The U.S. Education Department has suspended at least a half million dollars in grants that it awarded to Alaska Christian College, after concluding that the institution's use of federal funds unconstitutionally mixes church and state.

At issue is the college's receipt of a $435,000 grant from the department's Fund for the Improvement of Postsecondary Education -- an award that Alaska's powerful Congressional delegation earmarked to the college in a 2005 spending bill -- as well as other grants that the college received through similar channels in 2004 and 2003, totaling another $600,000. 

FIPSE, as the grant program is known, has long been a program that recognized peer-reviewed, innovative academic initiatives but has been taken over in recent years by Congressional earmarks. The 2005 funds awarded to Alaska Christian, which mostly serves Native American students from nearby villages and reservations, were to be used to recruit students, provide scholarships and pay staff salaries.

But in April, the Freedom From Religion Foundation, a nonprofit group that seeks to uphold the separation of church and state, filed a lawsuit in which it charged the department with violating the establishment clause of the First Amendment by using taxpayer funds to support activities that endorse religion.

The foundation argued that the college's openly religious mission of "preparing young people for whole-life discipleship" was irrevocably entangled with its efforts to educate underprivileged Native American students. College officials, though, said they had spent the funds according to a plan that FIPSE had approved, and some legal experts argued that the Alaska Christian's efforts to help Native American students overcome alcoholism and other problems through education could be viewed as a constitutionally legitimate secular purpose.

In response to the lawsuit, the Education Department (in conjunction with the U.S. Justice Department) reviewed the college's operations, on paper and through a visit to the Soldotna, Alaska, institution. In a letter Friday to Alaska Christian President Keith J. Hamilton, the assistant secretary for postsecondary education, Sally Stroup, said department officials had concluded that the college's use of federal funds broke the law. 

First, Stroup wrote, "the college does not have adequate safeguards to separate clearly in time or location inherently religious activities from the secular activities that could properly be supported by the federal funds." Second, the college requires students to participate in religious activities, rather than having such activities be voluntary, and third, "we have concluded that the college has used federal funds for religious purposes."

"The college achieves its purpose in carrying out its core program -- to help prepare for college underprivileged students who have earned high school diplomas but who are not ready for college-level academic work -- through inculcating religion," Stroup wrote.

As a result, the department suspended any unspent portion of its 2004 and 2005 grants to Alaska Christian, "unless and until" the college submits a plan for correcting how it spends federal money in a way that clearly separates its religious and other purposes.

Because of the department's action, the Freedom From Religion Foundation agreed to drop its lawsuit against the government. The foundation's co-president, Annie Laurie Gaylor, said she hoped the Education Department's decision would send a signal beyond the executive branch.

"We want these suspensions to serve notice on members of Congress that 'religious pork' will not hold up in court. The wall of separation between church and state, while battered, still holds," Gaylor said. "We have rescued nearly half a million in taxpayers' money. Public funds should never have been used to help build a bible college or indoctrinate a vulnerable set of students. These students deserve true academic remedial aid, not biblical indoctrination."

Alaska Christian officials could not be reached for comment. But a lawyer who is representing the college said in an interview Monday that the department had misstated the law and that Alaska Christian would submit a "corrective action plan" that would allow it to keep using the federal funds without overhauling its mission.

Derek L. Gaubatz, director of litigation for the Becket Fund for Religious Liberty, a nonprofit legal group, said the Education Department's letter had based its decision in the case on an outdated interpretation of the establishment clause, notably in concluding that the law precludes federal funds supporting anything with a religious purpose behind it, rather than more narrowly proscribing support for religious activities. Gaubatz also said that students at Alaska Christian, by choosing to go to the institution in the first place, had voluntarily chosento participate in the college's religious activities.

Gaubatz said he was confident that "at the end of the day, we will come up with something that everyone can agree on" that will allow Alaska Christian to keep its grant funds.