Charitable Choice: Legal and Constitutional Issues

CRS Report for Congress
Charitable Choice:
Legal and Constitutional Issues
Updated January 27, 2006
Angie A. Welborn
Legislative Attorney
American Law Division

Congressional Research Service ˜ The Library of Congress

Charitable Choice: Legal and Constitutional Issues
Summary
Soon after taking office in 2001, President Bush put forward a charitable choice
agenda intended to expand the ability of faith-based organizations to provide
federally funded social services without impairing their religious character or the
religious freedom of beneficiaries. However, prior to 2001, Congress began enacting
charitable choice rules for various federally funded social programs, including,
Temporary Assistance for Needy Families (TANF), the Community Service Block
Grant (CSBG), and substance abuse prevention and treatment programs. When
Congress did not enact legislation to apply the concepts behind charitable choice to
more programs, the Bush Administration issued an Executive Order directing a wide
range of social programs to follow the rubric of charitable choice. Despite the focus
on charitable choice during the Bush Administration, perhaps the broadest example
of charitable choice rules are those established by the 1996 welfare reform law (P.L.

104-193).

Since its inception, charitable choice has been persistently controversial; and
President Bush’s faith-based initiative made that controversy highly visible. Much
of the legal controversy has centered on the constitutionality of the federal
government directly subsidizing faith-based social services programs and on whether
subsidized religious organizations ought to be able to discriminate on religious
grounds in their employment practices.
This report provides analysis of a number of factual, civil rights, and
constitutional questions that have been raised regarding charitable choice in general.
The analysis is generally focused on those provisions enacted as part of the 1996
welfare reform law. More recent charitable choice rules may give rise to the same
or similar concerns. Primarily, this report focuses on civil rights concerns that have
arisen in the context of charitable choice and First Amendment issues, as well as
recent legal developments related to charitable choice. It will be updated as events
warrant.

Contents
In troduction ..................................................1
Civil Rights Concerns..........................................2
Nondiscrimination in federally assisted programs.................3
Nondiscrimination in employment............................4
Preemption of state and local civil rights laws...................8
Modification of Executive Order 11246........................8
First Amendment Issues........................................10
Direct aid...............................................11
Indirect aid..............................................15
Constitutionality of charitable choice.........................16
Recent Legal Developments....................................19

Charitable Choice: Legal and Constitutional
Issues
Introduction
Soon after taking office in 2001, President Bush put forward a charitable choice
agenda intended to expand the ability of faith-based organizations to provide
federally funded social services without impairing their religious character or the
religious freedom of beneficiaries. However, prior to 2001, Congress began enacting
charitable choice rules for various federally funded social service programs, including
Temporary Assistance for Needy Families (TANF), the Community Service Block
Grant (CSBG), and substance abuse prevention and treatment programs.¹ When
Congress did not enact legislation to apply the concepts behind charitable choice to
more programs, the Administration issued an Executive Order directing a wide range²
of social programs to follow the rubric of charitable choice.
Despite the focus on charitable choice during the Bush Administration, perhaps
the broadest example of charitable choice rules are those established by the 1996³
welfare reform law (P.L. 104-193). The provisions of the 1996 law are probably the
most far-ranging set of rules so far set out and have been a basic model for charitable
choice provisions since enacted, proposed, or established by regulation. In general,
the law’s major charitable choice provision bars government from discriminating
against an organization applying to provide publicly funded services on the basis of
its religious character, so long as the program is implemented in a manner consistent
with the Establishment Clause of the First Amendment to the U.S. Constitution.
Moreover, it stipulates the following rules with regard to faith-based organizations
applying for or receiving public funds and applicants for/recipients of services:
^!Religious organizations remain independent of government and
retain control over the definition, development, practice, and
expression of their religious belief.
^!Government may not require religious organizations to change their
form of internal governance or to remove religious art and other
symbols as a condition of participation.

¹ For more information on the application of charitable choice rules to these and other
programs, see CRS Report RL32736, Charitable Choice Rules and Faith-Based
Organizations, by Joe Richardson.
² For more information on this Executive Order, see CRS Report RS21924, Charitable
Choice: Expansion by Executive Action, by Joe Richardson.
³ For more information, see CRS Report RS20712, Charitable Choice, Faith-Based
Initiatives, and TANF, by Vee Burke.

^!Faith-based organizations may discriminate on religious grounds in
their employment practices, regardless of their receipt of public
funds.
^!Like other grantees/contractors, religious organizations’ use of
public funds is subject to audit — except that, when federal funds
are segregated, only those moneys are subject to audit.
^!Any party seeking to enforce its rights under charitable choice
provisions of law can assert a civil court action for relief against the
entity/agency allegedly committing a violation.
^!No funds provided directly (as opposed to indirectly through
vouchers) may be spent for sectarian worship, instruction, or
proselytiz ation.
^!Federal charitable choice rules are not to be construed as preempting
any provision of a state’s constitution or laws regarding aid to or
through religious organizations.
^!Faith-based organizations may not discriminate against beneficiaries
or potential beneficiaries on the basis of religion or religious belief.
^!Government must provide accessible alternative providers where
individuals have an objection to the religious character of the
organization/institution from which they receive or would receive
services.
Since its inception, charitable choice has been persistently controversial; and
President Bush’s faith-based initiative made that controversy highly visible. Much
of the legal controversy has centered on the constitutionality of the federal
government directly subsidizing faith-based social services programs and on whether
subsidized religious organizations ought to be able to discriminate on religious
grounds in their employment practices.
This report provides analysis of a number of factual, civil rights, and
constitutional questions that have been raised regarding charitable choice in general.
The analysis is generally focused on those provisions enacted as part of the 1996
welfare reform law. More recent charitable choice regulations issued under the
executive order discussed below may give rise to the same or similar concerns.
Primarily, this report focuses on the civil rights concerns that have arisen in the
context of charitable choice and First Amendment issues, as well as recent legal
developments related to charitable choice. It will be updated as events warrant.
Civil Rights Concerns
Several civil rights concerns have been raised in the debates on charitable
choice. The primary one has been whether the religious exemption in Title VII of the
Civil Rights Act of 1964, which allows religious organizations to discriminate on
religious grounds in their employment practices, should apply to religious
organizations that receive public funds under the rubric of charitable choice.
President Bush’s December 12, 2002, executive order (E.O. 13279) raised a related
issue by exempting religious organizations that contract to provide goods and
services to the federal government or that participate in federally financed
construction contracts from the religious nondiscrimination in employment
provisions of Executive Order 11246. There has also been some concern over the

protections from discrimination afforded beneficiaries by charitable choice, and on
whether charitable choice should preempt state and local civil rights laws that go
beyond federal nondiscrimination requirements and bar employment discrimination
on such bases as sexual orientation and marital status.
These issues arise in the context of a complex panoply of civil rights mandates
and exemptions that already exist. The following subsections explicate charitable
choice with respect to (1) existing mandates barring discrimination in programs and
activities that receive federal financial assistance, (2) existing regulatory mandates
barring discrimination in employment practices, particularly Title VII of the Civil
Rights Act of 1964; and (3) the preemption of state and local nondiscrimination laws
that go beyond federal law. A final subsection discusses the employment
nondiscrimination requirements of Executive Order 11246 and the President’s
exemption of religious organizations from the religious nondiscrimination
requirement of that Order.
Nondiscrimination in federally assisted programs. Federal law
imposes a number of civil rights obligations on the provision of services in programs
and activities that receive federal financial assistance:
^!Title VI of the Civil Rights Act of 1964 bars discrimination on the
bases of race, color, or national origin.⁴
^!Title IX of the Education Amendments of 1972 bars discrimination
on the basis of sex and on the basis of blindness (in admissions) in⁵
education programs.
^!Section 504 of the Rehabilitation Act of 1973 bars discrimination on⁶
the basis of handicap.
^!The Age Discrimination Act of 1975 bars discrimination on the⁷
basis of age.
All of these prohibitions on discrimination apply generally and are triggered by the
receipt of federal funds, but most of them apply only to the delivery of services and
not to the employment practices of the entities that receive federal funds. The
applicability of these statutes to federally financed programs and activities is not
altered by charitable choice.
In contrast, there is no comparable federal statute that generally bars religious
discrimination in federally funded programs and activities. Individual programs
sometimes contain such a prohibition,⁸ but there is no general statutory prohibition.

⁴ 42 U.S.C.A. 2000d et seq.
⁵ 20 U.S.C.A. 1681 et seq.
⁶ 29 U.S.C.A. 794.
⁷ 42 U.S.C.A. 6101 et seq.
⁸ See, e.g., the nondiscrimination prohibition attached to the Head Start program at 42
U.S.C.A. 9849(a).

Nonetheless, charitable choice has, since its inception as part of the welfare
reform measure in 1996, included provisions that bar religious organizations from
discriminating against beneficiaries on religious grounds and that require government
to make an alternate provider available to any beneficiary who objects to the religious
character of a given provider.
All of the existing charitable choice statutes, with the exception of the
Community Service Block Grants (CSBG) (P.L. 105-285), bar a religious
organization that receives assistance from discriminating against beneficiaries on the
basis of “religion” or “a religious belief.” Three of the four statutes also bar such
discrimination on the basis of a “refusal to actively participate in a religious
practice.” But one of the substance abuse statutes does not include this latter
prohibition.⁹
Nondiscrimination in employment. Federal statutes impose a number of
employment nondiscrimination requirements on public and private employers, and
generally these are not dependent on whether or not the entity receives federal
financial assistance, i.e., they are regulatory requirements that apply regardless of
whether an entity receives federal assistance. With the exception of Title IX, none
of the nondiscrimination statutes described in the previous subsection applies to the
employment practices of entities that receive federal funds (unless a primary
objective of the federally funded program is to provide employment). But most
public and private employers that employ more than a specified number of employees
are barred by the Americans with Disabilities Act from discriminating in their¹⁰
employment practices on the basis of disability, by the Age Discrimination in
Employment Act on the basis of age,¹¹ and by Title VII of the Civil Rights Act of¹²

1964 on the bases of race, color, national origin, sex, and religion.

A number of these statutes contain special provisions with respect to the
employment practices of religious institutions. Religious educational institutions are
exempt from the sex nondiscrimination requirement of Title IX, for instance, if “the
application of this subsection would not be consistent with the religious tenets of¹³
such organization.” The Americans with Disabilities Act, while barring religious
organizations from discriminating on the basis of disability in employment,
specifically provides that they may still give preference in their employment practices
on the basis of religion and may require their employees to conform to their religious¹⁴
tenets. Most important, Title VII specifically exempts religious employers from its
ban on religious discrimination in employment.

⁹ See P.L. 106-554.
¹⁰ 42 U.S.C.A. 12201 et seq.
¹¹ 29 U.S.C.A. 621 et seq.
¹² 42 U.S.C.A. 2000e et seq.
¹³ 20 U.S.C.A. 1681(a)(3).
¹⁴ 42 U.S.C.A. 12113(c).

Title VII and the religious exemption.It is the Title VII exemption that
has generated the most extensive debate in the discussion of charitable choice,
because all of the charitable choice statutes and proposals so far have explicitly
provided that the Title VII exemption “shall not be affected by the religious
organization’s provision of assistance under, or receipt of funds from, a program
described in ....”
Title VII bars most public and private employers with 15 or more employees
from discriminating in their employment practices on the bases of race, color,
national origin, sex, and religion. This threshold requirement of 15 employees
means that many churches, synagogues, and other congregational entities, as well as
small religious social services providers, are not large enough to be covered by any
of the nondiscrimination mandates of Title VII. But Section 702 of Title VII
specifically exempts those religious employers that are large enough to be covered
from its prohibition on religious discrimination, as follows:
This title shall not apply ... to a religious corporation, association, educational
institution, or society with respect to the employment of individuals of a
particular religion to perform work connected with the carrying on by such¹⁵
corporation, association, educational institution, or society of its activities.
Thus, religious organizations otherwise covered by Title VII may use religion as a
criterion in their hiring, firing, promotion, and other employment practices; and they
may do so not only with respect to employees engaged in religious activities but also
those engaged in purely secular activities. This exemption has been unanimously
upheld as constitutional by the Supreme Court with respect to the nonprofit activities¹⁶
of religious organizations and has been applied to allow a wide variety of religious
entities to discriminate on religious grounds in a wide variety of circumstances.¹⁷

¹⁵ 42 U.S.C.A. 2000e-1. Title VII also contains two other exemptions, now largely
redundant, allowing religious employers to discriminate on religious grounds. The first
allows educational institutions that are religiously controlled or that are “directed toward the
propagation of a particular religion” to discriminate on religious grounds in their
employment practices. The second allows all employers, not just religious organizations,
to use religion, sex, or national origin as a criterion in their employment practices if religion,
sex, or national origin “is a bona fide occupational qualification reasonably necessary to the
normal operation of that particular business or enterprise.” See 42 U.S.C.A. 2000e-2(e).
¹⁶ Corporation of the Presiding Bishop of Church of Jesus Christ of Latter-Day Saints v.
Amos, 483 U.S. 327 (1987). The Court offered no comment with respect to the
constitutionality of the exemption as it might be applied to any profit-making activities of
religious organizations.
¹⁷ See, e.g., Corporation of the Presiding Bishop v. Amos, supra (church fired a building
engineer employed in a church-owned gymnasium open to the public because he failed to
qualify for a “temple recommend”); Little v. Wuerl, 929 F.2d 944 (3d Cir. 1991) (Catholic
school fired a teacher who had remarried without first seeking an annulment of her first
marriage in accord with Catholic doctrine); Porth v. Roman Catholic Diocese of Kalamazoo,
209 Mich.App. 630, 532 N.W.2d 195 (Mich. App. 1995) (Catholic school refused to renew
the contract of a Protestant teacher after it had decided to hire only Catholics as faculty
members); Walker v. First Orthodox Presbyterian Church, 22 FEP Cases 761 (Cal. 1980)
(continued...)

As noted, Title VII is a regulatory statute. Nothing in its language generally or
in the religious exemption provision (§ 702) suggests that either is limited to
situations in which an employer does not receive public funds. The case in which the
Supreme Court upheld § 702 as constitutional did not involve any public funding,¹⁸
but several lower federal courts have held the exemption to be applicable to religious
organizations receiving public funds.¹⁹ Nonetheless, apparently to eliminate any
possible misunderstanding, all four charitable choice statutes have stated explicitly
that the religious exemption in Title VII is not lost simply because a religious
employer receives public funds. That, in turn, has generated vigorous opposition
from those who believe government should not subsidize such discrimination.
Religious organizations that meet the minimum size requirement of Title VII
(i.e. the organization has 15 or more employees) are not exempt from the other
employment nondiscrimination requirements of Title VII regarding race, color,
national origin, and sex; and charitable choice does not alter, or propose to alter, the
applicability of these requirements. Thus, religious organizations have in a number
of instances been held liable under Title VII for discrimination on the bases of race,
sex, or national origin.²⁰ It can sometimes be a close question, however, whether the

¹⁷ (...continued)
(church fired its organist on the grounds his homosexuality conflicted with the church’s^th
beliefs); Boyd v. Harding Academy of Memphis, Inc., 88 F.3d 410 (6 Cir. 1996) (Christian
school fired an unmarried female teacher after she became pregnant because of its beliefs^th
opposing extramarital sex); Maguire v. Marquette University, 814 F.2d 1213 (7 Cir. 1987)
(Catholic university refused to hire a female professor because her views on abortion were
not in accord with Catholic doctrine); EEOC v. Presbyterian Ministries, Inc., 788 F.Supp.
1154 (W.D. Wash. 1992) (a Christian retirement home fired a Muslim receptionist because
she insisted on wearing a head covering as required by her faith); Piatti v. Jewish
Community Centers of Greater Boston, Mass. LEXIS 733 (1993) (a Jewish community
center refused to hire a Catholic as a youth director); Feldstein v. Christian Science Monitor,
555 F.Supp. 974 (D. Mass. 1983) (a newspaper owned by the Christian Scientist Church
refused to hire applicants of other faiths); and Hall v. Baptist Memorial Health Care^th
Corporation, 215 F.3d 618 (6 Cir. 2000) (a Baptist health care corporation fired an
employee because she had assumed a leadership role in a church that welcomed and
supported gay and lesbian individuals).
¹⁸ Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints,
supra, n. 86.
¹⁹ See, e.g., Hall v. Baptist Memorial Health Care Corporation, supra, n. 10 (student
assistance); Siegel v. Truett-McConnell College, supra, n. 11 (student assistance); Young
v. Shawnee Mission Medical Center, Civ. No. 88-2321-S (D. Kan., decided Oct. 21, 1988)
(Medicare payments); Dodge v. Salvation Army, 1989 U.S.Dist.LEXIS 4797, 48 Empl. Prac.
Dec. (CCH) P38,619 (S.D. Miss. 1989) (unspecified public funding of a Victims Assistance
Coordinator position).
²⁰ See, e.g., EEOC v. Pacific Press Publishing House, 676 F.2d 1272 (9^th Cir. 1982)
(publishing house had fired a female employee after she complained that she had been
denied monetary allowances paid to similarly situation male employees); EEOC v. Lutheran
Family Services in the Carolinas, 884 F.Supp. 1033 (E.D. N.C. 1994) (a religious social
services provider had refused to give a pregnant employee a leave of absence but gave
extended leaves of absence to male employees for a variety of reasons); and EEOC v.
(continued...)

alleged discrimination by a religious employer is based on religion or one of the
prohibited bases of discrimination.²¹
Ministerial exception. It should be noted that the Title VII exemption
overlaps to some degree with a constitutionally-based employment discrimination
exemption for religious organizations that has been labeled the “ministerial
exception.” This exception exempts religious organizations from all statutory
prohibitions on discrimination with respect to the employment of ministers and other
ecclesiastical personnel. The free exercise of religion clause of the First Amendment,
it has been held, bars the government from interfering in any way with the
relationship between a religious institution and its ministers. The ministerial
exception has been held to apply to the employment of ministers (including youth
ministers, probationary ministers, and ministers of music), seminary faculty, and
hospital chaplains.²² It has been held not to apply, however, with respect to the
employment by religious organizations of persons who are not engaged in a religious
ministry or in the training of persons for such ministries, such as the administrative
and support staff in religious institutions.²³ Because the ministerial exemption is
constitutionally based, it is not modified by charitable choice in any way.

²⁰ (...continued)
Southwestern Baptist Theological Seminary, 651 F.2d 277 (5^th Cir. 1981), cert. den., 456
U.S. 905 (1982) (seminary held to be subject to filing information reports on its employment
practices with respect to staff in its non-academic departments).
²¹ In several cases the courts have refused to grant summary judgment in favor of Christian
schools that had each fired an unmarried female teacher who had become pregnant, saying
that if the dismissals were due to the teachers’ adultery the Title VII religious exemption
would apply but that dismissal for pregnancy alone would constitute forbidden sex
discrimination. See Vigars v. Valley Christian Center of Dublin, Cal., 805 F.Supp. 802
(N.D. Cal. 1992); Ganzy v. Allen Christian School, 995 F.Supp. 340 (E.D. N.Y. 1998); and^th
Cline v. Catholic Diocese of Toledo, 199 F.3d 853 (6 Cir. 1999).
²² See McClure v. Salvation Army, 460 F.2d 553 (5^th Cir.), cert. den., 409 U.S. 896 (1972)
(firing of a female officer in the Salvation Army after she claimed she was given a lower
salary and fewer benefits than male officers held to be within the scope of the ministerial
exemption); Bryce v. Episcopal Church in the Diocese of Colorado, 121 F.Supp.2d 1327
(firing of youth minister by her church after she participated in a commitment ceremony
with her partner held to be a constitutionally exempt act); Young v. Northern Illinois^th
Conference of the United Methodist Church, 21 F.3d 184 (7 Cir. 1994), cert. den., 513 U.S.

929 (1994) (conference of churches’ refusal to change the probationary status of an African-

American minister held to be constitutionally exempt);EEOC v. The Roman Catholic^th
Diocese of Raleigh, N.C., 213 F.3d 795 (4 Cir.), cert. den., 69 U.S.L.W. 3206 (2000)
(church fired its minister of music);EEOC v. Southwestern Baptist Theological Seminary,
supra (seminary’s criteria for its faculty held to be constitutionally exempt from monitoring
and examination by the EEOC); and Sharon v. St. Luke’s Presbyterian School of Theology,^st
713 N.E.2d 334 (Ind. Ct. App., 1 Dist., 1999) (firing of a chaplain by a religiously affiliated
hospital held to be constitutionally protected).
²³ See, e.g., EEOC v. Southwestern Baptist Theological Seminary, supra (administrative and
support staff in a seminary) and EEOC v. Pacific Press Publishing Association, 676 F.2d^th

1272 (9 Cir. 1982) (editorial support staff in a religious publishing house).

Preemption of state and local civil rights laws. Another issue that has
raised concerns is the preemptive effect of charitable choice on state and local civil
rights laws that bar forms of discrimination that are not barred by federal law, such
as discrimination based on sexual orientation or marital status. All of the charitable
choice statutes that have been enacted to date provide that a religious organization
that is a program participant “shall retain its independence from Federal, State, and
local government, including such organization’s control over the definition,
development, practice, and expression of its religious beliefs.” Similarly, all of the
charitable choice statutes to date have barred government from requiring that a
religious provider “alter its form of internal governance” and, as noted above, have
explicitly provided that a religious organization’s exemption under Title VII “shall
not be affected by its participation in, or receipt of funds from, a designated
program.” But with the exception of a provision added to the charitable choice
statute concerning substance abuse programs,²⁴ little attention has been paid to
whether these provisions might have a preemptive effect on state and local civil
rights laws.
Under the supremacy clause of the Constitution,²⁵ it seems clear that Congress
has the power to preempt state and local laws pursuant to charitable choice. What
has been the subject of debate has been the desirability of doing so in this case. It
might be noted, however, that Executive Order 13279 issued by President Bush on
December 12, 2002 (discussed infra), directs federal departments and agencies to
implement a similar policy regarding the independence of religious entities from state
and local laws in their social services programs.
Modification of Executive Order 11246. Executive Order 11246, in effect
since 1965,²⁶ requires that all federal procurement contracts (Part II) and federally
assisted construction contracts (Part III) include clauses barring contractors and
subcontractors from discriminating in their employment practices on the bases of
race, color, religion, sex,²⁷ or national origin and requiring them to take affirmative
action to promote equal employment opportunity. Section 202 of the Order provides
in part as follows:
During the performance of this contract, the contractor agrees as follows: (1) The
contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, or national origin. The

²⁴ P.L. 106-554,which added charitable choice provisions to Title V of the Public Health
Service Act, prefaced the Title VII exemption language with the following sentence:
“Nothing in this section shall be construed to modify or affect the provisions of any other
Federal or State law or regulation that relates to discrimination in employment.”
²⁵ U.S. Constitution, Art. VI, cl. 2: “This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof ... shall be the supreme Law of the Land.”
²⁶ 30 Fed. Reg. 12319 (Sept. 25, 1965). As amended, it can be found in the U.S. Code
following 42 U.S.C.A. 2000e.
²⁷ E.O. 11246 did not initially include “sex” among the prohibited grounds of discrimination.
That was added two years later by E.O. 11376 (32 Fed. Reg. 14303 (Oct. 13, 1967)). A
subsequent amendment also consolidated enforcement functions in the Department of Labor.
See E.O. 12086, 43 Fed. Reg. 46501 (Oct. 10, 1978).

contractor will take affirmative action to ensure that applicants are employed,
and that employees are treated during employment, without regard to their race,
color, religion, sex, or national origin ....
Section 301, in turn, requires that the same provisions be included in all federally
assisted construction contracts.
On December 12, 2002, President Bush issued Executive Order 13279.²⁸ That
Order, inter alia, amends E.O. 11246 with respect to the prohibition on religious
discrimination as it applies to religious organizations. The amendment adds the
following language to E.O. 11246:
Section 202 of this Order shall not apply to a Government contractor or
subcontractor that is a religious corporation, association, educational institution,
or society, with respect to the employment of individuals of a particular religion
to perform work connected with the carrying on by such corporation, association,
educational institution, or society of its activities. Such contractors and
subcontractors are not exempted or excused from complying with the other²⁹
requirements contained in this Order.
E.O. 13279 states that the amendment is “to further the strong Federal interest in
ensuring that the cost and progress of Federal procurement contracts are not
adversely affected by an artificial restriction of the labor pool caused by an
unwarranted exclusion of faith-based organizations from such contracts.”³⁰
The amendment tracks word-for-word the exemption afforded religious entities
from the religious nondiscrimination requirement of Title VII of the Civil Rights Act
of 1964.³¹ Thus, like the Title VII exemption, the exemption it affords covered
religious entities is broad: It applies to all of the activities of the organizations
regardless of whether an employee’s functions are secular or religious. But the
amendment does not affect the obligation of covered religious entities to comply with
the other requirements of the executive order regarding employment
nondiscrimination on the bases of race, color, sex, and national origin; nor does it
affect the obligation of covered nonreligious entities with respect to religious
discrimination.
To the extent the amendment modifies Part II of E.O. 11246, it seems doubtful
that it has substantial significance for religious organizations. Part II in itself is not
applicable to the federal grant and cooperative agreement programs subsidizing the
provision of social services that have been the primary focus of debate about
charitable choice and religious discrimination by faith-based organizations. Part II
concerns federal procurement contracts, i.e., contracts for the provision of goods and
services directly to the federal government. Such contracts can range from food
services to office supplies to bombers and can, obviously, involve substantial sums

²⁸ 67 Fed. Reg. 77141 (Dec. 16, 2002).
²⁹ Id. at 77143.
³⁰ Id.
³¹ 42 U.S.C. 2000e-1.

of money. But it is not at all clear that religious organizations have historically
played a significant role in such federal procurement contracts.
However, the amendment also appears to apply to Part III of E.O. 11246, i.e.,
to federally assisted construction contracts. Part III defines “construction contract”
to mean a contract “for the construction, rehabilitation, alteration, conversion,
extension, or repair of buildings, highways, or other improvements to real property”;
and its coverage includes construction contracts that are incident to carrying out a
federal “grant, contract, loan, insurance, or guarantee” program. Thus, Part III
reaches beyond the federal procurement contracts addressed by Part II and applies to
the construction aspects of federal grant programs such as, for example, those of the
Department of Housing and Urban Development. Because religious organizations
have historically been extensively involved in federally assisted housing and
community development programs, and because other federally assisted social
services programs in which faith-based organizations participate may incidentally
involve construction or renovation activities, the amendment to this part of E.O.

11246 likely has greater significance for such organizations.

First Amendment Issues
As noted above, the charitable choice statutes contain a number of provisions
that seem intended to ensure their constitutionality. All of these measures require
that they be implemented “consistent with the Establishment Clause of the United
States Constitution.” All require that public funds that are disbursed directly to
religious organizations not be used for purposes of religious worship, instruction, or
proselytization. All have provisions to protect those who receive services from
religious organizations from religious discrimination. All require equal treatment,
but not preferential treatment, for religious organizations seeking to participate in
government social services programs.
On the other hand, all of the statutes also allow religious organizations that
receive public funds to discriminate on religious grounds with respect to their
employees, to display religious symbols on the premises where services are provided,
and to practice and express their religious beliefs independent of any government
restrictions. None of them, moreover, require the publicly funded program to be
separately incorporated from its sponsoring religious organization. In addition, the
measures allow religious organizations that receive public funds indirectly, i.e., by
means of vouchers, to engage in religious worship, instruction, and proselytization
in the funded program and to impose religious requirements on beneficiaries after
they are once admitted to a program. Finally, all of the charitable choice initiatives
seem premised on the assumption that charitable choice may in some manner allow
religious organizations to employ their faiths in carrying out the publicly funded
programs, regardless of whether they are directly or indirectly funded.
As a consequence, questions have been raised about whether charitable choice
on its face or in its implementation is consistent with the establishment of religion
clause of the First Amendment. One aspect of this issue concerns whether it is
constitutional for public funds to go to organizations that discriminate on religious
grounds in their employment practices. More generally, the question is whether it is
constitutional for public funds to go to religious organizations that have the

characteristics detailed in the previous paragraph and that in some manner employ
their faiths in carrying out the funded programs.
These questions of constitutionality, in turn, have at least two dimensions. The
charitable choice statutes and proposals govern public aid that is given directly to
religious organizations by means of grants or cooperative agreements in the specified
programs and, at least in the case of Temporary Assistance for Needy Families
(TANF), public aid that is given indirectly in the form of vouchers that can be
redeemed with religious (as well as nonreligious) organizations. The constitutional
strictures that apply to these two forms of aid differ; and as a consequence, the form
in which the public aid is provided to religious organizations under charitable choice
has implications for the constitutionality of the aid.
These questions are further complicated by the fact that the Supreme Court’s
interpretation of the establishment clause has been shifting. Prior to its recent
decisions, the Court’s construction of the establishment clause made it difficult, if not
impossible, for religious organizations that are deemed pervasively sectarian to
receive aid directly from the government, even for avowedly secular purposes, and
have required that programs receiving direct public aid be essentially secular in
nature. But the Court’s recent decisions in Agostini v. Felton³² and Mitchell v.
Helms³³ have relaxed the strictures on direct aid and eliminated the pervasively
sectarian barrier, although the Court still requires that direct aid to religious
institutions not be used for religious indoctrination. With respect to indirect
assistance, the Court’s past jurisprudence has been less restrictive; and its recent
decision in Zelman v. Simmons-Harris³⁴ appears to legitimate an even broader array
of voucher programs.
The following subsections detail the constitutional frameworks that appear to
govern direct and indirect aid and apply them to charitable choice:
Direct aid. In general terms the establishment clause has been construed by
the Supreme Court to “absolutely prohibit government-financed or government-
sponsored indoctrination into the beliefs of a particular religious faith.”³⁵
“[G]overnment inculcation of religious beliefs,” the Court has stated, “has the
impermissible effect of advancing religion.”³⁶ To guard against that effect, public
assistance which flows directly to religious institutions in the form of grants or
cooperative agreements has been required by the Court to be limited to aid that is
“secular, neutral, and nonideological....”³⁷ Government has been able to provide
direct support to secular programs and services sponsored or provided by religious

³² 521 U.S. 203 (1997).
³³ 530 U.S. 793 (2000).
³⁴ 122 S.Ct. 2460 (2002).
³⁵ Grand Rapids School District v. Ball, 473 U.S. 373, 385 (1973).
³⁶ Agostini v. Felton, 521 U.S. 203, 223 (1997).
³⁷ Committee for Public Education v. Nyquist, 413 U.S. 756, 780 (1973).

entities, but it has been barred from directly subsidizing such organizations’ religious
activities or proselytizing.³⁸
The Court gradually distilled the constitutional requirements governing direct
aid into a tripartite test. That test, known as the Lemon test after the case in which
it was first given full expression, required public aid to meet all of the following
requirements:
First, the statute must have a secular legislative purpose; second, its principal or
primary effect must be one that neither advances nor inhibits religion ...; finally,³⁹
the statute must not foster “an excessive entanglement with religion.”
The secular purpose prong has rarely posed a serious obstacle to the constitutionality
of a direct aid program, but the Court’s original formulations of the primary effect
and entanglement tests often proved fatal to programs providing direct aid to
pervasively religious institutions. The Court construed the primary effect test to
mean that direct public aid must be limited to secular use. Thus, a direct aid program
could founder on this aspect of the Lemon test in either of two ways. It could be held
unconstitutional if the aid was not limited to secular use either by its nature or by
statutory or regulatory constraint.⁴⁰ It could also be held unconstitutional if it flowed
to institutions that the Court deemed to be pervasively sectarian, i.e., entities whose
religious and secular functions were so “inextricably intertwined” that their secular
functions could not be isolated for purposes of public aid.⁴¹
Moreover, even if an aid program was limited to secular use, it often foundered
on the excessive entanglement prong of the Lemon test. Particularly in the context
of direct aid to pervasively sectarian organizations, the Court held that government
had to closely monitor the use religious organizations made of the aid provided in
order to be sure that the limitation to secular use was observed. But the very act of
monitoring, the Court sometimes said, excessively intruded the government into the
affairs of the religious institution; and for that reason the aid program was
unconstitutional.⁴²
Thus, under this application of the Lemon test, religious organizations were not
automatically disqualified from participating in public programs providing direct
assistance. But in order to meet the secular use requirement, such organizations had
either to divest themselves of their religious character and to become predominantly
secular in nature or, at the least, to be able to separate their secular functions and

³⁸ Committee for Public Education v. Nyquist, supra; Lemon v. Kurtzman, 403 U.S. 602
(1971); Bowen v. Kendrick, 487 U.S. 589 (1988).
³⁹ Lemon v. Kurtzman, 403 U.S. 602, 612-13 (1971).
⁴⁰ See, e.g., Committee for Public Education v. Nyquist, supra; Meek v. Pittenger, 421 U.S.

349 (1975); Wolman v. Walter, 433 U.S. 229 (1977).

⁴¹ See, e.g., Wolman v. Walter, supra, and School District of the City of Grand Rapids v.
Ball, 473 U.S. 373 (1985).
⁴² Lemon v. Kurtzman, supra; Meek v. Pittenger, supra; Aguilar v. Felton, 473 U.S. 402
(1985).

activities from their religious functions and activities. To the extent they did so, it
was deemed constitutionally permissible for government to provide direct funding
to their secular functions. This former interpretation of the establishment clause also
generally meant that it was constitutionally impermissible for religious organizations
that are pervasively sectarian to participate in direct public aid programs.⁴³
As a practical matter, these interpretations of the establishment clause had their
most severe effects on programs providing direct aid to sectarian elementary and
secondary schools, because the Court presumed that such schools are pervasively
sectarian. The Court presumed to the contrary with respect to sectarian colleges,
hospitals, and other social welfare organizations, although it held open the possibility
that some of these agencies might be pervasively sectarian.⁴⁴
In its most recent decisions, however, the Court has reformulated the Lemon
test and abandoned the presumption that some religious institutions, such as sectarian
elementary and secondary schools, are so pervasively sectarian that they are
constitutionally ineligible to participate in direct public aid programs. The Court still
requires that direct public aid serve a secular purpose, not have a primary effect of
advancing or inhibiting religion, and not lead to excessive entanglement. But the
primary effect test now means that the aid itself must be secular in nature, must be
distributed on a religiously neutral basis, and must not be used for purposes of
religious indoctrination. Moreover, the Court has now made the excessive
entanglement test one aspect of the primary effect inquiry; and it no longer assumes
that such entanglement is the inevitable result of government oversight of its aid
program.

⁴³ The Court did not lay down a hard and fast definition of what makes an organization
pervasively sectarian. But it looked at such factors as the proximity of the organization in
question to a sponsoring church; the presence of religious symbols and paintings on the
premises; formal church or denominational control over the organization; whether a
religious criterion is applied in the hiring of employees or in the selection of trustees or, in
the case of a school, to the admission of students; statements in the organization’s charter
or other publications that its purpose is the propagation and promotion of religious faith;
whether the organization engages in religious services or other religious activities; its
devotion, in the case of schools, to academic freedom; etc. See, e.g., Bradfield v. Roberts,
175 U.S. 291 (1899); Lemon v. Kurtzman, supra; Tilton v. Richardson, 403 U.S. 672
(1971); Committee for Public Education v. Nyquist, supra; Meek v. Pittenger, 421 U.S. 349
(1975); Roemer v. Maryland Board of Public Works, 426 U.S. 736 (1976); and Bowen v.
Kendrick, 487 U.S. 589 (1988). But the Court has also made clear that “it is not enough to
show that the recipient of a ... grant is affiliated with a religious institution or that it is
‘religiously inspired.’” Bowen v. Kendrick, supra, at 621. Indeed, none of these factors, by
itself, has been held sufficient to make an institution pervasively sectarian and therefore
ineligible for direct aid. Such a finding has always rested on a combination of factors. For
useful lower federal court discussions of the criteria bearing on whether an institution is
pervasively sectarian or not, see Minnesota Federation of Teachers v. Nelson, 740 F.Supp.^th

694 (D. Minn. 1990) and Columbia Union College v. Clark, 159 F.3d 151 (4 Cir. 1998),

cert. denied, 527 U.S. 1013 (1999), on remand sub nom Columbia Union College v. Oliver,^th

2000 U.S.Dist.LEXIS 13644 (D. Md. 2000), aff’d, 2001 U.S.App.LEXIS 14253 (4 Cir.

decided June 26, 2001).
⁴⁴ See Bowen v. Kendrick, 487 U.S. 589 (1988).

In 1997, in Agostini v. Felton⁴⁵ the Court for the first time overturned a prior
establishment clause decision and held it to be constitutional for public school
teachers to provide remedial and enrichment services on the premises of private
sectarian schools to children attending those schools who were eligible for such
services under Title I of the Elementary and Secondary Education Act.⁴⁶ The earlier
decision of Aguilar v. Felton, supra, had found the delivery of such services on the
premises of sectarian elementary and secondary schools to be excessively entangling,
because the pervasively sectarian nature of the institutions required government to
engage in a very intrusive monitoring to be sure that the Title I employees did not
inculcate religion. But in Agostini the Court stated that subsequent decisions had
abandoned the presumption that “public employees will inculcate religion simply
because they happen to be in a sectarian environment.”⁴⁷ As a consequence, it said,
it had also to “discard the assumption that pervasive monitoring of Title I teachers
is required.”⁴⁸ The Court also stated that
the factors we use to assess whether an entanglement is “excessive” are similar
to the factors we use to examine “effect” .... Thus, it is simplest to recognize
why entanglement is significant and treat it ... as an aspect of the inquiry into a⁴⁹
statute’s effect.
Most recently, the Court in Mitchell v. Helms⁵⁰ upheld as constitutional an
ESEA program which subsidizes the acquisition and use of educational materials and
equipment by public and private schools. More particularly, the Court found the
provision of such items as computer hardware and software, library books, movie
projectors, television sets, tape recorders, VCRs, laboratory equipment, maps, and
cassette recordings to private sectarian elementary and secondary schools not to
violate the establishment clause. In the process the Court overturned parts of two
prior decisions which had held similar aid programs to be unconstitutional and which
had been premised on the view that direct aid to pervasively sectarian institutions is
constitutionally suspect.⁵¹ Although the Justices could not agree on a majority
opinion, the plurality opinion by Justice Thomas and the concurring opinion by
Justice O’Connor (joined by Justice Breyer) both appear to have eliminated pervasive
sectarianism as a constitutionally preclusive characteristic regarding direct aid and
modified the primary effect test accordingly. Agostini had hinted at this result but
Mitchell confirmed it. As summarized by Justice O’Connor, the primary effect test
now has three essential elements:

⁴⁵ 521 U.S. 203 (1997).
⁴⁶ The Agostini decision overturned in its entirety the Court’s decision in Aguilar v. Felton,
473 U.S. 402 (1985) but also overturned parts of Meek v. Pittenger, supra, and City of
Grand Rapids v. Ball, 473 U.S. 373 (1985).
⁴⁷ Agostini v. Felton, supra, at 234.
⁴⁸ Id.
⁴⁹ Id. at 232-33.
⁵⁰ 530 U.S. 793 (2000).
⁵¹ Overturned in part were Meek v. Pittenger, 421 U.S. 349 (1975) and Wolman v. Walter,

433 U.S. 229 (1977).

(1) whether the aid results in governmental indoctrination, (2) whether the aid
program defines its recipients by reference to religion, and (3) whether the aid⁵²
creates an excessive entanglement between government and religion.
Thus, the Court now appears to construe the establishment clause to allow some
forms of direct aid to religious entities that formerly were deemed constitutionally
excluded because of their pervasively religious character. Under the reformulated
Lemon test, direct public aid must still serve a secular purpose and not create an
excessive entanglement. But the most critical elements appear to be that the aid is
distributed in a religiously neutral manner, i.e., that it does not define its recipients
on the basis of religion and provide an incentive for beneficiaries to undertake
religious indoctrination, and that it does not result in religious indoctrination which
is attributable to the government.
Indirect aid. Indirect aid in the form of tax benefits or vouchers, however, was
less constrained prior to the Court’s recent revisions of its establishment clause
jurisprudence; and the Court’s most recent decision in Zelman v. Simmons-Harris⁵³
appears to loosen the constitutional bounds even more. Like its standards for direct
aid, the Court requires that indirect aid programs serve a secular purpose and be
distributed to their initial beneficiaries on a religiously neutral basis, i.e., that the
beneficiaries not be chosen or given preference on the basis of a religious criterion.
But the critical element seems to be whether the initial beneficiaries have a “true
private choice” in deciding whether to obtain subsidized services from secular or
religious providers.
In its earlier decisions the Court held indirect aid programs unconstitutional if
they had been designed in such a manner that the universe of choice available to the⁵⁴
beneficiaries was almost entirely religious. But if the initial beneficiaries had a
genuinely independent choice among secular and religious providers, the Court held
the programs constitutional and ruled that even pervasively sectarian entities were not
precluded from participating.⁵⁵ Indeed, the Court made clear that indirect aid which
ultimately is channeled to religious institutions does not have to be restricted to
secular use but can be used for all of the institutions’ functions, including their⁵⁶
religious ones.
The Court’s recent decision in Zelman v. Simmons-Harris, supra, further
loosened the constitutional constraints on indirect aid. That case involved a program

⁵² Mitchell v. Helms, supra, at 845 (opinion of O’Connor, J.).
⁵³ 122 S.Ct. 2460 (2002).
⁵⁴ Committee for Public Education v. Nyquist, supra, and Sloan v. Lemon, supra.
⁵⁵ Mueller v. Allen, 463 US. 388 (1983); Witters v. Washington Department of Social
Services, 474 U.S. 481 (1986); Zobrest v. Catalina Foothills School District, 509 U.S. 1
(1993); Zelman v. Simmons-Harris, supra.
⁵⁶ For a more detailed examination of the constitutional standards governing indirect aid,
including the Court’s decision in Zelman v. Simmons-Harris, supra, and for summaries of
recent state and lower federal court decisions, see CRS Report RL30165, Education
Vouchers: Constitutional Issues and Cases, by Angie A. Welborn.

of educational vouchers that low-income parents could use at private schools in the
city of Cleveland. Most of those schools were religious in nature. But the Court held
that in evaluating whether the parents had a true private choice in using the aid, all
of the educational options open to the parents needed to be considered and not just
the private school options. Thus, enrollment in public schools, magnet schools, and
community schools, as well as the possibility of receiving special tutoring assistance,
all needed to be considered as options along with the private religious and secular
school possibilities. In other words, the Court held that the universe of choice
available to the voucher recipients was not defined solely by the private providers
where the vouchers could be used but included a number of public school and non-
voucher educational options as well.
Constitutionality of charitable choice. Some aspects of the charitable
choice proposals that have been enacted likely satisfy the foregoing requirements.
That seems particularly to be the case with respect to social services aid that is
provided in the form of vouchers. The Court’s interpretations of the establishment
clause make clear that such aid can ultimately flow even to pervasively sectarian
institutions, so long as the initial recipients have a true private choice among service
providers. That means both that such aid can go to religious entities that
discriminate on religious grounds in their employment practices⁵⁷ and that such
entities need not be barred from engaging in religious worship, instruction, and
proselytizing in programs receiving such support. Thus, there does not appear to be
a constitutional problem in the provisions of the charitable choice statutes that allow
such employment discrimination and that permit religious institutions receiving
social services aid indirectly to engage in religious worship, instruction, or
proselytizing in the subsidized program.
Nonetheless, there may still be a constitutional question raised about charitable
choice with respect to indirect aid. The critical issue for indirect aid continues to be
whether there is a genuinely independent decision-maker between the government
and the entity that ultimately receives the assistance or whether the government has
dictated that the aid ultimately goes to a religious entity. All of the charitable choice
measures, with the exception of CSBG, require that those who object to a particular
religious provider be given an alternative that is either secular or not religiously
objectionable. But they may not require that a voucher recipient have a choice of

⁵⁷ A number of lower court decisions have held that religious colleges and hospitals do not
forfeit their Title VII exemption as a result of receiving public funds indirectly in the form
of student aid and Medicare payments. See, e.g., Young v. Shawnee Mission Medical
Center, 1988 U.S.Dist.LEXIS 12248 (D. Kan. 1988) (court held that the Title VII exemption
applied to a religiously affiliated hospital’s firing of a clerk-receptionist because she was not
a Seventh Day Adventist, notwithstanding the hospital’s acceptance of Medicare payments);
Siegel v. Truett-McConnell College, Inc., 13 F.Supp.2d 1335 (N.D. Ga. 1994) (Baptist
college’s firing of a teacher because he was not a Christian held to be protected by Title VII
notwithstanding college’s receipt of public funds from a federal student assistance program);^th
and Hall v. Baptist Memorial Health Care Corporation, 215 F.23d 618 (6 Cir. 2000)
(Baptist college’s firing of a student services specialist because she had become a lay
minister in a community church that welcomed gay and lesbian members held to be
protected by Title VII exemption notwithstanding the college’s receipt of public funds by
means of unspecified federal student assistance programs).

secular and religious providers initially. Whether this is sufficient to meet the
Court’s standards does not seem certain.
Whether direct aid to religious entities that discriminate on religious grounds
in their employment practices, as allowed by all of the charitable choice statutes, can
pass constitutional muster seems more complex but still likely. Prior to Mitchell the
Court’s decisions had often used such employment discrimination as an indicator that
an entity was pervasively sectarian and, hence, ineligible for direct assistance.⁵⁸ But
it had never relied on that factor alone; other factors always entered into the
constitutional equation.⁵⁹ Those rulings, consequently, seem to suggest that religious
discrimination in employment, by itself, might not have been enough to render a
direct aid program unconstitutional. Mitchell seems to strengthen that possibility, at
least for certain kinds of direct aid. In that case, as noted, the Court upheld as
constitutional a direct aid program providing educational supplies and equipment to
entities that the Court had previously found to be pervasively sectarian and had
previously held to be constitutionally barred from receiving such aid — sectarian
elementary and secondary schools. In so doing the Court shifted the constitutional
focus from the nature of the organization receiving the aid to whether the aid is
distributed in a religiously neutral manner and whether it is used for religious
indoctrination. As a consequence, whether the entity receiving the assistance
discriminates on religious grounds in its employment practices seems to have become
of little or no concern, at least for in-kind direct assistance.
The more critical question concerns the role of faith in carrying out social
services programs that are directly subsidized. The Court’s decisions make clear
that direct public aid cannot be used for religious indoctrination, and all of the
charitable choice measures seem to meet this requirement by explicitly prohibiting
direct aid from being used for religious worship, instruction, or proselytizing. But
the underlying assumption of charitable choice has been that religious organizations
ought to be able to retain their religious character and employ their religious faiths

⁵⁸ See, e.g., Lemon v. Kurtzman, supra (fact that most of the teachers in the Catholic schools
were nuns and rest were largely lay Catholics found to support finding that schools were “an
integral part of the religious mission of the Catholic church”); Hunt v. McNair, 413 U.S. 734
(1973) (fact that religiously affiliated college had no religious qualifications for faculty
weighed in determining whether state could issue bonds to subsidize the construction of
academic buildings); Committee for Public Education v. Nyquist, 413 U.S. 756 (1973)
(imposition of religious restrictions on faculty appointments found to be one element in
rendering sectarian elementary and secondary schools constitutionally ineligible for state
maintenance and repair grants); and Roemer v. Maryland Board of Public Works, 426 U.S.
736 (1976) (finding that religiously affiliated colleges did not make hiring decisions “on a
religious basis” relied on in part in upholding direct public grants to colleges).
⁵⁹ Indeed, in some decisions the Court has given that factor no weight at all. See, e.g.,
Bradfield v. Roberts, 175 U.S. 291 (1899) (upholding construction of wing at a hospital run
by an order of Catholic nuns on the condition the wing be used for the medical care of the
poor) and Tilton v. Richardson, 403 U.S. 672, 681 (1971) (in finding several religiously
affiliated colleges not to be so permeated by religion as to be ineligible for federal
construction grants for academic buildings, the Court placed primary emphasis on the fact
that the schools “were characterized by an atmosphere of academic freedom rather than
religious indoctrination”).

in carrying out the subsidized programs. That, it is said, is what makes their
programs distinctive and more effective. Thus, given this assumption and the various
possibilities for how particular subsidized programs might be implemented, it seems
likely that constitutional questions will inevitably arise in the implementation of
direct aid programs under charitable choice, notwithstanding its prohibitions on the
use of direct aid for religious worship, instruction, and proselytization.
In addition, it should be noted that Mitchell involved an in-kind aid program —
educational supplies and equipment. All of the Justices in Mitchell expressed doubt
that direct grants of money to religious entities could pass constitutional muster even
under the Court’s loosened standards for direct aid programs; and direct grants of
money are what seem contemplated in the programs to which charitable choice now
applies. Justice O’Connor, joined by Justice Breyer, stated in Mitchell both that
“[t]his Court has recognized special Establishment Clause dangers where the
government makes direct money payments to sectarian institutions” and that a direct
subsidy “would be impermissible under the Establishment Clause.”⁶⁰ Justice Souter,
joined by Justices Stevens and Ginsburg, stated:
[W]e have long held government aid invalid when circumstances would allow
its diversion to religious education. The risk of diversion is obviously high when
aid in the form of government funds makes its way into the coffers of religious
organizations, and so from the start we have understood the Constitution to bar⁶¹
outright money grants of aid to religion.
Justice Thomas, joined by Chief Justice Rehnquist and Justices Scalia and Kennedy,
asserted that neutrality is the essential constitutional criterion governing public aid
programs that benefit religious entities. But he, nonetheless, observed that “we have
seen ‘special Establishment Clause dangers’ ... when money is given to religious⁶²
schools or entities directly rather than, as in Witters and Mueller, indirectly.” These
statements are all dicta and do not indicate with any certainty how the Court might
rule on a case involving a particular grant or cooperative agreement. But they do
indicate constitutional doubt about direct money grants.
In addition, it deserves notice that one federal district court, in a decision handed
down some years prior to Mitchell, held religious discrimination in employment by
a religious organization in a position specifically funded by a government grant to
be unconstitutional.⁶³ Neither Agostini nor Mitchell addressed the constitutionality

⁶⁰ Mitchell v. Helms, supra, at 843 (quoting Rosenberger v. Rector and Visitors of
University of Virginia, 515 U.S. 819, 842 (1995) and 841, respectively (O’Connor, J.,
concurring in the judgment).
⁶¹ Id. at 890 (Souter, J., dissenting).
⁶² Id. at 818-19, quoting Rosenberger, supra, at 842 (Thomas, J., plurality opinion)
(emphasis in original).
⁶³ Dodge v. Salvation Army, 48 Empl.Prac.Dec. 38619, 1989 U.S.Dist.LEXIS 4797, 1989
WL 53857 (S.D. Miss. 1989) (establishment clause held to bar the Salvation Army from
firing a Wiccan from her position as Victims Assistance Coordinator in a Domestic
Violence Shelter, both of which were substantially funded by public grants, on the grounds
(continued...)

of direct monetary subsidies. On the other hand, it should also be noted that,
although not in direct conflict, a federal appellate court recently upheld a state
program providing general aid to colleges, including religiously affiliated ones, as
applied to a Seventh Day Adventist college, notwithstanding that the college “gave
an express preference in hiring ... to members of the Church.”⁶⁴ Another recent case
that was thought to raise the question of the constitutionality of public funding of an
agency that discriminated on religious grounds in its employment practices turned out
not to do so. In Pedreira v. Kentucky Baptist Homes for Children, Inc.⁶⁵ the federal
district court held that the firing of an employee because of her lesbian lifestyle by
an organization whose Christian values abhorred homosexuality did not involve
religious discrimination, because the organization’s policy did not require employees
to accept or practice its religious beliefs but only to conform to a behavioral
requirement.
As a final observation, it also deserves notice that formal neutrality as the
controlling constitutional principle did gain the adherence of four Justices in Mitchell
v. Helms, supra (Chief Justice Rehnquist and Justices Scalia, Kennedy, and Thomas).
This perspective contends that the critical constitutional elements governing direct
public aid to religious entities are whether the aid itself is secular and whether it has
been distributed in a religiously neutral fashion, i.e., without preference for religious
entities. From this perspective it makes no difference whether the institutional entity
eventually uses the aid for religious purposes or not. A slight shift in the membership
of the Court, thus, could foreshadow further changes in the Court’s jurisprudence in
this area.
Recent Legal Developments
In 2004, several decisions addressing some aspects of charitable choice
generally were handed down by the United States Supreme Court and other lower
federal courts. While none of these cases specifically addressed the constitutionality
of any of the federally funded programs currently subject to charitable choice rules,
the decisions may be an indication of how a federal court would address challenges

⁶³ (...continued)
that public funding of such discrimination would have a primary effect of advancing religion
and would entangle the government in the religious purpose of the Salvation Army).
⁶⁴ Columbia Union College v. Oliver, 254 F.3d 496 (4^th Cir. 2001).
⁶⁵ 186 F.Supp.2d 757, 86 FEP Cases 417 (W.D. Ky. 2001).

to those programs if brought at a later date.⁶⁶ Two of these cases are discussed
below.
In Locke v. Davey,⁶⁷ the United States Supreme Court overturned a decision by
the U.S. Court of Appeals for the Ninth Circuit that had held the free exercise clause
of the First Amendment to be violated by a statute and a constitutional provision in
the state of Washington that were applied to deny a college scholarship to an eligible
student simply because he planned to pursue a degree in theology at a religious
college.⁶⁸ Article I, § 11, of the Washington Constitution provides in part that “[n]o
public money or property shall be appropriated for or applied to any religious
worship, exercise or instruction, or the support of any religious establishment.”
Reflecting that stricture, a state statute providing college scholarships for in-state,
low and moderate income college students included a provision stating that “[n]o aid
may be awarded to any student who is pursuing a degree in theology.”⁶⁹ As a
consequence, the state denied a Promise Scholarship to a student enrolled in a
religious college who sought to pursue a double major in Pastoral Ministries and
Business Management and Administration.
The Supreme Court reversed the decision of the Ninth Circuit finding that
Washington state’s exclusion of the pursuit of a devotional theology degree from its
otherwise inclusive scholarship aid program did not violate the Free Exercise Clause
of the First Amendment.⁷⁰ The Court rejected Davey’s argument that the program
was presumptively unconstitutional because it is not facially neutral with respect to
religion. Davey’s claim was based on the Court’s decision in Church of Lukumi
Babalu Aye, Inc. v. Hialeah where the Court determined that a city ordinance making
it a crime to engage in certain types of animal slaughter violated the Free Exercise

⁶⁶ In mid-2004, the Freedom From Religion Foundation filed a challenge to the current
Administration’s faith-based and community initiative as a whole alleging that it violated
the Establishment Clause by using government resources to promote religion, favoring
religious organizations over secular, and religiously indoctrinating social service recipients.
A copy of the complaint can be found here
[http://www.ffrf.org/legal/faithbased_complaint.html]. The plaintiffs have reportedly
voluntarily dismissed eight of their original claims, and others have been dismissed due to
lack of standing. What remains are challenges to two particular grants awarded by the
Department of Health and Human Services. Motions for summary judgment were due at the
end of 2004, but there is no indication of whether the last two claims have been resolved.
The case is presumably pending in the United States District Court for the Western District
of Wisconsin.
⁶⁷ 540 U.S. 712 (2004). For more information see CRS Report RL30165, Education
Vouchers: Constitutional Issues and Cases, by Angie A. Welborn.
⁶⁸ 299 F.3d 748 (9^th Cir. 2002).
⁶⁹ Wash. Rev. Code § 28B.10.814.
⁷⁰ 540 U.S. 720. The Court also rejected Davey’s argument that the Promise Scholarship
Program is an unconstitutional viewpoint restriction on speech, finding that the Program was
not a forum for speech. Id. at 721.

rights of those who practice the Santeria religion.⁷¹ The Court distinguished the
present case from Lukumi, and others in that line of cases, by noting that the state law
in question imposed no civil or criminal penalties on any type of religious service or
rite, nor did it require the student to choose between their religious beliefs and receipt
of a government benefit.⁷²
The Court went on to note that the Promise Scholarship Program went “a long
way toward including religion in its benefits” by allowing students to attend
pervasively religious schools, so long as they are accredited, and allowing students
to take devotional theology courses.⁷³ Without any evidence to suggest animus
towards religion, there existed no presumption of unconstitutionality.⁷⁴ The Court
found that since the state’s interest in not funding the pursuit of devotional degrees
was substantial and the burden placed on Promise Scholars by the exclusion of such
programs was minor, the program survived constitutional scrutiny.⁷⁵
The United States District Court for the District of Columbia, in American
Jewish Congress v. Corporation for National and Community Service, ruled that
AmeriCorps Education Award Program violated the Establishment Clause by
providing awards to teachers who serve in religious schools and by making grants to
the religious organizations that oversee such teachers.⁷⁶ In making this
determination, the court found that Corporation used “highly discretionary criteria
to select among potentially qualifying grantees” and “that a number of programs
actually list among their requirements that AmeriCorps participants must be of a
particular faith.”⁷⁷ Based upon these findings, the court stated that “it is clear that the
Corporation does not determine eligibility for government aid neutrally.”⁷⁸
The Corporation had argued that although Americorps participants were placed
in religious schools, they were required to keep timesheets noting that amount of time
they spend on classroom activities and that religious activities were to be excluded
from the timesheets they submitted as a condition of their participation in the
program. Despite these efforts, the court found that the Corporation’s monitoring of
the participant’s time spent on religious and nonreligious activities was inadequate,
and that in the context of a religious classroom, it was “not possible to clearly
distinguish between the two roles the AmeriCorps participants are supposed to
play.”⁷⁹ The court also found that funds received by the educational institutions for

⁷¹ 508 U.S. 520 (1993).
⁷² 540 U.S. at 720, citations omitted.
⁷³ Id. at 724.
⁷⁴ Id. at 725.
⁷⁵ Id.
⁷⁶ 323 F. Supp.2d 44 (D. D.C. 2004).
⁷⁷ 323 F. Supp.2d at 60.
⁷⁸ Id.
⁷⁹ Id. at 63.

the AmeriCorp participants was not segregated to ensure that the money was spent
on only secular activities.⁸⁰
On March 8, 2005, the United States Court of Appeals for the District of
Columbia Circuit reversed the decision of the district court.⁸¹ The Court of Appeals
noted that AmeriCorps participants and grantees were chosen without regard to
religion and that participants who elected to teach religion in addition to secular
subjects did so as a result of their own private interests.⁸² The court found that the
AmeriCorps program itself created no incentives for participants to teach religion and
that there were adequate measures in place to ensure that when a participant chose
to teach religion, there was no “imprimatur of government endorsement.”⁸³ The
court’s decision was appealed, but the Supreme Court denied certiorari on January

9, 2006.⁸⁴

⁸⁰ Id. at 64.
⁸¹ 399 F.3d 351 (DC Cir. 2005).
⁸² Id. at 10.
⁸³ Id. at 11, citing Zelman at 655.
⁸⁴ 2006 U.S. LEXIS 221 (January 9, 2006).