U.S. Supreme Court Decision May Affect Local Governments Appropriating Funds to Private Entities

July 14, 2017 By Susan D. Goodwin In Legal Alerts

A recent U.S. Supreme Court decision may require changes to how local governments manage grant and other publicly funded programs if religious entities are excluded from participation.

On June 26, 2017, the Court decided the case of Trinity Lutheran Church of Columbia, Inc. v. Comer, Director, Missouri Department of Natural Resources. In that case, Trinity Lutheran Church (“Church”) applied for a state grant to purchase rubber playground surfaces made from recycled tires.

Missouri’s Constitution prohibits use of public money for religious purposes. Based on this, the Department’s policy was to disqualify religious organizations from receiving grants. The Church alleged the policy violates the Free Exercise Clause of the First Amendment.

In its decision, the Court pointed out that the Free Exercise Clause protects religious observers against unequal treatment. The Court held that the Department’s policy expressly discriminated against otherwise eligible applicants by disqualifying them from a public benefit solely because of their religious character.

The Court distinguished cases that upheld prohibitions on using public funds for religious endeavors, saying grants for a playground did not promote religion, as opposed to scholarships for the ministry which would be a religious endeavor. Here, the Department’s policy denied access to the program based on who the Church was as opposed to what the Church was going to do with the funds. The court reasoned that the playground was a nonreligious purpose and concluded that the rejection of the Church’s application imposed a penalty on the exercise of its religion.

Arizona has two Constitutional provisions that prohibit use of public funds that “support” religion. When administering any program that provides public funds to a private entity, Arizona local governments may not exclude religious institutions from participation and should carefully review any such applications to ascertain the use to which the funds will be put by the religious institution and whether that use promotes a religious purpose or a non-religious purpose.

For more information, or if you have questions about the Court’s decision and its potential effects, please contact one of the following Gust Rosenfeld attorneys:

Susan D. Goodwin602-257-3761sgoodwin@gustlaw.com
Andrew McGuire602-257-7664amcguire@gustlaw.com

or any of our Public Law attorneys.

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