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I am Lutheran.
That said, this is a toughie. Can the public use the playground? That would be the biggest question for me. If it is predominantly for church use, then I think there's a problem. Are the student mostly from the church or community? If the church is agreeing to public use if it is given the grant, I think the state has a problem.
Very few if any school playgrounds are open to the public, including public schools, they are restricted to their students and staff. The real question is the program really about keeping kids safer on playgrounds or not?
Depends on the city- here in San Francisco there is a program that opens up public school playgrounds to public use after school and on weekends- not all schools, but it is a nice way to add 'park land' to cities.
The case is in regards to a state program that provides a sater playground material made from recycled tires to schools for their playgrounds- I don't think anyone has disputed that the material itself would make the school/church playground safer- its being used at many other playgrounds- the only dispute is the wording of the State Constitution which prohibits direct or indirect financing of religious institutions.
It is a state rights issue versus a religious rights question.
Actually it's a discrimination issue as I see it. Providing a safer playground for kids has nothing to do with establishing a religion.
Well the church argues that it is a religious discrimination issue- that non-religious schools can get the material.
The state argues that it is both a state rights issue- and a religious discrimination issue- the state does not want to be put in the position of determining whether something is religious in nature or not.