Court Battle: Church-State Questions Vex Falwell’s University

Liberty University’s application for tax-free bonds raises questions about the school’s Christian nature.

The proposed issuance of tax-free bonds has plunged Liberty University (LU) into unexpected controversy in Lynchburg, Virginia, and sent university officials scrambling to fend off legal challenges and put down rumors about the future of the school. Adding to the controversy are new changes in the student application form and catalog, which have led some to question whether LU is compromising its Christian distinctiveness to obtain the bond issue. Liberty vigorously denies that is the case.

At root is LU’s application to issue nearly $60 million in low-interest, tax-free bonds through the Industrial Development Authority of Lynchburg. According to Mark DeMoss, spokesman for Liberty University chancellor Jerry Falwell, LU wants to use the bonds to purchase its campus from Falwell’s Old-Time Gospel Hour Ministry, the current title holder of the property. “It’s primarily a long-term refinancing of the major debt … accumulated in building the University,” DeMoss told CHRISTIANITY TODAY.

DeMoss said the growth of LU has decreased the need for subsidies to the school from the Old-Time Gospel Hour and thus prompted the decision to transfer LU “to its own two feet.”

DeMoss said the transfer would not change the relationship between Thomas Road Baptist Church and LU, which he characterized as one of “spiritual kinship,” but not of legal control.

Virginia law permits educational institutions to take advantage of the beneficial bonds, but stipulates that proceeds may not be used to finance pervasively religious activities. In order to comply with that requirement, LU specifically excluded its School of Religion, campus church, and Christian radio station from the bond proposal. Hoping to prevent any future challenge to the legality of the bonds, LU asked the Lynchburg Circuit Court to rule on the validity of the bond issue.

The ensuing legal battle, which mushroomed to include debate over constitutional church-state issues and the very nature of LU, caught everyone by surprise. Last month, a preliminary hearing stretched into four days of testimony before Judge Mosby Perrow III. Final oral arguments are scheduled to be presented on February 20.

Two separate groups of Virginia taxpayers are opposing the bond issuance, citing constitutional concerns. Retired Baptist minister Nathanael B. Habel, a long-time activist with Americans United for the Separation of Church and State, said he sees the bond issue allowing “special treatment” to one religion. “It’s good for both the church and the government to keep them separate,” he said.

Habel’s attorney, Jeff Somers, asserted that the tax-free bonds would amount to a public subsidy of between $2.5 million and $3 million annually for LU. “The reason tax-free bonds exist is because the authorities want to encourage certain activities which they think are beneficial to the state,” he said. “But the Constitution makes it quite clear that one activity the government can’t promote is religion.”

Habel and Somers have opposed Falwell in the past, leading a fight against the Old-Time Gospel Hour receiving a property-tax exemption for LU in 1987. But another citizen opponent is Pat McGuigan, who works for the conservative Washington group Free Congress. Over the years, Falwell has worked with Free Congress on various political projects.

McGuigan, through his attorneys, has refused to comment on his opposition to the bond. However, in documents filed with the court, McGuigan alleges that “one of the primary purposes of the University is to provide religious training and to further and promote religious goals.” Therefore, McGuigan claims, the issuance, sale, and use of the proceeds would violate both the U.S. and Virginia constitutions.

DeMoss, however, noted that religious schools such as Brigham Young, Loyola, and Mercer universities have been able to issue such bonds. “We think that an evangelical Christian institution should be equally entitled to favorable interest rates for refinancing, [just as] any other school is,” he said.

Editing Out Christ

Much of the debate has centered on the nature of LU. And adding fuel to the fire are recent changes in LU documents that remove some references to Christ and Christianity. According to portions of the 1990–91 Liberty catalog submitted to the court, several changes in wording have been made from the 1989–90 catalog. For example, “chapel” is now called “convocation,” and “Christian” service requirements are now termed “community service.”

Admission requirements also contain notable changes. The current catalog states that “The University reserves the right to refuse admission to any individual who has not received Christ as his personal Savior.” On the application, students are asked if they have received Christ as personal Savior and are told to describe their salvation experience.

Under new admission policies, “The prospective student is assessed according to academic background, personal moral behavior and character, personal philosophy, and compatibility with Liberty’s traditions, regulations and environment.” No mention is made of Jesus Christ. Likewise, on the application, students will no longer be asked if Christ is their personal Savior.

DeMoss downplayed the significance of the changes. “When you’re dealing with an issue like salvation, short of being God, there’s no infallible way to determine where somebody stands on that. But we think the application will give us a pretty good look at who’s coming here,” he said. In addition, DeMoss said that, whether called chapel or convocation, the meetings will still be required and will not change. He added that the catalog has changed often in LU’s 20 years.

Habel said he fears the changes mean Liberty has started on the same road as other universities that have forsaken their religious roots. “This is the secularization process taking place,” he said, pointing out that the changes came at the same time as the bond issue.

DeMoss emphatically denied this. “Liberty University is, always has been, and always will be an evangelical Christian university. The doctrinal statement remains unchanged,” he said. “We would operate the same next year, with or without the bond issue.”

In the midst of the controversy, students and faculty members have been worried about the future of LU. DeMoss admitted that “perhaps in our busyness, Dr. Falwell didn’t have a chance to walk everybody through this whole thing.” Falwell has spent the past few weeks meeting with student leaders, faculty, and church members, explaining the situation and trying to stop “far-out and bizarre rumors,” he said.

For now, despite lingering concerns, most students and faculty members appear willing to wait to see what happens. DeMoss is confident staff and students will ultimately trust Falwell. “Dr. Falwell has invested over 30 years in the ministry and 20 years in Liberty University, and hardly anybody who knows him would think he would sacrifice what we are for any reason, financial or otherwise,” he said.

By Kim A. Lawton in Lynchburg, Virginia.

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