The state withdrew a $250,000 grant to a Roman Catholic school after the American Civil Liberties Union and a Jewish group challenged the constitutionality of the funding.
The Legislature approved the grant to Seton Hall Preparatory School in West Orange last summer. In August, the ACLU of New Jersey and the American Jewish Congress sued to block the grant, contending it violated the establishment-of-religion clauses in the U.S. and New Jersey Constitutions.
The state notified the school about two weeks ago that the money, which would have helped fund a $2 million expansion, would not be coming. The plaintiffs dropped their lawsuit Wednesday.
"It was a quarter-million-dollar payment we had hoped to use for the restoration of the cafeteria and three classrooms," said the Rev. Michael Kelly, the school's headmaster.
"It was really going to help us. Now it's a challenge for us to go out and raise more money."
The ACLU called the withdrawal of the grant proper.
"Providing financial support to a private religious school through taxpayers' funds is not only unconstitutional but, with so many of our public schools in desperate conditions, is wholly unjustifiable," said Deborah Jacobs, the ACLU's New Jersey executive director. "We are pleased that the state has agreed not to release the funds and can now put that money to a more appropriate use."
The ACLU said that while the U.S. Supreme Court had upheld programs that made money or benefits available to all schools or students and gave some to parochial schools, the Legislature's direct grant to a religious school - to the exclusion of other secular and nonsectarian schools - lacked the essential element of "neutrality."
"Conferring financial support to followers of one religion to the exclusion of others is the exact type of action against which our state and federal constitutions were meant to protect," said Marc Stern, an attorney for the American Jewish Congress.
The lawsuit also challenged a grant to St. Peter's Preparatory School in Jersey City, but that portion of the suit was dropped in December after it was determined that the funding would be used solely for environmental cleanup of chemicals present before the school bought the land.
The grants to the two schools were added to the state budget in June at the request of State Sens. Bernard Kenny (D., Hudson) and Richard Codey (D., Essex).