Later this year, California governor Jerry Brown may sign legislation with numerous harmful repercussions for the Golden State’s Christian colleges. The state is currently moving closer to adopting a bill that would subject religious higher-education institutions to regulations forbidding them to act on their religious tenets if their students receive state grants to support their studies. SB 1146 “could destroy the ability of numerous faith-based colleges and universities to pursue the mission for which they were created,” warned Ed Stetzer, the executive director of Wheaton College’s Billy Graham Center for Evangelism, in a recent post reporting on an earlier draft.

The bill has received considerable criticism from legislators and college presidents. Fresno Pacific University president Richard Kriegbaum wrote in early June that the bill “would severely restrict the free and full exercise of religious freedom granted by the First Amendment of the Constitution of the United States.” According to Asuza Pacific University president Jon R. Wallace, the bill “significantly reduces religious freedom” and “would effectively eliminate faith-based institutions as a choice for California’s most disadvantaged students.” “SB 1146 seeks to divest us of our religious distinctives,” and “weaken the rich educational diversity of our state” wrote Biola University president Barry H. Corey in letter to faculty and staff.

In spite of that critical response, a newly revised version of the proposal passed a legislative committee last week and will likely reach the final stages of approval in a few weeks. Just what exactly does it say, and what would be its effects if it passed?

What’s the point of this bill in the first place?

The bill’s primary goal is to prevent colleges that receive state funds from enforcing codes of student conduct that reflect the college’s religious beliefs about sexual identity and the confining of marriage to male-female relationships.

Historically, California’s higher-education law, which includes requirements against discrimination based on sexual orientation, sex, and gender identity, has had an exemption allowing a religious college to follow policies based on its religious tenets. The bill would largely undo that exemption, preserving it only for programs “preparing students to become ministers of the religion or to enter upon some other vocation of the religion.” The apparent intent is that colleges that provide a general education from a faith-based perspective will no longer be protected. This includes schools like Biola University, Azusa Pacific University, and Fresno Pacific University.

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The bill’s chief sponsor, state senator Ricardo Lara, has said that his goal is to protect LGBT students at religious colleges. The bill’s proponents cite accounts of students being expelled from school, allegedly for coming out as gay or transgender, which consequently causes them to lose time or money invested in that school. Proponents also want to prevent a religious college from, for example, assigning transgender students to housing based on their biological sex at birth or denying married-student housing to same-sex couples. Proponents see these policies as examples of sexual-orientation, sex, and gender-identity discrimination that should not occur in state-funded programs.

How have Christian colleges responded?

Religious colleges say that the bill is “a solution in search of a problem, and creates bigger problems than it attempts to solve.” The accounts of expulsions or discipline, the colleges say, are few in number; in at least one instance, the basis for the dismissal is in dispute; and the colleges have policies for giving students notice of their standards of conduct and for ensuring fair treatment.

There are ambiguities in the bill’s current version that might leave room for religious colleges’ conduct policies. Indeed, at last week’s committee hearing the American Civil Liberties Union of California objected that the language is not strict enough at various points. But the primary purpose is clear.

Is that all that the bill would do?

No, it could have much broader effects. In its current form, the bill could bar a college from setting standards of belief or conduct not just for students, but for faculty—persons who are crucial to carrying out the college’s mission. This is because the bill amends a portion of California law that covers not just student-related policies, but employment policies. Lara affirmed to the legislative committee last week that he means only to protect LGBT students and to leave employment unaffected, but that would require reworking the language.

In addition, the bill could bar student-related policies not only with respect to sexual conduct, but also with respect to preferences in admissions for students who belong to the college’s denomination or faith.

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Has any of the criticism of the bill changed its content?

An earlier version of the bill was so broad that it threatened to bar not only religiously-grounded codes of conduct and statements of faith for faculty and students, but also a host of other religious elements essential to many faith-based colleges such as mandatory chapel attendance or required Bible or religion courses. That version, which passed California’s state senate in May, prompted the previously mentioned public outcry. The bill now provides that a college may “enforce religious practices” as long as it applies them to all students, gay and straight. (That said, some online critiques of the bill are based on its earlier version.)

But the new version still creates serious conflicts. Under it, a college can have religious practices but cannot discriminate based on sexual orientation, sex, or gender identity—or even religious belief. It is likely to mean that religious colleges can follow some aspects of their faith and mission, but not their tenets about marriage and sexual identity.

Who will this bill affect?

The bill applies only to colleges that receive state funding—but that includes state grants and loans to students, most importantly under the “Cal Grant” program that assists academically promising students from modest-income families. Such aid (up to $9,000 yearly at a private school) can be crucial to their ability to cover college costs; if they cannot use a grant at a given college, they may find it difficult or impossible to enroll. At some Christian colleges, Cal Grant recipients make up roughly a quarter of the student body, helping those colleges serve students from diverse socioeconomic backgrounds and ethnicities.

The colleges argue that students, including LGBT students, have a wide range of institutions from which to choose, and that a pluralistic system in education should not disfavor an institution that follows a distinctive religious-moral perspective, or the students who choose it. In 2015–16, 321 colleges in California were eligible for Cal Grants; an estimated 40 colleges (less than 15% of the total) have the kinds of policies the bill aims to prevent.

So if the bill passes, will students lose their state-issued Cal Grants?

That is a danger. The bill explicitly authorizes an LGBT student who claims discrimination to file a civil lawsuit against the college. But a more aggressive means of enforcing the state’s rules is to authorize the relevant agency to declare the college—and thus all its students—ineligible to participate in the grant program. Harming tens of thousands of students in this immediate way would likely be highly unpopular, and Lara has reiterated that it’s not his intent to do so. However, the bill is unclear on that point: The latest version is missing an earlier provision that had said the bill would not affect the “operation of the Cal Grant program.”

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Even restoring that disclaimer might have little effect. Colleges may still have to certify they do not discriminate in order for their students to be eligible; and the threat of liability from private lawsuits may be just as effective as an agency decision in driving the college either to drop out of the grant program or to violate its religious tenets.

Okay, but could students also lose their federal grants and loans?

No. California cannot change the exemption for federal funding, only its own exemption for state funding.

Title IX is the federal law prohibiting sex-based discrimination by colleges receiving federal funds. It contains the same sort of religion-protective exemption language that California is now trying to change. (Indeed, one reason for the California bill was that more colleges were claiming Title IX exemptions after the Supreme Court’s 2015 same-sex-marriage decision.) Whatever happens with this bill, students at religious colleges will continue to receive federal grants and loans.

I’ve heard something about a “disclosure” requirement. That sounds scary. What does that do?

The California bill requires that in-state religious colleges that have claimed the federal exemption must disclose that fact in admissions and orientation materials, in faculty and student handbooks, and at a “prominent” physical location on campus. The proponents say this is necessary to ensure that LGBT students and faculty are not surprised by college rules.

Ensuring notice seems like a legitimate concern in general. LGBT people often face insecurity about how others will treat them; they are harmed if a rule of conduct at their college is a surprise to them. Moreover, the argument that students should be able to choose diverse educational perspectives presumes they have information about the choice they’re making.

The US Department of Education has published the names of colleges claiming the Title IX exemption; people on both sides of the issue have called it an effort at “shaming.” But there may be more ground for requiring that colleges’ own materials to give notice to prospective and current students. Christian colleges generally maintain that the notice they currently give is sufficient, and one can argue that students should already know what they are getting. But several colleges have indicated that they can accept disclosure requirements as a means of ensuring transparency: Their objection is to the rest of the bill.

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It should be noted that, logically, requiring that colleges disclose their conduct policies weakens the case that the policies themselves must be forbidden. With clear disclosure, students who attend these colleges have made an informed choice.

What can religious colleges do if the bill becomes law?

Some might use the First Amendment. Colleges could raise challenges based on their rights to exercise religion and to associate in order to express their beliefs. Among other things, religious institutions have protections for their “internal governance” decisions, including choosing leaders and setting membership standards. In its 2012 Hosanna-Tabor decision, the Supreme Court unanimously reaffirmed these rights even in the face of a non-discrimination law. That principle may protect some college policies concerning faculty, although it’s unclear whether and how far it would protect policies concerning students.

The state will likely raise several counterarguments. Under the Free Exercise Clause, the government usually can require that religious groups follow “religion-neutral, generally applicable” laws. This bill targets religious colleges in that it shrinks the exemption specifically provided to them; but the result, the state will say, is that religious colleges are subject to the same non-discrimination rules as other colleges receiving state aid. In about 30 states, religious actors can challenge even generally applicable laws by using religious freedom statutes (modeled on the federal Religious Freedom Restoration Act) or state constitutional rulings. But California has no such statute, and its state constitutional rule is very uncertain. The state will also argue that the bill involves affirmative state funding, and courts are often reluctant to put constitutional limits on government’s ability to decide how to spend its money.

The colleges respond that in its current form, the bill targets religious organizations. Among other things, if the bill forbids colleges to engage in discrimination based on religious belief, they will be the only belief-based organizations barred from demanding that their employees commit to that underlying belief (an institution based on a secular ideal would not face the bar). And the requirement to disclose a Title IX exemption, while perhaps less burdensome, applies only to religious colleges, even though other entities have Title IX exemptions. These objections require more exploration; some might be cured by changing the bill’s language. Whatever the ultimate result, lawsuits over the law could be long and costly.

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And if the bill survives a lawsuit?

The affected colleges could respond in several ways, although all are unattractive from their standpoint. Schools could try to avoid conflicts where possible; for example, a college that provides married-student housing could stop offering it. But that solution will not always be possible.

Some colleges might decide they have no choice but to stop participating in the Cal Grants program. That, of course, would cause a substantial hit to student finances; it might lead to tuition increases, and a regrettable decline in economic and ethnic diversity among students, unless other sources of money replace the grants. If donors value colleges’ loyalty to the male-female view of marriage or to other conservative sexual ethics, they may need to shoulder an additional share of the burden of defraying students’ educational costs.

Finally, some colleges might decide to stay in the program but reduce the risk of suit by becoming more “sectarian”: to admit only students who explicitly affirm all the college’s beliefs on contested matters. (This assumes the bill does not prohibit admissions preferences based on religious belief.)

In the future, this may increasingly become the legislative and judicial compromise in religious-exemption disputes: The organization will be permitted to demand uniformity of belief but forbidden to discriminate based on any other ground. That result would preserve some autonomy for religious groups, but only in very reduced form, and with a significant social cost. As I’ve argued here, religious groups that (1) reach out to serve non-members, but also (2) maintain a distinctive faith-based identity and standards, are especially likely to provide vigorous and valuable services.

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What is the status of the bill? Is there a compromise that might be reached?

The state senate passed the first version of the bill, the version that threatened to bar a host of religious elements in colleges, on May 26 (see timeline/status). The altered version described above has now moved through one committee in the state assembly; the appropriations committee must still consider it, and as already noted, the sponsor has promised to make changes. If the assembly passes it, the senate will have to approve the new version.

It’s not clear whether any compromise measure is possible. The colleges vigorously argue for keeping some form of exemption allowing them to follow their “tenets and mission.” The proponents seem unlikely to accept such language, and the Democrats, who hold the majority, generally tilt toward their position. But legislators have received many calls and messages concerning this issue, and critiques of the bill have already contributed to changes in it once before.

Thomas Berg is James L. Oberstar Professor of Law and Public Policy, University of St. Thomas School of Law (Minnesota), where he teaches constitutional law and supervises the school’s Religious Liberty Appellate Clinic. He has co-written articles and a Supreme Court brief (with Douglas Laycock) on how government can protect religious liberty as well as same-sex civil marriage.