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In US religious schools' use of tax-free bonds spurs church-state debate

Associated Press is reporting a new element in the separation of church and state debate. It concerns the use of tax-free bonds by religious schools to fund capital works. No public funds are used to pay the bonds. The state serves as a conduit, a legal requirement for the nonprofits to get the tax exemption, and the bonds' credit is backed separately. But nationwide, similar schools have had their bonds' tax-exempt status challenged by groups who claim it amounts to state support of religion. Some judges have agreed, though the law is unclear. The religious schools maintain that it would be religious discrimination to deny them the bonds.

The issue is a somewhat obscure offshoot of related debates about how much indirect support government can provide for religious schools -- textbooks, lunches and busing, for example.

"Whether one characterizes them as a tax exemption or a cash benefit, the loss to taxpayers and citizens is the same, and in many cases runs to the tune of millions of dollars," said Ayesah Khan of Americans United for Separation of Church and State.

Khan's group sued unsuccessfully to invalidate bonds issued for Pat Robertson's Regent University in Virginia. "The heart of the establishment clause is that taxpayers not be forced to support a religious institution," Khan said.

The religious schools read the First Amendment differently. They say it prohibits the government from denying them, on religious grounds, a tax exemption available to anyone else.

"The ACLU's position is asking government to discriminate against religion," said Martin Nussbaum, a Colorado attorney who has represented a number of schools in such cases. "That's shameful."

Nussbaum says the state is simply providing a neutral government service. Telling religious schools they can't take advantage is like telling church members the fire department won't protect them or they can't use a national park, he said.

The only U.S. Supreme Court decision on such financings is nearly 30 years old. It upheld such bonds as long as schools are not "pervasively sectarian." The standard has allowed financings for Catholic schools such as Georgetown University and Boston College, where many students aren't Catholic and faculty do not have to teach from a particular religious perspective.

But some say the standard forces judges to conduct a kind of inquisition into how religious a school is.

AP/Freedom Forum