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Maine: the next voucher battleground
Since Lionel and Jill Guay's town of Minot, Maine, has no high school, the state offers to send their 15-year-old daughter to other local schools. As with about 17,000 other Maine students from small towns, the state will even pay for her to attend a private school.

Just so long as it's not a religious school.

The Guays want to send their daughter to a Roman Catholic school, but Maine has a 1981 law prohibiting the vouchers from going to religious schools. So now the Guays and five other local families are filing suit.

It's all been to court before, and in 1997 the state's Supreme Judicial Court upheld the law, saying the Establishment Clause of the U.S. Constitution prohibits the use of vouchers for religious schools.

The court won't be able to make that claim this time around. The Supreme Court unequivocally ruled in June that religious schools should not be discriminated against in voucher programs.

Maine Attorney General Steven Rowe says the June decision isn't similar enough to the Maine situation to make it an open-and-shut case. Assistant Attorney General Sarah Forster puts it another way: the Supreme Court ruled that states can pay for religious schools. "But the question quickly becomes: Must they?" she tells the Sun Journal of Lewiston.

The answer is yes, based not on the June case but in many other cases since 1997 ("Nothing in the Establishment Clause requires the exclusion of pervasively sectarian schools from otherwise permissible aid programs," wrote Justice Clarence Thomas in a 2000 case. Clear enough?) Still, Weblog is sure it'll take a while for this to be resolved.

Religious mutual funds up 21 percent over last three years
MMA Praxis Mutual Funds, a Mennonite company, commissioned a study that shows assets in religious mutual funds rising 21 percent in the three years ending March 31, 2002—by the end, they were worth at least $4.42 billion. Assets in mutual funds of all types only rose 11 percent over that time.

With such growth and apparent increasing demand, it's little wonder that the number of religious funds to invest in is growing as well—up 121 percent from from 1999 to the end of 2001. Still, that $4.42 billion may seem like a lot, but as Reuters notes, it's only 0.1 percent of the total mutual fund industry.

CBS Marketwatch, however, says all isn't rosy:

So far this year, faith-based funds have had a hard time keeping up with the rest of the mutual fund universe. The group was down more than 13 percent until the end of August, compared to a 10 percent decline by the average mutual fund, according to Thomson Financial.

Over the period of the MMA Praxis study, which covers the three years ending in March 2002, religiously managed funds performed well, losing just half of 1 percent annually as opposed to a decline of 5.9 percent by the average mutual fund. In the longer term, the faith-based groups underperformed, averaging gains of 5.7 percent a year over the past five years compared to returns of 9.2 percent for the total mutual fund universe.

A separate Reuters story also suggests that MMA Praxis itself has had to respond to problems. The news service reports that investors with MMA Praxis assets below the $2,000 mark (about 40% of its investors) will be charged an annual fee of $14. "Most boards probably would have passed this without a lot of discussion," MMA Praxis President John Liechty told the paper. "But given the fact of who we are, there was some lively discussion among some of our trustees about whether this was the right thing to do."

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September (Web-only) 2002, Vol. 46