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COLLEGE BUILDING AUTHORITY v. LYNN, et al.

VA Supreme Court



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COLLEGE BUILDING AUTHORITY

v.

LYNN, et al.


November 3, 2000

Record No. 992099

Present: Carrico, C.J., Lacy, Keenan, Koontz,
Kinser and Lemons, JJ., and Poff, S.J.

VIRGINIA COLLEGE BUILDING AUTHORITY

v.

BARRY LYNN, ET AL.


OPINION BY JUSTICE DONALD W. LEMONS

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND

Randall G. Johnson, Judge

The Virginia College Building Authority
("VCBA" or "Authority") approved the issuance
of revenue bonds, colloquially referred to as "conduit
bonds," for the benefit of Regent University
("Regent"). The funds to be raised by the bonds were
designated to finance projects at a new campus in Alexandria and
for refinancing of student housing on the Virginia Beach campus.
Pursuant to the Public Finance Act of 1991, Code
?? 15.2-2600 to -2663, the VCBA filed a motion for
judgment in the Circuit Court for the City of Richmond requesting
validation of the bonds.

Appellees, Barry Lynn and other unnamed
Virginia members of Americans United for Separation of Church and
State, and Frank Feibelman, Mary Bauer, and Bernard H. Levin
appeared and filed grounds of defense contesting the validation
of the bonds. At the time of the circuit court hearing, VCBA had
completed approximately thirty-five bond issues for private
colleges or universities in the Commonwealth of Virginia.

After hearing evidence, the circuit court
refused to validate the bonds, holding that Regent is ineligible
to participate in the VCBA program because Regent is a
pervasively sectarian institution and because its primary purpose
is "religious training." In this appeal, we consider
the circuit court’s denial of Regent University’s
participation in bond financing of these projects pursuant to the
Educational Facilities Authority Act, Code ? 23-30.39 et
seq. (the "Act").

I. FACTS

A. REGENT UNIVERSITY

Regent University is self-described as a
"private Christian university" with a main campus
located in Virginia Beach, Virginia. Regent offers more than 20
graduate degrees through eight accredited colleges, including the
College of Communication and the Arts, School of Counseling and
Human Services, School of Government, School of Business, School
of Education, School of Law, School of Divinity, and the Center
for Leadership Studies.
[1] Regent is accredited by the Southern Association of
Colleges and Schools ("SACS") and its Law School is
separately accredited by the American Bar Association
("ABA").

Regent was founded upon Dr. M.G.
("Pat") Robertson’s "inspired vision of
establishing a graduate-level institution that would train mature
men and women for the challenge of representing Christ in their
professions." It was "incorporated . . . to
recover the Christian heritage of our nation." Regent’s
"ultimate purpose" is to "glorify[] God and His
Son, Jesus Christ."

Regent was created under the auspices of the
Christian Broadcasting Network, Inc. ("CBN"), the Board
of Directors of which still appoints the chairman and all 48
members of the University’s Board of Regents. Three members
of Regent’s board are also members of CBN’s board.
Characterized as a "parachurch organization" with a
"Christian purpose", CBN is to own all assets and incur
all debts in the event of the dissolution of Regent. Regent has
received over $200 million in financial support from CBN. As the
founder and president of CBN, and the Chancellor of Regent,
Robertson acts as "the principal liaison" between CBN
and Regent. He consults with Regent "on such matters as the
mission of the university, its scope and its direction," and
provides guidance on and coordinates matters such as
Regent’s fiscal expenditures and general resource
development.

Regent’s Articles of Incorporation,
provide that:

[Regent] shall exist for the purpose of
bringing glory to God and His Son Jesus Christ by providing an
institution or institutions of learning in which those who are
mature in the knowledge of God and His ways can assist and guide,
in a spirit of free inquiry and scholarly excellence, those who
would learn of Him, His ways, and His creation, while together
they study ways to glorify God and better their world.

Regent has adopted a Statement of Faith that
provides:

Regent University is a Christ-centered
institution. The Board of Trustees, along with the faculty and
staff of the university, are committed to an evangelical
interpretation and application of the Christian faith. The campus
community is closely identified with the present-day renewal
movement, which emphasizes the gifts, fruit and ministries of the
Holy Spirit. It is expected that all trustees, officers,
administrators and faculty will subscribe to this statement in
writing:

1. That the Holy Bible is the inspired,
infallible and authoritative source of Christian doctrine and
precept.

2. That there is one God, eternally existent in
three persons: Father, Son and Holy Ghost.

3. That man was created in the image of God
but, as a result of sin, is lost and powerless to save himself.

4. That the only hope for man is to believe on
the Lord Jesus Christ, the virgin-born son of God, who died to
take upon Himself the punishment for the sin of mankind, and who
rose from the dead, so that by receiving Him as Savior and Lord,
man is redeemed by His blood.

5. That Jesus Christ will personally return to
earth in power and glory.

6. That the Holy Spirit indwells those who
receive Christ, for the purpose of enabling them to live
righteous and holy lives.

7. That the Church is the Body of Christ and is
comprised of all those who through belief in Christ have been
spiritually regenerated by the indwelling Holy Spirit. The
mission of the Church is worldwide evangelization and the
nurturing and discipling of Christians.

Additionally, Regent has adopted a Mission
Statement that provides:

Preamble — Regent University is a graduate
institution that exists to bring glory to God the Father and His
Son Jesus Christ through the work of the Holy Spirit.

Mission — Our mission is to provide an
exemplary graduate education from biblical perspectives to
aspiring servant leaders in pivotal professions and to be a
leading center of Christian thought and action.

Vision — Our vision, through our graduates
and other scholarly activities, is to provide Christian
leadership in transforming society by affirming and teaching
principles of truth, justice and love as described in the Holy
Scriptures, embodied in the person of Jesus Christ, and enabled
through the power of the Holy Spirit.

Regent Provost Dr. William George Selig
("Dr. Selig") testified that the practical function of
these statements is to:

set[] the stage of [Regent’s] world view,
that we exist to bring glory to God. And that’s our
preamble. But our mission, which is played out in very practical
terms, is to provide an exemplary graduate education. In other
words, the finest possible education we can provide from [a] biblical perspective to people we hope will go on and make a
difference in society.

Apart from the School of Divinity which has a
specific purpose of theological education, instruction in other
schools focuses upon traditional subjects with inclusion of
biblical perspective where applicable. As Dr. Selig explained:
"In areas where [scripture] doesn’t fit, we don’t
use it or we don’t spend any time talking about it. In areas
where it fits, we do. And so it’s just a consistency in our
world view as to how we behave toward others and what does
scripture have to say."

Regent has approximately 108 faculty members
and 1,850 students, 289 of whom are enrolled in the School of
Divinity. The average age of a Regent student is 31. Regent has
no specific religious requirement for student admissions. Its
admissions criteria include: (1) high intellectual achievement
and scholarship, with a minimum grade point average and test
scores, (2) "maturity in spiritual and/or character
qualities," and (3) "[p]ersonal goals consistent with
the mission and goals of Regent University."

Dr. Selig explained that although some schools
at Regent inquire into "Christian commitment" for the
purpose of evaluating ethical or moral standards, the lack of
such a "commitment" does not negatively impact an
applicant’s standing for admission. All applicants are
required to submit a "Clergy Recommendation," both as a
matter of policy and practice. Among the questions asked is
whether the applicant has "made a meaningful personal
commitment to Jesus Christ." Dr. Selig explained the
relevance of this information as follows:

Well, we’re looking for moral and ethical
standards, and we believe that if somebody is — and
it’s certainly, not 100 percent assured — but if
somebody has made a — has made a Christian commitment, then
we’re assuming that they’re attempting to live
according to the tenets of scripture. So we see that as one piece
of information that would be helpful.

Applicants also must submit a signed
"Community Life Form", stating that they must
"understand and be committed to receiving an education"
in accordance with Regent’s Statement of Faith.

Although encouraged to do so, students are not
required to attend Regent’s weekly corporate chapel services
or participate in any particular religious activities. However,
they must have "[p]ersonal goals consistent with the mission
and goals of Regent University", and must submit a
"[p]ersonal goals statement" addressing how their
"personal and spiritual objectives" relate to
Regent’s "Christ-centered educational philosophy."
The instructions explain that "for the Christian, [a goal] is a statement of faith in God’s will for his or her
life."

Faculty, unlike students, are required to sign
a document indicating their adherence to the "Statement of
Faith." They are "strongly encouraged but they’re
not required" to attend chapel. The faculty is required to
integrate "faith and learning." Dr. Selig testified,
and the SACS and the ABA agree, that the Statement of Faith has
not interfered with academic freedom. Regent’s detailed
academic freedom policy encourages faculty to "pursue truth
. . . by research, discussion, and other forms of
inquiry." Nonetheless, Regent prohibits faculty from using
"their position or classroom as a platform to demand
adherence by students to a personal theological viewpoint,
political preference or social agenda." The SACS in a review
of Regent’s accreditation application in 1998 found that
"[f]aculty and students are free to examine all pertinent
data, question assumptions, be guided by the evidence of
scholarly research, and teach and study the substance of a given
discipline." With respect to its curriculum, each faculty
member at Regent is required to include in the syllabus for each
class a "description of how the Christian faith and the
Bible will be incorporated into the course."

B. THE BONDS

Article VIII, ? 11 of the Constitution of
Virginia provides that:

The General Assembly may provide for loans to,
and grants to or on behalf of, students attending nonprofit
institutions of higher education in the Commonwealth whose
primary purpose is to provide collegiate or graduate education
and not to provide religious training or theological education.
The General Assembly may also provide for a State agency or
authority to assist in borrowing money for construction of
educational facilities at such institutions, provided that the
Commonwealth shall not be liable for any debt created by such
borrowing. The General Assembly may also provide for the
Commonwealth or any political subdivision thereof to contract
with such institutions for the provision of educational or other
related services.

Pursuant to this constitutional authorization,
the General Assembly of Virginia enacted the "Educational
Facilities Authority Act." The General Assembly declared in
Code ? 23-30.39 the public policy of the Commonwealth of
Virginia as follows:

It is hereby declared that for the benefit of
the people of the Commonwealth, the increase of their commerce,
welfare and prosperity and the improvement of their health and
living conditions it is essential that this and future
generations of youth be given the fullest opportunity to learn
and to develop their intellectual and mental capacities; that it
is essential that institutions for higher education within the
Commonwealth be provided with appropriate additional means to
assist such youth in achieving the required levels of learning
and development of their intellectual and mental capacities; and
that it is the purpose of this chapter to provide a measure of
assistance and an alternative method to enable institutions for
higher education in the Commonwealth to provide the facilities
and structures which are sorely needed to accomplish the purposes
of this chapter, all to the public benefit and good, to the
extent and manner provided herein.

To carry out the purposes of the Educational
Facilities Authority Act, an agency of the Commonwealth entitled
the "Virginia College Building Authority" was created.
Among its powers and duties, the Authority may "issue bonds,
bond anticipation notes and other obligations of the Authority
for any of its corporate purposes." Code
? 23-30.42(b). A "project" authorized for
participation under the Act is defined in pertinent part as
follows:

"Project," in the case of a
participating institution for higher education, a structure or
structures suitable for use as a dormitory or other multi-unit
housing facility for students, faculty, officers or employees, a
dining hall, student union, administration building, academic
building, library, laboratory, research facility, classroom,
athletic facility, health care facility, maintenance, storage or
utility facility and other structures or facilities related to
any of the foregoing or required or useful for the instruction of
students or the conducting of research or the operation of an
institution for higher education, . . . and shall not
include any facility used or to be used for sectarian instruction
or as a place of religious worship nor any facility which is used
or to be used primarily in connection with any part of the
program of a school or department of divinity for any religious
denomination.

Code ? 23-30.41(b). Specifically, an
"[i]nstitution for higher education" is defined as
"[a] nonprofit educational institution within the
Commonwealth whose primary purpose is to provide collegiate or
graduate education and not to provide religious training or
theological education." Code ? 23-30.41(e).

Generally speaking, the VCBA issues bonds that
enjoy income tax exemption under United States Internal Revenue
Code ?? 103, 145 and, for Virginia residents, Code
? 23-30.53. The proceeds of bonds issued are loaned to the
qualified institution of higher education (hence the descriptive
term, "conduit") and repayment to bond holders is made
through a trustee who monitors the institution’s payments,
credit-worthiness, and compliance with terms of the loan. After
issuance of the bonds, the VCBA has no active role. The qualified
institution of higher education pays all costs associated with
the issuance of the bonds. No state funds are granted or loaned,
and:

Revenue bonds issued under the provisions of
this chapter shall not be deemed to constitute a debt or
liability of the Commonwealth or of any political subdivision
thereof or a pledge of the faith and credit of the Commonwealth
or of any political subdivision, but shall be payable solely from
the funds herein provided therefor from revenues. . . .
The issuance of revenue bonds under the provisions of this
chapter shall not directly or indirectly or contingently obligate
the Commonwealth or any political subdivision thereof to levy or
to pledge any form of taxation whatever therefor or to make any
appropriation for their payment.

Code ? 23-30.49.

Upon Regent’s application for
participation under the Educational Facilities Authority Act, the
VCBA on June 22, 1999 adopted a resolution approving bonds for
the benefit of Regent for projects including a new campus in
Alexandria containing classrooms, administrative space, a
communication and arts complex, an events center on the Virginia
Beach campus, and refinancing of student housing in Virginia
Beach previously financed with tax exempt bonds. Specifically,
the VCBA Resolution mandates that no bond proceeds will be used
to provide:

(a) any facility used or to be used for
sectarian instruction or as a place of religious worship,
including any chapel and the like or (b) any facility used or to
be used primarily in connection with any part of the program of a
school or department of divinity for any religious denomination;
and in particular the proceeds of the Bonds will not be used to
provide facilities for the University’s Divinity School.

In its application Regent proposed that it
would make a pro-rata equity contribution for the use of that
portion of the Alexandria building subject to the financing by
bonds, in order to compensate for use of the facilities by the
School of Divinity. Additionally, in testimony, Dr. Selig
indicated that Regent "would lease space out elsewhere"
and not use the bond-financed facilities for the School of
Divinity if the pro-rata equity contribution proposal was not
approved.

II. STANDARD OF REVIEW

At the trial of this matter, both parties
submitted exhibits to be considered by the Court; however, only
VCBA offered testimony. The trial judge ruled from the bench
immediately upon the conclusion of the presentation of evidence
and arguments of counsel. Thereafter, counsel for appellee
submitted a proposed order, 17 pages in length, containing
detailed findings of fact and conclusions of law. The trial judge
declined to enter the proposed order saying:

I didn’t disbelieve any witness who was on
the stand. I just had a different interpretation of the facts
than those witnesses had of the facts. I mean to the extent that
it helps you at all, my decision was not based on any credibility
findings with regard to the witnesses. It was based solely on the
record. And the [appellate] Courts will have exactly the same
record that [I] have. I really don’t see why I have to make
findings of fact and conclusions of law.

****

. . . why does the Supreme Court of
Virginia or the Supreme Court of the United States need to know
how I interpreted the law? What difference does it make to them
how I interpreted the law?

Considering the observations of the trial judge
and upon our examination of the record, we conclude that
"[w]hile the parties disagree as to the conclusions to be
drawn from the factual record, the facts themselves are not in
dispute." Smyth County Community Hosp. v. Town of Marion,
259 Va. 328, 331, 527, S.E.2d 401, 402 (2000).

The determination of Regent’s eligibility
for participation under the Educational Facilities Authority Act
is a mixed question of law and fact. Therefore, we conduct a
review of the trial court’s application of law to the
undisputed facts. Cinnamon v. Int’l Bus. Machines Corp.,
238 Va. 471, 474, 384 S.E.2d 618, 619 (1989).

III. ISSUES PRESENTED

VCBA contends that the trial court erred in
denying validation of the bonds for the benefit of Regent. It
maintains that extension of the benefits offered under the Act to
Regent would not violate the Constitution of Virginia or Virginia
statutory provisions, nor would it violate the Establishment
Clause of the First Amendment to the United States Constitution.
VCBA asserts that its program of bond financing involves aid
provided in a neutral fashion to eligible institutions of higher
education in the Commonwealth. Further, VCBA maintains that
Regent is not a pervasively sectarian institution and that even
if it is pervasively sectarian, this form of aid is, nonetheless,
permissible. Additionally, VCBA contends that refusal of
validation of the bonds for the stated reasons amounts to
discrimination based upon the recipient’s viewpoint, which
is prohibited by the free speech clauses of the United States
Constitution and the Constitution of Virginia.

Appellees urge this Court to uphold the circuit
court’s denial of validation of the bonds because they
contend that Regent is pervasively sectarian and its
participation in state-sponsored bond financing is impermissible
under the Constitution of Virginia and statutes and violates the
Establishment Clause of the First Amendment to the United States
Constitution. At the very least, appellees maintain that the
Regent School of Divinity should not be permitted to utilize any
space in buildings financed by the bonds. Finally, appellees
assert that denial of validation does not implicate free speech
issues.

The posture of this case requires our
consideration of the issues in a precise order. We must first
consider whether the validation of the bonds would violate the
Act or the provisions of Article VIII, ? 11 of the
Constitution of Virginia. Second, we must consider whether the
Establishment Clause of the First Amendment to the United States
Constitution and/or Article I, ? 16 of the Constitution of
Virginia would be violated if the bonds were validated. Only if
we determine that a violation of the Act or the various
provisions of the Constitution of Virginia has occurred do we
consider the question of violation of free speech rights based
upon viewpoint discrimination.

IV. ANALYSIS OF STATE ISSUES

Both the Act and Article VIII, ? 11 of
the Constitution of Virginia state that aid is permitted to
institutions "whose primary purpose is to provide collegiate
or graduate education and not to provide religious training or
theological education." Va. Const. art. VIII, ? 11,
Code ? 23-30.41(e). In addition to finding that Regent was
pervasively sectarian, the trial court held that it could not
validate the bonds because Regent had "a primary purpose of
religious training," which would violate the Act and
Virginia constitutional provisions. Appellees candidly concede
that, apart from particular concerns about the School of
Divinity, they do not contend that Regent is such an institution.
In their brief appellees state:

Although the trial court found otherwise, the
Appellees did not contend in the court below and do not contend
here, that Regent is such an institution. The Appellees’
only contention that involves Article VIII, ? 11 pertains
to Regent’s proposal of a pro rata contribution to
compensate for the Divinity School’s use of the
bond-financed buildings. Accordingly, the general question of
whether the bonds can be issued turns on whether the issuance
would violate the federal Establishment Clause and the parallel
provision of the Virginia Constitution, Article I, ? 16.

Despite appellees’ concession, the trial
court, nonetheless, made these findings and we must review them.
[2]

As more fully developed in this opinion, we
find that Regent, in both policy and practice, is pervasively
sectarian. However, this conclusion does not resolve the question
of its primary purpose. In order to validate the bond issue,
state constitutional and statutory provisions require that Regent
must be an institution whose "primary purpose is to provide
collegiate or graduate education and not to provide religious
training or theological education." With the exception of
the Divinity School, we are satisfied that Regent meets this
requirement.

Definition of the phrase "religious
training or theological education" must precede our analysis
of primary purpose. The Report of the Commission on
Constitutional Revisions (Report) observed that "a
theological seminary would not qualify" for inclusion but
stated that among "those colleges and universities which
would qualify, the section makes no distinction between those
which are church related and those which are not. Many of the
private colleges in Virginia are church-related, but typically
they operate like any other college." Report of the
Commission on Constitutional Revision, 1969, p. 274.

Of particular help in our interpretation of the
meaning of the phrase "religious training or theological
education" is the Report’s reference to Public Views
Document 100 which is a "Memorandum to Commission on
Constitutional Revision" from the Association of Independent
Colleges. The Report specifically cites to that portion of the
Memorandum which states:

The Association does not advocate state aid for
the promotion of theological training or religious education.
Clearly, a seminary and its students should be barred from state
aid. Under the federal Higher Education Facilities Act of 1963 a
distinction is made between a church related college and an
institution or one of its departments whose primary function is educating
students for religious vocations
. See 20 U.S.C.A.
? 751(a)(2). This distinction is the difference between an
institution whose primary service is to the state and community
and one whose primary service is to a religious or denominational
group. (emphasis supplied).

Public Views Document 100, p. 6.

Based on the language in this document and the
Report of the Commission on Constitutional Revision, we interpret
the phrase "theological education" to be applicable to
a seminary or other institution whose purpose is to prepare
students for vocations associated with ordination, such as rabbi,
minister or priest. By contrast, we interpret the phrase
"religious training" to be applicable to institutions
or departments within institutions whose purpose is preparation
of students for religious vocations other than those associated
with ordination. Such other vocations would include missionary or
director of religious education. In either case, the
"primary function is educating students for religious
vocations."
[3]

With the exception of the School of Divinity,
the primary purpose of Regent’s graduate programs is
preparing students for secular vocations. Although an institution
may have multiple purposes, by definition it can have only one
"primary purpose". Webster’s Third New
International Dictionary
(1993) defines "primary"
as "first in order of time or development." Id.
at 1800.

Regent offers over 20 different graduate
degrees in subjects such as business, education, journalism, law,
and psychology. Regent is accredited by the SACS to award the
master’s and doctor’s degrees. In reaffirming
Regent’s accreditation, SACS noted that:

Regent University demonstrates a
well-documented concern for promoting and assuring academic
freedom and providing for professional security of faculty
members. The faculty want to integrate faith into learning, but
no one attempts to dictate to them how this is to be done.

****

Faculty and students are free to examine all
pertinent data, question assumptions, be guided by the evidence
of scholarly research, and teach and study the substance of a
given discipline. All the units seem very open to and supportive
of academic freedom, viewing it, as one unit explains, as a
"sacred trust."

The ABA accredited the law school and such
accreditation permits its graduates to apply for licensure to
practice law in all 50 states. The ABA also found no inhibition
of Regent’s academic freedom.

The law school at Regent provides a good
illustration of Regent’s primary purpose. First year
students are required to take courses in Common Law, Contracts,
Torts, Civil Procedure, Legal Research and Writing, and Property.
Students are exposed to the same core curriculum that permeates
the first year at any law school in the country.

Regent may have an idealized mission of
"glorifying God and His Son, Jesus Christ." However,
this precatory language does not reveal the primary institutional
purpose. In all practical aspects, Regent is a graduate
institution that teaches various secular subjects from a
religious viewpoint. The prohibition in question under the Act
and the Constitution of Virginia does not proscribe teaching of
otherwise secular subjects from a religious viewpoint.

We hold that, with the exception of the
Divinity School, Regent is an institution "whose primary
purpose is to provide collegiate or graduate education and not to
provide religious training or theological education."
[4]

In addition to particular concerns about use of
the bond-funded facilities by the School of Divinity
[5], appellees maintain that Article I, ? 16 of the
Constitution of Virginia, which they refer to as a "parallel
provision" to the federal Establishment Clause, is violated
and that our prior holding in Habel (Liberty University is
pervasively sectarian and its participation in industrial bond
financing violates the Establishment Clause and Article I,
? 16 of the Constitution of Virginia) must be applied to
invalidate the conduit bonds proposed to be issued to Regent.
Appellees are correct to characterize Article I, ? 16 of
the Constitution of Virginia as a "parallel provision"
to the Establishment Clause for we have always been informed by
the United States Supreme Court Establishment Clause
jurisprudence in our construction of Article I, ? 16.

Because the Establishment Clause landscape is
ever-changing, we have not hesitated to reconsider prior
interpretation of our own Constitution. We noted in Miller v.
Ayers
, 214 Va. 171, 198 S.E.2d 634 (1973)("Miller
II"), that the United States Supreme Court had decided ten
cases involving state programs of financial aid to private
educational institutions since Miller I. See Miller
II
, 214 Va. at 180, 198 S.E.2d at 641. We stated without
hesitation, "[t]hese new decisions require a reexamination
of our earlier holding." Id. Similarly, the multitude
of Establishment Clause cases decided by the United States
Supreme Court since Habel require reexamination of that
prior holding. As our analysis of current Establishment Clause
requirements reveals, Regent’s participation in the VCBA
bond program does not violate the Establishment Clause and
similarly does not violate Article I, ? 16 of the
Constitution of Virginia.

V. ESTABLISHMENT CLAUSE[6]

A. THE STANDARD

In its most recent pronouncement on the
subject, the United States Supreme Court once again acknowledged
the uncertain and ever-changing landscape of its Establishment
Clause jurisprudence.

The Establishment Clause of the First Amendment
dictates that "Congress shall make no law respecting an
establishment of religion." In the over 50 years since Everson
[v. Bd. of Educ. of the Township of Ewing, et al.
, 330 U.S. 1
(1947)], we have consistently struggled to apply these simple
words in the context of governmental aid to religious schools. As
we admitted in Tilton v. Richardson, 403 U.S. 672, 29
L.Ed.2d 790, 91 S.Ct. 2091 (1971), "candor compels the
acknowledgment that we can only dimly perceive the boundaries of
permissible government activity in this sensitive area." 403
U.S. at 678 (plurality opinion); see 403 U.S. at 671 (White, J.,
concurring in judgment).

Mitchell v. Helms, ___ U.S. ___, 120
S.Ct. 2530, 2540 (2000) (plurality opinion).

Review of the entire panoply of Establishment
Clause cases is often unhelpful in a particular case because
adjudication of these sensitive issues is dependent upon the
context in which they are raised. Chief Justice Burger’s
observations for the Court in Walz v. Tax Comm’n, 397
U.S. 664 (1970), remain true today:

The Establishment and Free Exercise Clauses of
the First Amendment are not the most precisely drawn portions of
the Constitution. The sweep of the absolute prohibitions in the
Religion Clauses may have been calculated; but the purpose was to
state an objective, not to write a statute. In attempting to
articulate the scope of the two Religion Clauses, the
Court’s opinions reflect the limitations inherent in
formulating general principles on a case-by-case basis. The
considerable internal inconsistency in the opinions of the Court
derives from what, in retrospect, may have been too sweeping
utterances on aspects of these clauses that seemed clear in
relation to the particular cases but have limited meaning as
general principles.

Id. at 668.

In Lemon v. Kurtzman, 403 U.S. 602
(1971), the Court recited its well known three-pronged test for
Establishment Clause analysis: "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, the statute must not foster ‘an excessive
government entanglement with religion.’" Id. at
612-13 (citations omitted). Thereafter, in Agostini v. Felton,
521 U.S. 203 (1997), the Court reaffirmed the general principles
used to determine whether government aid violates the
Establishment Clause. After Agostini, the analysis still
requires determination "whether the government acted with
the purpose of advancing or inhibiting religion" and
"whether the aid has the ‘effect’ of advancing or
inhibiting religion." Id. at 222-23. Merging the
analysis of excessive government entanglement into the
"primary effect" analysis, the Court stated,

Regardless of how we have characterized the
issue, however, the factors we use to assess whether an
entanglement is ‘excessive’ are similar to the factors
we used to examine ‘effect.’ That is, to assess
entanglement, we have looked to ‘the character and purposes
of the institutions that are benefited, the nature of the aid
that the State provides, and the resulting relationship between
the government and religious authority.’

Id. at 232 (quoting Lemon, 403
U.S. at 615).

Recent cases rarely involve claims of
governmental action purposefully advancing religion;
consequently, after Agostini, the focus of Establishment
Clause analysis will most often be upon the "primary
effect" test. In that regard, the Court articulated three
criteria used to determine whether government aid is permissible:
"it does not result in governmental indoctrination; define
its recipients by reference to religion; or create an excessive
entanglement." Id. at 234. Finally, Agostini
requires a determination whether the government aid constitutes
an "endorsement of religion." Agostini, 521 U.S.
at 235. See also Mitchell, ___ U.S. at ___, 120
S.Ct. at 2560 (O’Connor, J., concurring).

Agostini overruled a prior decision in Aguilar
v. Felton
, 473 U.S. 402 (1985), involving not only the same
government program (Title I of the Elementary and Secondary
Education Act of 1965), but involving the same case which it
revisited some years later upon petition seeking relief from an
injunction pursuant to Federal Rule 60(b)(5). The Court in Aguilar
characterized the schools receiving aid as "pervasively
sectarian." Id. at 411-12. Upon reconsideration of
the case, the Court focused upon the character of the aid
involved and whether "use of that aid to indoctrinate
religion could be attributed to the State." Agostini,
521 U.S. at 230. Declaring that "we have departed from the
rule . . . that all government aid that directly assists the
educational function of religious schools is invalid," id.
at 225, the Court acknowledged that government aid to pervasively
sectarian schools had been previously approved:

[W]e have sustained programs that provided aid
to all eligible children regardless of where they attended
school. See, e.g., Everson v. Board of Ed. of Ewing,
330 U.S. 1, 16-18 (1947)(sustaining local ordinance authorizing
all parents to deduct from their state tax returns the costs of
transporting their children to school on public buses); Board
of Ed. of Central School Dist. No. 1 v. Allen
, 392 U. S. 236,
243-244 (1968)(sustaining New York law loaning secular textbooks
to all children; Mueller v. Allen, [463 U.S. 388,] 398-399
(1983)(sustaining Minnesota statute allowing all parents to
deduct actual costs of tuition, textbooks, and transportation
from state tax returns); Witters v. Washington Dept. of Servs.
for Blind
, 474 U.S. 481, 487-88 (1986)](sustaining Washington
law granting all eligible blind persons vocational assistance; Zobrest
v. Catalina Foothills Sch. Dist.
, 509 U.S. 1, 10 (1993)] (sustaining section of IDEA providing all "disabled"
children with necessary aid).

Id. at 231. Of course in Agostini,
the Court approved aid to pervasively sectarian schools by
permitting public school teachers to provide remedial education
to disadvantaged children in parochial schools.

Upon cursory review, it would appear that Agostini
removed from consideration the analysis of the pervasively
sectarian nature of the institution receiving government aid. The
plurality in Mitchell certainly thought so when it said:

One of the dissent’s factors deserves
special mention: whether a school that receives aid (or whose
students receive aid) is pervasively sectarian. The dissent is
correct that there was a period when this factor mattered,
particularly if the pervasively sectarian school was a primary or
secondary school. But that period is one that the Court should
regret, and it is thankfully long past.

Mitchell, ___ U.S. at ___, 120 S.Ct. at
2550. However, without a fifth vote to command a majority, the
plurality’s obituary for analysis of pervasive sectarianism
may be premature. The concurrence of Justice O’Connor,
joined by Justice Breyer, suggests that the consideration of an
institution’s pervasively sectarian nature, although limited
in impact, remains appropriate.

Mitchell involved a challenge to a
school aid program described as a "close cousin" to the
provision at issue in Agostini. ___ U.S. at ___, 120 S.Ct.
at 2537. Chapter 2 of the Education Consolidation and Improvement
Act of 1981, Pub. L. 97-35, 95 Stat. 469, as amended, 20 U.S.C.
?? 7301-7373, among other things, provides aid for certain
instructional and educational materials. 120 S.Ct. at 2537.
Federal funds are provided to state and local educational
agencies which, upon application from both public and private
schools, purchases requested materials and loans them to the
requesting institution. Id. at ___, 120 S.Ct. at 2537. In
Jefferson Parish, Louisiana, private schools, including religious
schools characterized by the district court as pervasively
sectarian, participated in the program of government aid. See
id. at ___, 120 S.Ct. at 2538.

In Mitchell a majority of six justices
approved aid to schools that are indisputably pervasively
sectarian. The plurality opinion reaffirmed the Agostini
refinement to the Lemon test and, because the secular
purpose of the program and any excessive government entanglement
were not the subject of controversy, focused entirely upon the
two remaining criteria of the Agostini "effect"
test: whether the program results in governmental indoctrination,
and whether it defines its recipients by reference to religion.

Concluding that the aid did not have "the
effect of advancing religion," the plurality stated,
"[the aid] does not result in governmental indoctrination,
because it determines eligibility for aid neutrally, allocates
that aid based on the private choices of the parents of
schoolchildren, and does not provide aid that has an
impermissible content. Nor does [the program] define its
recipients by reference to religion." Id. at ___, 120
S.Ct. at 2552. For the plurality, "the inquiry into the
recipient’s religious views required by a focus on whether a
school is pervasively sectarian is not only unnecessary but also
offensive." Id. at ___, 120 S.Ct. at 2551.

Justice O’Connor, the author of the
majority opinion in Agostini, concurred in the result of Mitchell
but wrote separately because the plurality opinion was "of
unprecedented breadth for the evaluation of Establishment Clause
challenges to government school-aid programs." Id. at
___, 120 S.Ct. at 2556. Summarizing her concerns with the
plurality, Justice O’Connor stated:

Reduced to its essentials, the plurality’s
rule states that government aid to religious schools does not
have the effect of advancing religion so long as the aid is
offered on a neutral basis and the aid is secular in content. The
plurality also rejects the distinction between direct and
indirect aid, and holds that the actual diversion of secular aid
by a religious school to the advancement of its religious mission
is permissible.

Id.

Noting the importance of neutrality, private
choices and secular content, Justice O’Connor emphasized
that other factors must be considered in the evaluation of school
aid programs. These factors include whether the aid is
supplemental to regular curricula, whether state funds reach
religious school’s coffers, whether the aid is actually
diverted to religious activities, and whether the aid constitutes
an endorsement of religion.

Although never directly responding to the
plurality’s announcement of the death of "pervasively
sectarian analysis," the concurring opinion makes it clear
that such concerns are still alive. Justice O’Connor states:

I also disagree with the plurality’s
conclusion that actual diversion of government aid to religious
indoctrination is consistent with the Establishment Clause.
. . . [O]ur decisions "provide no precedent for
the use of public funds to finance religious activities."
. . . [A]ctual diversion is constitutionally
impermissible.

Id. at ___, 120 S.Ct. at 2558 (citations
omitted).

In the context of her concerns over actual
diversion of government aid to religious activity, Justice
O’Connor favorably cites Justice Kennedy’s concurring
opinion in Bowen v. Kendrick, 487 U.S. 589 (1988), where
the remand to the district court is explained as follows:
"The only purpose of further inquiring whether any
particular grantee institution is pervasively sectarian is as a
preliminary step to demonstrating that the funds are in fact
being used to further religion." Mitchell, ___ U.S.
at ___, 120 S.Ct. at 2558 (citing Bowen, 487 U.S. at 624
(Kennedy, J., concurring)).

Clearly, the United States Supreme Court has
approved some forms of aid to pervasively sectarian institutions.
See, e.g., Mitchell, ___ U.S. ___, 120 S.Ct. 2556
(upholding funds distributed by the federal government to state
and local governmental agencies, which in turn lend educational
materials and equipment to public and private schools, including
parochial schools), Agostini, 521 U.S. at 234-35
(upholding a federally funded program providing supplemental,
remedial instruction by public school teachers to disadvantaged
children in parochial schools), Zobrest, 509 U.S. at 10
(upholding a state-funded sign-language interpreter being
furnished to a disabled child enrolled in a pervasively sectarian
school), Witters, 474 U.S. at 488-89 (sustaining
Washington law granting all eligible blind persons vocational
assistance and permitting use of grant money for program at a
Bible college), Mueller, 463 U.S. at 398-99 (sustaining
Minnesota statute allowing all parents to deduct actual costs of
tuition, textbooks, and transportation from state tax return,
including expenses associated with their children’s
attendance at parochial schools), Allen, 392 U.S. at
243-44 (sustaining New York law loaning secular textbooks to all
children, including children at parochial schools), and Everson,
330 U.S. at 16-18 (sustaining local ordinance authorizing all
parents to deduct on their state tax returns the costs of
transporting their children to public or private schools on
public buses).

The governmental aid in Mitchell, Agostini,
Zobrest, Witters, Mueller, Allen and Everson
involved pervasively sectarian schools. In these cases, it was
the nature of the aid that was dispositive of the Establishment
Clause question, not the nature of the institution. Upon
consideration of Agostini, the plurality and concurring
opinions in Mitchell, and the several cases cited above,
we conclude that both the nature of the aid and the nature of the
institution receiving that aid must be appropriately considered
and balanced to determine whether the Establishment Clause
prohibits a particular school aid program.

In applying this test, it is helpful to examine
Hunt v. McNair, 413 U.S. 734 (1973), a case remarkably
similar to the case before us. In Hunt, the United States
Supreme Court entertained a challenge to the South Carolina
Educational Facilities Authority Act.
[7] The legislative
purpose for the South Carolina statute was " ‘to
assist institutions for higher education in the construction,
financing and refinancing of projects . . . primarily
through the issuance of revenue bonds.’ " 413 U.S.
at 736 (quoting S.C. Code Ann. ? 22-41.4 (Supp. 1971)). The
South Carolina Act, like Virginia’s, explicitly provided
that the bonds shall not be obligations of the state directly or
indirectly. See id. at 737 (quoting S.C. Code Ann.
? 22-41.10 (Supp. 1971)). As in Virginia, none of the
general revenues of South Carolina was used to support a
particular project. See id. at 738.

Justice Powell, writing for the court in Hunt,
succinctly characterized the nature of the aid afforded the
college:

The advantage of financing educational
institutions through a state-created authority derives from
relevant provisions of federal and South Carolina state income
tax laws which provide in effect that the interest on such bonds
is not subject to income taxation. The income-tax-exempt status
of the interest enables the Authority, as an instrumentality of
the State, to market the bonds at a significantly lower rate of
interest than the educational institution would be forced to pay
if it borrowed the money by conventional private financing.

Id. at 738-739 (footnote omitted).

Considering the three-pronged test articulated
in Lemon, the Court in Hunt found that the
"purpose of the statute is manifestly a secular one." Id.
at 741. Also, the Court concluded that periodic inspection of the
facilities to ensure compliance with restrictive use did not
threaten excessive governmental entanglement with religion. See
id. at 745-49. In consideration of the second prong of the
Lemon test, the Court, citing Walz and Tilton,
noted: "[w]hatever may be its initial appeal, the
proposition that the Establishment Clause prohibits any program
which in some manner aids an institution with a religious
affiliation has consistently been rejected." Hunt,
413 U.S. at 742-43.

Upon review of the sparse record in that case,
the Court observed that there was "no basis to conclude that
the College’s operations are oriented significantly towards
sectarian rather than secular education." Id. at 744.
The Court further stated, "we are satisfied that
implementation of the proposal will not have the primary effect
of advancing or inhibiting religion." Id. at 745.
Appended to that statement at the end of the discussion of the
"primary effect test", the Court specifically declined
to address the very issue presented in the case before us today. Id.
at 745 n.7.

In footnote seven, the Court suggested that
even if an institution is pervasively sectarian, the aid in
question may be so unique that the provision of the aid does not
result in "the primary effect" of advancing or
inhibiting religion. The footnote in its entirety states as
follows:

The "state aid" involved in this case
is of a very special sort. We have here no expenditure of public
funds, either by grant or loan, no reimbursement by a State for
expenditures made by a parochial school or college, and no
extending or committing of a State’s credit. Rather, the
only state aid consists, not of financial assistance directly or
indirectly which would implicate public funds or credit, but the
creation of an instrumentality (the Authority) through which
educational institutions may borrow funds on the basis of their
own credit and the security of their own property upon more
favorable interest terms than otherwise would be available. The
Supreme Court of New Jersey characterized the assistance rendered
an educational institution under an act generally similar to the
South Carolina Act as merely being a "governmental
service." Clayton v. Kervick, 56 N.J. 523, 530-531,
267 A.2d 503, 506-507 (1970). The South Carolina Supreme Court,
in the opinion below, described the role of the State as that of
a "mere conduit." 258 S.C., at 107, 187 S.E.2d at 650.
Because we conclude that the primary effect of the assistance
afforded here is neither to advance nor to inhibit religion under
Lemon and Tilton, we need not decide whether, as
appellees argue, Brief for Appellees 14, the importance of the
tax exemption in the South Carolina scheme brings the present
case under Walz v. Tax Comm’n, 397 U.S. 664 (1970),
where this Court upheld a local property tax exemption which
included religious institutions.

Id. at 745.

In Walz, an owner of real estate in New
York sought an injunction in state court to prevent the New York
City Tax Commission from granting property tax exemptions to
religious organizations for properties used solely for religious
worship. See 397 U.S. at 666. The essence of the complaint
was that the grant of a tax exemption to church property
indirectly required taxpayers to make a contribution to religious
bodies and thereby violated the Establishment Clause. See id.
at 667.

Concluding that the legislative purpose of the
property tax exemption was "neither the advancement nor the
inhibition of religion; [and] neither sponsorship nor
hostility," Id. at 672, the Court stated:

Granting tax exemptions to churches necessarily
operates to afford an indirect economic benefit and also gives
rise to some, but yet a lesser, involvement than taxing them. In
analyzing either alternative the questions are whether the
involvement is excessive, and whether it is a continuing one
calling for official and continuing surveillance leading to an
impermissible degree of entanglement. Obviously a direct money
subsidy would be a relationship pregnant with involvement.

* * *

The grant of a tax exemption is not sponsorship
since the government does not transfer part of its revenue to
churches but simply abstains from demanding that the church
support the state. . . . There is no genuine nexus
between tax exemption and establishment of religion.
. . . The exemption creates only a minimal and remote
involvement between church and state and far less than taxation
of churches.

Id. at 674-75. Comparing provision of
police and fire protection to the granting of tax exempt status,
the Court noted that:

But if as in Everson buses can be
provided to carry and policemen to protect church school pupils,
we fail to see how a broader range of police and fire protection
given equally to all churches, along with nonprofit hospitals,
art galleries, and libraries receiving the same tax exemption, is
different for purposes of the Religion Clauses.

Id. at 671.

In the case before us, appellees do not contend
and we do not find that the VCBA purports to act with the purpose
of advancing or inhibiting religion, or that the bond program
results in excessive entanglement. Consequently, as in Agostini
and Mitchell, we must consider whether the aid results in
governmental indoctrination, whether recipients of the aid are
defined by reference to religion, and whether the government aid
program constitutes an endorsement of religion. As the Court did
in Hunt, we must first determine whether Regent is
pervasively sectarian. If Regent is pervasively sectarian then,
considering Agostini, Mitchell, and a host of other
fact-specific cases, we must determine whether the unique nature
of the aid is nonetheless permitted without offending the
Establishment Clause.

B. IS REGENT PERVASIVELY
SECTARIAN?

Assessment of whether an institution is
pervasively sectarian
[8] requires consideration of "a general picture of
the institution, composed of many elements." Roemer,
426 U.S. at 758. Although the Supreme Court has relied on several
common factors in making this determination, no one distinct
formula has emerged.
[9] In identifying characteristics of
a pervasively sectarian institution, the Court has considered:
(1) whether the institution is formally affiliated with a church
and the amount of institutional autonomy it enjoys apart from the
church with which it is affiliated;
[10] (2) whether one of
the purposes of the institution is the indoctrination of religion
and whether the institution’s activities reflect such a
purpose or exert dominating religious influence over the academic
curriculum;
[11] (3) whether the institution
reflects an atmosphere of academic freedom;
[12] (4) the
institution’s policy on classroom prayer or other evidence
of religion entering into elements of classroom instruction;
[13] (5) the existence and utilization of religious
qualifications for faculty membership or student admission;
[14] and (6) the religious composition
of the student population and faculty.
[15]

Our examination of Regent pursuant to the
Establishment Clause and Article I, ? 16 of the
Constitution of Virginia requires consideration of whether the
institution is pervasively sectarian. While Regent (with the
exception of the School of Divinity) may not have a primary
purpose of religious training or theological education, upon
consideration of the factors utilized to determine whether an
institution is pervasively sectarian, we hold that Regent is such
an institution. The lengthy description of Regent in this opinion
amply and conclusively supports this determination.

C. REGENT’S PARTICIPATION
IN THE BOND FINANCING PROGRAM

Having established that Regent is a pervasively
sectarian institution, we must consider whether it nonetheless is
permitted to participate in the VCBA bond program without
offending the Establishment Clause. We turn to the remaining
interrelated questions unique to this case: whether the aid
results in government indoctrination, whether the aid program
defines its recipients by reference to religion, and whether the
aid program constitutes an endorsement of religion.

It is important to distinguish at the outset
the unique nature of the governmental aid involved in the VCBA
bond program. Because the bond proceeds are the funds of private
investors, the bond proceeds are not governmental aid received by
the institution. No taxpayer dollars are transferred directly or
indirectly to a participating institution. No taxpayer dollars
are pledged or utilized as surety for bond obligations. Unlike
the aid programs reviewed in many of the cases that define
Establishment Clause jurisprudence, there is no government money
utilized for construction or maintenance of buildings, for
provision of bus transportation, for reimbursement of educational
expenses, for provision of teachers on or off private school
premises, or for the provision of books or materials of any kind.

The aid does not involve usage of governmental
funds and, in the traditional sense in which the terms have been
used, the terms "direct aid" or "indirect
aid" are simply inapplicable. The Court acknowledged this
unique difference in footnote seven of its opinion in Hunt.
The nature of this aid is properly defined as the granting of tax
exempt status to the bonds which has the incidental result of
permitting a qualifying institution to borrow funds at an
inter

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