A state inspector has been requested to assessment whether or not Yeshiva College, which is in a courtroom battle with a gaggle of L.G.B.T.Q. college students over whether or not it should acknowledge their campus membership, ought to have acquired $230 million in taxpayer funds after the college has stated that it’s a non secular establishment.

The referral might result in a big escalation in a fancy case through which the college has argued in courtroom that it’s a Fashionable Orthodox Jewish non secular establishment, which might exempt it from anti-discrimination legal guidelines and permit it to reject the membership. Earlier than the 2021 lawsuit, Yeshiva described itself as an academic establishment, which made it eligible for taxpayer funds however obliged it to comply with metropolis and state nondiscrimination legal guidelines.

Earlier this 12 months, state lawmakers stated the college’s authorized argument raised alarm bells as a result of it had for many years accepted public funds to pay for the development and renovation of its amenities. The lawmakers accused Yeshiva of misrepresenting itself to acquire a minimum of $230 million and requested the college to offer a full account inside 30 days of the way it had spent these funds.

Yeshiva declined to take action, stated Brad Hoylman-Sigal, the chairman of the State Senate Judiciary Committee. In a letter despatched final week, he requested the New York State inspector common, Lucy Lang, to analyze whether or not the college had misled the federal government “to qualify for low-cost, tax-exempt bond financing.”

The school’s “discriminatory conduct and claimed standing seem like at odds with the statements Y.U. made to acquire state bond financing,” Mr. Hoylman-Sigal stated within the letter. David King, a spokesman for the inspector common’s workplace, stated on Thursday that it had acquired the referral and would assessment it.

In an interview, Mr. Hoylman-Sigal stated, “No matter anybody’s motives, misrepresentation to acquire public cash is dishonest and will probably violate state regulation.”

In an announcement on Monday, Andrew Lauer, the college’s vice chairman for authorized affairs and common counsel, as a substitute stated lawmakers had been laboring underneath “a elementary misunderstanding of the details and the regulation.”

He declined to reply to questions on whether or not the college had misled the state or why it declined to adjust to lawmakers’s request for paperwork.

“Spiritual establishments usually are not precluded from receiving financing from” the state, Mr. Lauer stated.

He added that it was “false and offensive” to say the college discriminated towards L.G.B.T.Q. college students as a result of directors based a religiously-based membership for members of the neighborhood final 12 months. The lawsuit’s plaintiffs rejected that compromise, saying it imposed guidelines on their membership to which different golf equipment weren’t subjected.

“Yeshiva has already established a path ahead to proceed offering loving and supportive areas for its L.G.B.T.Q. college students,” he stated. “Properly-meaning politicians are kindly requested to study the details earlier than attacking Jewish schooling.”

The case has introduced a heated nationwide debate over the interaction of non secular liberty and civil rights to one of the vital politically liberal cities in the USA.

It additionally raises the specter that the college, which has greater than 6,000 college students on 4 campuses in Manhattan and the Bronx, might jeopardize its means to obtain state funds.

The courtroom battle is a component of a bigger nationwide dispute over whether or not firms and organizations which are religiously affiliated — and even people, like bakers or county clerks — should present providers and public lodging to individuals whose views or lifestyle they disapprove of.

Many Jewish congregations help L.G.B.T.Q. rights, bless same-sex weddings and make use of rabbis who’re homosexual or transgender. Nonetheless, many Orthodox leaders interpret the Jewish religion in a method that promotes extra conventional concepts of gender and sexuality.

The central query within the authorized dispute involving Yeshiva is whether or not it ought to be thought-about an academic company that’s ruled by state schooling regulation, which is what it says within the college constitution, or whether or not it ought to be granted the First Modification protections of a non secular company, which is what the college has argued in courtroom.

Judges have to date rejected the college’s argument.

In a ruling towards Yeshiva final June, Justice Lynn R. Kotler of the State Supreme Court docket in Manhattan pointed to the college’s constitution, which describes it as “an academic company underneath the schooling regulation of the State of New York” that was “organized and operated completely for instructional functions.”

After that ruling, Yeshiva made an emergency enchantment to the U.S. Supreme Court docket, which has taken a broad view of non secular liberty lately and virtually by no means dominated towards a non secular freedom claimant since Justice Amy Coney Barrett joined the bench in 2020.

However the excessive courtroom rejected Yeshiva’s request final 12 months. It ordered the college to acknowledge the membership, referred to as the Delight Alliance, and to exhaust its appeals on the state degree.

In response, the college stated it could droop all pupil golf equipment somewhat than acknowledge one for L.G.B.T.Q. college students, a risk that was retracted when the Delight Alliance agreed to stay formally unrecognized whereas its courtroom case remained pending. Yeshiva misplaced one enchantment on the state degree, however it could enchantment once more.

If Yeshiva succeeds at being acknowledged as a non secular establishment, extra legally akin to a seminary than to a school, that may elevate a tough new query: What ought to be finished in regards to the great amount of public cash it has acquired lately?

In his letter to the inspector common on Monday, Mr. Hoylman-Sigal stated lawmakers’ considerations centered on a minimum of three separate situations in 2009, 2011 and 2022 when the Dormitory Authority of the State of New York issued bonds on behalf of Yeshiva to lift cash for building tasks.

The Dormitory Authority is a public finance and building company that works with well being care and schooling establishments throughout the state. The authority has a protracted historical past of working with religiously affiliated faculties, stated Jeffrey Gordon, an authority spokesman, however not non secular establishments like Catholic seminaries.

Such establishments have leeway to do issues like create admissions standards that restrict enrollment to heterosexual Catholic males, as an example.

Mr. Gordon stated he couldn’t recall one other occasion when an establishment like Yeshiva had transitioned from an establishment ruled by state schooling regulation to a non secular establishment.