hearty congratulations to our friends at Sidley Austin, LLP for their fine work. The lawyers named on the brief include Jeffrey A. Berman, Esq., who has represented Loma Linda University and Adventist Health for many years, and was honored last year at our Liberty banquet for his career contributions preserving religious autonomy of religious institutions; Gene Schaerr, Mark E. Haddad, and Nicholas Miller, who now directs the Andrews University International Religious Liberty Institute. Our friends at the Christian Legal Society also deserve our thanks for their fine amicus brief, including Gregory S. Baylor, director of the Center for Law & Religious Freedom, Steven H. Aden, Casey Mattox, and Samuel B. Casey, director of the Christian Legal Society.