Legal society enters campus funding discrimination case

SACRAMENTO, Calif. — Fearing a California Supreme Court ruling that could have a devastating impact on tax-exempt bond funding for Christian schools and universities, the Christian Legal Society’s Center for Law & Religious Freedom has filed a “friend-of-the-court” brief on behalf of three Southern California campuses.

“The essence of religious freedom is government neutrality towards religion,” Gregory S. Baylor, director of the Christian Legal Society’s Center for Law & Religious Freedom, said in a news release.

The brief, on behalf of Azusa Pacific University, California Baptist University, and the Oaks Christian School, argues that California should not use a church-state provision in its constitution to discriminate against intentionally religious schools by denying them the benefits of tax-exempt bond financing.

The state high court has agreed to review the case, which was first brought by the California Statewide Communities Development Authority, which offers tax-exempt bond financing to institutions, including private schools, for the development of projects intended to benefit the public.

“Giving religious schools the same access to conduit financing is completely consistent with our nationwide commitment to respecting America’s religious diversity,” Baylor said.

Through the program, the authority acts as a “conduit” through which schools may borrow money from private investors at a lower interest rate because the lender’s earnings are tax-free. Through the process, the authority charges borrowers a fee for its services, and state funds are not lent to the borrowers. Before approving the 2002 request from the three Christian campuses, the authority asked a state trial court to review the proposed transactions and to deem them constitutionally permissible.

The trial court held, however, that California Constitution forbids the authority from giving these three educational institutions the same access to conduit financing available to other schools. The authority appealed, and the California Court of Appeal agreed with the lower court that the California Constitution required discrimination against the schools on the ground that they were “pervasively sectarian.”

In preparation of the Supreme Court review, however, the Legal Society brief argues that decades of cases interpreting the state constitutional provision demonstrate the legality of the proposed transactions. The brief further explains that virtually every state—even states with constitutional provisions similar to California’s—extends the benefits of tax-exempt bond financing to religious schools.

“The lower courts’ decisions are yet another example of an all-too-frequent occurrence: discrimination against religion in the name of ‘separation of church and state,’” Baylor said. “We are hopeful that the California Supreme Court will embrace a better understanding of church-state relations and overturn the lower courts’ discrimination against religious schools. “The center, with funding from the national Alliance Defense Fund, filed the brief on behalf of the Christian Legal Society and the Council for Christian Colleges & Universities, an international higher education association of intentionally Christian colleges and universities.

Both Azusa Pacific University and California Baptist University are among its 100 U.S. member institutions. Eight additional CCCU member and four affiliate institutions are located in California.

If the Supreme Court of California affirms the lower court decision, 14 CCCU members and affiliates will likely be denied the same access to conduit financing available to other California institutions of higher education.

For more information, log on to christianlegalsociety.org.

Published, May 2005

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