Federal district court puts a heavy price on taxpayer-funded religious social services

By K. Hollyn Hollman

Hollman Report
June 2006

Avoiding lawsuits has always been a good reason for religious social service ministries to steer clear of government funding. The Constitution protects freedom of conscience by prohibiting government from advancing religion. Yet in recent years some politicians have pushed to expand public funding of pervasively religious groups. Such efforts go beyond the traditional religious affiliate model (a separate corporate entity from any church body, non-proselytizing, nondiscrimination in employment, etc.) that has long provided a lawful and ethical way for government and religion to cooperate in the provision of social services.

These proposals that offer financial "help" to religious groups come with a heavy price. As a recent court decision vividly illustrates, religious organizations that receive public funding not only risk the hassle and expense of being sued, but they may also be compelled to reimburse the government for funds already spent. In Americans United for Separation of Church and State v. Prison Fellowship Ministries, et al, a federal district court in Iowa found that the state and religious social service providers acted together in violation of the Establishment Clause in the operation of a prisoner pre-release program. Exercising the court's inherent discretion to fashion an appropriate remedy, the judge ordered the service provider to repay more than $1.5 million to the state.

At dispute was an arrangement beginning in 1999 between Iowa and Prison Fellowship Ministries (PFM), a prison ministry program founded in 1976 by Chuck Colson, former counsel to President Richard Nixon. The InnerChange program in the Iowa Newton Correctional Facility is one of PFM's many activities related to prison reform and criminal justice (see story, p. 2).

In its decision, the court describes the transformational program, detailing the inextricable relationship between the religious content and its goals. PFM's argument that government money was allocated to the nonsectarian aspects of the contractor's services were not supported by the evidence. The 14-day trial revealed that the state had delegated some of its traditional functions to an entity whose purpose was religious conversion that could not be separated from the services that may properly be funded with tax support.

In light of its potential impact on the faith-based initiatives, the case certainly deserves careful analysis as a potential landmark case.

The remedy is one of the most striking aspects of the decision. Recoupment has not been a major argument in the legal debates. The typical remedy for an Establishment Clause violation is a judgment against the governmental entity simply declaring the practice unconstitutional and an injunction ordering the unconstitutional practice to cease. Nominal damages and attorneys' fees may also be awarded. The court in this case, however, found that more was needed to provide a fair remedy and ordered repayment.

In the usual First Amendment case, plaintiffs simply sue the government, which has a duty to avoid promoting religion. The government has no business being involved in religion. Private religious organizations, such as PFM and other pervasively religious nonprofits, as well as houses of worship, are in the business of advancing religion and can do so with few restrictions. It is the unholy marriage of the government and religion that causes problems. The court in this case found that InnerChange and Prison Fellowship "acted under color of state law," meaning they acted jointly with state officials in carrying out an unconstitutional policy. The court found the facts demonstrated that from the perspective of the inmates, "the differences between private and state actions of InnerChange and Prison Fellowship are nonexistent."

It is that relationship that led to the extraordinary relief. In addition to its anticlimactic decision to declare the contract invalid and to enjoin InnerChange's operation in the Iowa Department of Corrections (so long as supported by government funds), the court ordered that Iowa cease payment to PFM and InnerChange, including for services provided in the past quarter. Then, weighing numerous equitable considerations—the substantial nature of the violation, knowledge of the risks associated with the program, and the financial impact on the state—it ordered PFM and InnerChange to repay the Department of Corrections the full amount of state funds received since 1999, not less than $1.5 million.

The BJC fights for religious freedom protections of prisoners. Our support of prison chaplains and legislation that accommodates religious needs of prisoners, such as the Religious Land Use and Institutionalized Persons Act of 2000, is a tangible way we work to promote the free exercise of religion. Beyond what government must do to accommodate the religious needs of prisoners within the walls, we applaud efforts of private religious groups to minister to those in prison in ways that they feel led by religious convictions.

The facts of this case demonstrate, however, that merging the functions of the government with the ministries of pervasively religious entities simply does not pay.