Can tax funded social programs operated by religious groups discriminate on the basis of sexuality? A federal judge upholds the dismissal of a social worker by a Kentucky Baptist "home" for juveniles because she was a lesbian.

U.S. District Court Judge ruled yesterday that a Baptist group which operate homes for juveniles under a contract with the state of Kentucky was justified in dismissing a woman identified as a lesbian.

   The ruling could have repercussions for President Bush's faith-based initiative, which would funnel public money to houses of worship to administer social services, and immunize those groups from local and state anti-discrimination statutes.

   Judge Charles R. Simpson III, Chief Judge of the U.S. District Court in Louisville, wrote, "The civil rights statutes protect religious freedom, not personal lifestyle choices." Simpson rejected claims made by Alicia Pedreira and the American Civil Liberties Union that the Kentucky Baptist Homes for Children violated federal law when it fired her three years ago.

   In March, 1998 Pedreira was actively recruited from her job as a therapist at a Louisville hospital by the Kentucky Baptist Homes for Children, the largest "private" social service provider to juveniles in the state. KBHC had been receiving state funds since the early 1970s, and more than half of its current $19 million annual operating budget now comes from taxpayers. When a photograph appeared in a state-fair art competition showing Pedreira and her partner wearing a T-shirt with "Isle of Lesbos" printed on it, the Baptist group dismissed her. The termination statement declared: "Alicia Pedreira is being terminated on October 28, 1998 from Kentucky Baptist Homes for Children because her admitted homosexual lifestyle is contrary to Kentucky Baptist Homes for Children core values."

   With the help of the ACLU, Pedreira filed suit against the Commonwealth of Kentucky and KBHC, saying that the firing violated state and federal law, and the Establishment Clause of the U.S. Constitution. The action charged that state and federal law prohibited employment discrimination based on religion, and that Pedreira was wrongfully terminated because she did not adhere to KBHC's religious beliefs concerning homosexuality.

   The lawsuit, PEDREIRA et al. v. COMMONWEALTH OF KENTUCKY AND KENTUCKY BAPTIST HOMES FOR CHILDREN was the first of its kind in the nation to raise the issue of whether religious groups that receive public funds for social services could discriminate in hiring or firing practices on the basis of religion. Such discrimination could be against gay men and women, Atheists, unwed mothers, pregnant women for were single, even persons of unpopular faiths.

   As a result of Pedreira's suit, Kentucky Baptist Homes, which operates eight residential centers for nearly 800 youngsters, threatened to not renew its contract if the state attempted to impose anti-bias rules as a condition for funding. "If there was ever a time when we had to choose between our standards for role models for children and public dollars, we will stick by our values," declared a spokesperson. Gov. Paul Patton announced that the state would not penalize Baptist Homes for refusing to employ homosexuals, even though 80% of its budget came from public funds. In July, 2000, Kentucky Baptist Homes for Children won its stand-off with critics, and the group's executive committee voted 5-0 to renew the contract. Baptist Homes President Bill Smithwick told The Courier-Journal newspaper that the agency "will continue its current hiring practices and emphasis on traditional family values."

   Pedreira's suit was based on the premise that since there is no state or federal law barring employment discrimination on the basis of sexual orientation, the State of Kentucky -- by subsidizing KBHC -- was funding religious-based discrimination. Judge Simpson disagreed, ruling that KBHC, although it receives public funding, could discriminate on the basis of lifestyle.

   "The code of conduct, although requiring behavior which is consistent with the (Baptist Homes) values, leaves the religious freedom of employees and potential employees unfettered," added Simpson. "There is no religious discrimination in an employment policy which does not require and does not inhibit the practice of or belief in any faith."

   "This is shocking stuff," declared Eric Ferrero, a spokesperson for the ACLU's lesbian and gay rights project. "We now have a court saying that you can use taxpayer funds to discriminate, and that is perfectly legal. It ups the ante the Bush faith-based initiative, and sets off alarm bells."

   The suit has been closely watched by human rights activists and critics of President Bush's faith-based initiative. It also underscores recent revelations that the Salvation Army conducted a covert influence peddling campaign to lobby the White House, and ensure that President Bush's federal faith-based initiative would insulate religious groups accepting government funds to operate social programs from state and local anti-discrimination statutes.

   "This ruling brings home to everyone that discrimination with government dollars doesn't begin and end with the Salvation Army," said ACLU legislative counsel Christopher Anders. "This goes on all over the place."

   The Kentucky decision did not rule on the merits of a second component in the PEDREIRA case, which asserts that it is a violation of the Establishment Clause of the First Amendment to fund pervasively sectarian agencies like the Baptist Homes with public revenue. Several other plaintiffs argued that funding Baptist Homes with public money violated the separation of church and state, since the church-affiliated agency works to instill children with religious values and teachings. There is a similar suit in Texas involving a jobs training program administered by a network of churches, where clients were pressured into changing their religious beliefs. "The final ruling on that issue will affect thousands of nonprofits and faith-based organizations across the country," said Smithwick.

   All of this raises questions not only for the Bush federal faith-based initiative, but also legislation now being crafted by Sen. Joseph Lieberman which would require religious groups which accept government funds to not discriminate in their hiring and firing practices. H.R. 7, passed recently by the House of Representatives, expands the range of funding programs for churches and other sectarian groups, and still permits them to retain their "religious character." In addition, religious groups are currently exempt through Title 7 of the Civil Rights Act, and may discriminate on the basis of faith.

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