Today's Daily Breeze reports that Los Angeles City Council is debating the scope of a court ruling handed down last year. In 2004, a California appellate court held that conduit financing by the state for pervasively sectarian schools violated California's constitution. In California Statewide Communities Development Authority v. All Persons Interested, a California appellate court held that t use of conduit financing, which allows schools to finance projects at a lower cost than they could through conventional financing, is a form of aid within the meaning of Cal. Const. Art. XVI, § 5, and has the direct and substantial effect of aiding religion. The case is on appeal to the California Supreme Court.
Today L.A. City Council is scheduled to vote on a plan to issue $30 million in tax-exempt bonds on behalf of Loyola High School, a Catholic parochial school. The bonds would save the high school $8 million in interest costs. The city's attorneys have recommended that the council move ahead with the transaction, saying Loyola's educational activities, and its willingness to admit students of all religious backgrounds, shows that it is not "pervasively sectarian." The bond proceeds will be used to build a new science facility. The ACLU of Southern California questions the proposed move, arguing that the school is pervasively sectarian. The city has already used tax-exempt bonds to assist three other parochial schools since 2001.
UPDATE: In its vote, the Los Angeles City Council approved the issuance of tax-exempt bonds for Loyola High School, prompting a promise from the ACLU to review the transaction to determine if it violates the state constitution's separation of church and state.
