The state appeals court ruled the USD 10.6 million grant to the all-male Beth Medrash Govoha yeshiva in Lakewood and USD 645,323 to the Princeton Theological Seminary are unconstitutional.
The American Civil Liberties Union and Americans United for Separation of Church and State had challenged the grants, which New Jersey officials argued were OK because they were meant to pay for buildings and equipment, not religious activities.
The grants were made as part of USD 1.3 billion given to schools across the state in April 2013. The court said its ruling doesn't mean the state can't give money to religious-affiliated schools that have a broader sectarian mission.
Moshe Gleiberman, vice president of BMG, said the yeshiva is disappointed in the ruling and is confident the grants will be reinstated by the state Supreme Court.
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The yeshiva itself wasn't named in the suit and a spokesman for the state attorney general's office declined to comment on whether it will appeal.
Gleiberman said most of the 6,800 students at the yeshiva where they devote themselves to the study of Jewish law go into non-clergy professions. He said the projects the grants were to fund, including a library and research center, are on hold.