A Kentucky taxpayer-funded, religiously-affiliated network of homes for at-risk children that Americans United has fought in court for more than a decade has made a pretty stunning announcement: It might start hiring gays and lesbians.

Back in 2000, Americans United and the American Civil Liberties Union charged that state funds were being used to proselytize children and advance religion at Kentucky Baptist Homes for Children, which is now known as Sunrise Children’s Services. This year the state of Kentucky agreed to end the lengthy and bitter battle, promising in a settlement to make broad changes in its child-care system to prevent state-funded religious indoctrination and coercion of children.

(Unfortunately Sunrise Children’s Services is attempting to contest the settlement, so the matter isn’t entirely resolved just yet.)

But in the same lawsuit, Sunrise, an affiliate of the Kentucky Baptist Convention, had also faced allegations that it violated employment discrimination laws by firing Alicia Pedreira after the organization learned that she is a lesbian. This information came to light in 1998, when a picture of Pedreira and her partner was shown in an exhibit at the Kentucky State Fair.

Pedreira lost that portion of the case because the courts concluded that she was fired due to her lifestyle, which isn’t protected by the U.S. Constitution, rather than for her religious beliefs, and that Sunrise’s religious motivations for firing her weren’t sufficient to save her claim.

Along with three ministers, Pedreira continued to litigate the other portion of the AU/ACLU case, Pedreira v. Kentucky Baptist Homes for Children, challenging the state’s funding of Sunrise. Now, it seems that the goals of both parts of the case are about to be accomplished, assuming that the settlement of the funding part of the case is upheld by the court, and that Sunrise’s board approves the proposed change in its employment policies.    

The core question is not about separation of church and state or government money,” Sunrise President Bill Smithwick said in a statement yesterday. “The question is whether we will walk away from the pain, suffering, loneliness, and brokenness of the kids we serve and have served since 1869.”

The Louisville Courier-Journal said Smithwick didn’t offer an explanation for why Sunrise was considering a policy change, but it noted his organization is accountable to more than just Baptists, including taxpayers and donors.

Smithwick’s statement sparked immediate backlash. The Courier-Journal said the Kentucky Baptist Convention, which provides about 4 percent of Sunrise’s yearly $27 million budget, is not pleased.

“If the trustees decide to follow Smithwick and surrender biblical values to maintain government funding, then clearly they will have forsaken the Baptist character of Sunrise and become the equivalent of any secular corporation that contracts with the state to provide childcare,” said Paul Chitwood, executive director of the Kentucky Baptist Convention, on his blog.

Americans United Associate Legal Director Alex Luchenitser told the Courier-Journal the move surprised him, but isn’t related to the settlement.

“This is very surprising,” he said. “They were very adamant that they wouldn’t hire gays and lesbians.”

It’s difficult to say what’s going on here, but it could be related to the Southern Baptist Convention’s (SBC) larger public relations campaign. According to a recent story in the Wall Street Journal¸ the new head of the SBC’s lobbying arm in Washington, D.C., said he is interested in stepping back from the culture wars.

The Journal reported that Moore said it is time to dial down the rhetoric and pull back from partisan politics. He cited a “visceral recoil” among younger evangelicals to heavy handed church-based politicking as a reason to step back from partisanship.

As my colleague Rob Boston noted, it’s not likely that the SBC is really retreating from the culture wars. More likely, it’s just changing its strategy but working toward the same old goals.

But maybe there is some progress being made in Kentucky. We’ll just have to wait and see.