Yesterday in a 4-3 decision, California's Supreme Court upheld the governmentally-sponsored conduit financing of campus improvements at three pervasively-sectarian religious schools. Under the arrangement, state and local governments expend no public funds, but Community Development Authorities act as issuers of tax-exempt bonds to permit the schools to finance construction at lower interest rates than they would otherwise have to pay.
In California Statewide Communities Development Authority v. All Persons Interested In the Matter of the Validity of a Purchase Agreement, (CA Sup. Ct., March 5, 2007), a majority of the court held that the arrangement did not violate either California's Constitution (Art. XVI, Sec. 5) that bars state support for any school controlled by a sectarian denomination; nor does it violate the First Amendment.
The majority held that financing would be valid if it met 4 tests: it must serve the public interest and provide no more than an incidental benefit to religion; it must be equally available to secular and sectarian institutions; the program must prohibit use of bond proceeds for "religious projects"; and the program must not impose any financial burden on the government. The court went on to hold that the first of these tests would be met so long as the school provides a broad curriculum in secular subjects, and remanded the case to the trial court for it to determine whether the schools offer a sufficiently broad variety of secular courses.
The dissent argued that California's Constitution prohibits the state from acting as a fundraiser for schools. The Associated Press yesterday reported on the court's decision. [Thanks to How Appealing for my updated link to the opinion.]
