The lawsuit by Dennis Gillam and Billy Pruitt claimed the board illegally issued bonds and loaned money from the sale of the bonds to Harding for improvements to its Searcy campus. The two argued the action promoted religion in violation of the First Amendment.
But U.S. District Judge Brian Miller said the bonds neither promote nor inhibit religion and that the financing method is used by numerous educational institutions -- including some without religious affiliations.
Harding is affiliated with the Church of Christ.
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