Last year, ADvindicate broke the story that La Sierra University had issued $24 million dollars in tax exempt bonds.
Pursuant to the California Supreme Court ruling that allows “pervasively sectarian” schools such as La Sierra University and Cal Baptist University to issue tax-free bonds, the issuing institution is required to sign a solemn covenant stating:
The Corporation covenants and agrees that no portion of the proceeds of the Bonds will be used to finance or refinance any facility, place or building used or to be used for sectarian instruction or study or as a place for devotional activities or religious worship or in connection with any part of the programs of any school or department of divinity,
This restriction applies for the useful life of any structure financed or refinanced with bond proceeds. Given the language of the covenant—which was repeated several times in the bond documents, and signed by La Sierra President Randal Wisbey and Vice President for Finance, David Geriguis—the public discussion naturally revolved around the secularization of specific buildings and structures financed by tax-free bond money, most notably the Thaine B. Price Science Complex.
But now a California court has ruled that participation in the tax-free bond program effectively secularizes even a private, sectarian university, converting it into a secular business establishment and severely limiting its right to uphold its own religious standards.
The story begins when Domainlor Javier Cabading, an immigrant from the Philippines, enrolled in the nursing program at Cal Baptist University, a private institution in Riverside, California, that is affiliated with the Southern Baptist Convention. The 25 year old Cabading, who goes by the name “Dominique Javier,” is biologically male, but has always identified as female, and hence clicked the “female” box on Cal Baptist's online application form.
In April, 2011, Cabading appeared on the MTV show “True Life” and revealed that “she” was actually a he. “I’m a girl trapped in a guy’s body,” Cabading said on the show. On August 30, 2011, Cabading was expelled from Cal Baptist for “committing or attempting to engage in fraud, or concealing identity,” and for presenting false or misleading information in university judicial processes.
California state law, specifically the Unruh Civil Rights Act (Cal. Civ. Code § 51), prohibits “business establishments” from discriminating based upon several categories—sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation. The act defines “sex” as including “a person's gender identity and gender expression” and hence outlaws discrimination based upon gender identity. On February 25 of this year, Cabading sued Cal Baptist claiming “she” was expelled because “she” identified and dressed as female, but was biologically male. Cabading is claiming $500,000 in damages.
Cal Baptist demurred, arguing that the Unruh Act did not apply to Cal Baptist University because it is not a “business establishment,” but a private educational institution with a religious mission that integrally includes inculcating religious beliefs and values. Citing a recent case in which a Lutheran high school expelled two female students for sexual impropriety--Doe v. California Lutheran High School Ass'n (2009) 170 Cal.App.4th 828—Cal Baptist asked Judge Matthew Perantoni to dismiss the Unruh Act claims.
Cabading's attorney, Paul Southwick of Davis Wright Tremaine, LLP, argued that Cal Baptist University (“CBU”) had effectively admitted that it was in the secular education business in statements made in connection with issuing the tax-free bonds:
Moreover, as a participant in California Statewide Comm. Dev. Auth. v. All Persons Interested's tax free bond financing program, CBU has obligated itself to demonstrate that, despite its inclusion of a religious viewpoint in otherwise secular classes, “it provides an education that is secular in substance.” California Statewide Comm. Dev. Auth. v. All Persons Interested (2007) 40 Cal.4th 788, 805 fn 9 (“CSCDA”). When an educational institution provides a broad curriculum in secular subjects, “the bond program assists the religious school in providing educational opportunities to California residents, enhancing their employment prospects[.]” Id at 803.
Moreover, CBU joined an amicus brief [in the CSCDA case], promising the court that monies raised through the bonds would be spent exclusively on projects that advanced CSCDA's secular goals and would “not be used for activities that the outside world would typically view as religious or sectarian.” . . . In so doing, CBU holds itself out as an institution whose primary service is to the state and the community, and not to its religious denomination.
Arguing that schools are public if their potential constituency is more public than private, Southwick stated:
The same is true of CBU. However, it is even more public in that it is . . . a beneficiary of a public bond program through which it has raised over $100 million, and is seeking an additional $115 million, to construct educational facilities to be used exclusively in support of secular education.
On May 7th Judge Perantoni sided with Cabading and Southwick, ruling that the lawsuit against Cal Baptist, including the Unruh Act claims, could go forward.
La Sierra University has participated in the same tax free bond program as Cal Baptist. La Sierra admits many non-Adventist students; by some reports, 40% of the student population is non-Adventist. In its bond documents, La Sierra made the same admissions as Cal Baptist regarding the secular nature of its curriculum: “Thus, La Sierra does the things most other universities do: all information and coursework used to teach secular subjects are neutral with respect to religion.” If Cal Baptist loses this case, it will create a precedent that will certainly apply to La Sierra.
Some commentators have already noted that issuing the tax exempt bonds might interfere with La Sierra's ability to uphold its own standards of conduct and deportment. Michael Peabody, who operates the Religiousliberty.TV website, was way ahead of the curve on the issue. In an article on the bond issue published in February (just before the Cabading lawsuit was filed), Peabody wrote:
Finally, when it comes to allowing student clubs on campus, La Sierra may . . . no longer legally prohibit recognition for a gay and lesbian club. This issue made news in November 2012 when a gay and lesbian club was denied recognition because, in the words of the campus spokesperson, the club “does not align with Seventh-day Adventist beliefs on sexuality. La Sierra is a Seventh-day Adventist university, so we support the values of the SDA Church. That is why they were turned down.”
It does not appear that the bond has been used by any parties to expand their rights on campus, but the bond would seem to give many groups a right of legal action in the event that they feel discriminated against by the university because of their religious beliefs. From a religious liberty angle, religious institutions have long held the “right to discriminate” in order to protect their interests and religious missions, but what the California Supreme Court seems to be saying is that they also have the right to contract away some of these protections in return for tax-exempt bond funding.
From the other side of the ideological spectrum, T. Joe Willey, has also suggested that, because of the bond financing, La Sierra may not be able to prevent a homosexual student group from meeting on campus. It is becoming ever clearer that La Sierra was likely wrong when it asserted, through counsel Kent Hansen, that:
The issuance of the bonds does not alter La Sierra's rights of religious preference in employment and student admissions or Adventist standards reflected in the policies of the campus.
The truth is that none of us knew with certainty what legal effect issuing the bonds would have. My own legal analysis turns out to have been less perspicacious than Michael Peabody's, but even a year ago when ADvindicate first broke the tax-free bond story, I noted that the monetary savings were not worth the legal risks of issuing the bonds:
But rather than try to guess how much legal jeopardy La Sierra has placed itself in, the question you should be asking is why? Why would any Seventh-day Adventist institution voluntarily place itself in a position where it may not be able to teach exactly what it wants in exactly the way it wants? Why should we ever, in order to save 2% of interest, promise anyone that we won't teach in a sectarian way, and promote our specific doctrine and worldview? Why would we ever promise that our classes will be “neutral with respect to religion”?
We now have a clearer picture of the problems La Sierra has blundered into by issuing the tax-exempt bonds. The problems are worse than I would have guessed.