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She said that appears to violate "a pretty strong principle in our constitutional law" against discrimination based on religion.
"As long as you're using the money for playground services, you're not disentitled from that program because you're a religious institution doing religious things", Kagan said.
There is not infinite money, so not all applications will be successful: the government will invariably be giving money, directly, to some religious institutions and not others.
Missouri's Department of Natural Resources, which administers the playground resurfacing program, ranked Trinity Lutheran's grant application fifth out of the 44 it received.
"This preschool, with its playground attached, is an essential part of the ministry of this church and an essential part of its mission", Lynn said of Trinity Lutheran.
Thirty-nine states have state constitutional provisions that bar taxpayer funds from going to religious schools - provisions that have been a major obstacle for the school choice movement.
The case, which examines the limits of religious freedom under the U.S. Constitution, is one of the most important before the court in its current term.
Like the majority of US states, Missouri has a provision in its constitution that prohibits governmental funds from supporting houses of worship.
The state's policy change stems directly from the 2011 case, Trinity Lutheran Church of Columbia v. Comer, in which the state denied materials to resurface a preschool playground because the school was operated by a religious organization. The government should never take tax dollars from its citizens and give them directly to church groups to fund their programs. The Court has upheld indirect grants such as vouchers, where parents rather than the state decide whether to spend taxpayer funds on a religious or a secular school. And as Mr Layton acknowledged, the Missouri constitution would ban funding for all churches for playground improvements just as it bans funding for some. Cortman replied that the decision also said that churches shouldn't be deprived of all public benefits.
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Seven of them - all but Justices Sonia Sotomayor and Ruth Bader Ginsburg - spoke in favor of the church's position.
"We aren't asking for special treatment", said Annette Kiehne, Trinity Lutheran Child Learnin Center director. It also could buttress the case for using publicly funded vouchers to send children to religious schools. "A change in administration", said Cortman, "could readily lead to a resumption of the State's former policy of excluding churches from the Scrap Tire Program or the governor could simply change his mind due to political pressure".
Layton, in an interview, said he will rely most heavily on a 2004 case from Washington state when the court decided the state could deny a scholarship to a student seeking a divinity degree.
The timing of the argument "heightened our concern that the court has held this case for so long", said Alice O'Brien, general counsel of the National Education Association, which opposes state aid to private schools. Layton said they would be prohibited. It was "reenacted" in the latest version of the state's constitution in 1945.
"This church is not going to close its religious practices or its doors because its playground doesn't have these tires", she told Trinity's attorney David Cortman. And judging by questions asked by the justices, it appeared as though the majority might side with the church. Layton said it would, according to a traditional reading of the constitution. The issue was discussed only briefly during the oral argument, suggesting the justices are eager to decide the case on the merits.
Justice Stephen Breyer wondered why it is that a religious school is entitled to police and fire protection, but may be denied money to make its playground safer.
To put it plainly, Missouri took the position that it had the right to create programs that have nothing at all to do with religion but then withhold the benefits of those programs from religious institutions exclusively because they are religious.
Alito asked Missouri's lawyer, James Layton, if religious entities would be barred from applying if Missouri had a similar programme.
But the justices showed little or no interest in that option during Wednesday's argument. "Discrimination on the basis of status of religion-we know that's happened in this case, right?"
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