For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Weintraub, C.J.
The question is whether the New Jersey Educational Facilities Authority Law, N.J.S.A. 18A:72A-1 et seq., violates the church-state provisions of the Federal and State Constitutions. Other challenges to the statute were rejected in Clayton v. Kervick, 52 N.J. 138 (1968). The issue now before us was there reserved, the parties then contemplating that a record would be made with respect to it. Later on a motion it was concluded a record was not needed, and the issue was decided on the face of the statute. The trial court held there was no conflict with the church-state provisions. We certified the ensuing appeal before argument in the Appellate Division.
The statute is designed to provide funds to finance the construction of dormitories and educational facilities for public and private institutions of higher education. To that end, the statute created the New Jersey Educational Facilities Authority (herein Authority), "a public body corporate and politic." N.J.S.A. 18A:72A-4(a). It should be stressed at once that the statute does not provide for a gift or grant of State moneys to any institution. Rather the plan calls for the Authority to operate on a self-sustaining basis. The Authority sells its bonds to private sources and pays the principal and interest out of revenues gained by the use of the moneys so obtained. Secs. 11, 30, and 31. As to private educational institutions, the Authority may lend the moneys to the institution, or the Authority may erect a facility on lands conveyed to it by the educational institution, return the improved property to the institution
by a lease, and reconvey title upon full performance of the lease. Either way, the charge the Authority makes must cover the principal of and interest on the bonds the Authority issues for the moneys employed in the transaction. Thus there is no gift or grant of moneys. And the bonds are the obligations of the Authority alone. They are not debts of the State, and the State's credit is not pledged. Secs. 10 and 37. The bonds and property of the Authority are exempt from State and local taxation, sec. 18, and this, together with the exemption of the bonds from federal taxation, reduces the cost of money to the Authority and makes the plan feasible.
The purpose of the statute is stated in section 1:
It is hereby declared that a serious public emergency exists affecting and threatening the welfare, comfort, health, safety and prosperity of the people of the state and resulting from the fact that financial resources are lacking with which to construct required dormitory and other educational facilities at public and private institutions of higher education; that it is essential that this and future generations of youth be given the fullest opportunity to learn and to develop their intellectual and mental capacities; that it is essential that institutions for higher education within the state be provided with appropriate additional means to assist such youth in achieving the required levels of learning and development of their intellectual and mental capacities; that it is essential that all resources of the state be employed in order to meet the tremendous demand for higher educational opportunities; that all institutions of higher education in the state, both public and private, are an integral part of the total educational effort in the state for providing higher educational opportunities, and that it is the purpose of this chapter to provide a measure of assistance and an alternative method to enable institutions of higher education in the state to provide the facilities which are sorely needed to accomplish the purpose of this chapter, all to the public benefit and good, to the extent and manner provided herein.
To qualify for financing under the statute, a private college must be an institution for higher education. "Higher education" is defined in N.J.S.A. 18A:1-1 to mean "that education which is provided by any or all of public institutions of higher education as herein defined and any or all
equivalent private institutions," and that section, read with the definition of "public institutions of higher education" in N.J.S.A. 18A:62-1, means, for present purposes, that the private institutions, to be eligible under this statute, must offer higher education equivalent to that furnished by the public colleges. The "educational facilities" which may be constructed are many,*fn1 but there is expressly excluded "any facility used or to be used for sectarian instruction or as a place for religious worship." Sec. 3.
The First Amendment to the Federal Constitution, made applicable to the States by the Fourteenth Amendment, provides:
Congress shall make no law respecting an establishment of religion, or prohibiting the free ...