When it comes to church-state separation, the news from the U.S. Supreme Court this year can hardly be called good.

On May 5, the high court gave its blessing to official prayers before meetings of municipal government – even if they’re mostly Christian. At the end of June, the justices ruled that certain closely held corporations can deny employees access to birth control in health-care plans if such coverage offends the owners’ religious beliefs.

But amid this gloom there was one bright spot: On June 16th, the Supreme Court refused to hear Elmbrook School District v. Does, a legal challenge brought by Americans United contesting a Wisconsin public school district’s decision to hold graduations in Elmbrook Church, a local evangelical mega-church.

By rejecting the case, the high court upheld a lower court ruling against the district and ended a years-long legal battle over the constitutionality of the school’s practice.

But the high court’s decision has its detractors, and the case’s implications for religious liberty still reverberate on both sides of the political divide. That’s likely due to existing church-state controversies: The Elmbrook ruling came on the heels of the court’s controversial verdict in Greece v. Galloway, the city council prayer case.

That case sparked a national debate over religious liberty’s true definition and application – a debate that reached fever pitch after the court’s ruling in Burwell v. Hobby Lobby Stores, the birth control case.

While it didn’t garner as much media attention as those rulings, the court’s decision not to hear Elmbrook did showcase the stark divide on the high court when it comes to church-state separation.

Justices Antonin Scalia and Clar­ence Thomas, who both ruled for Hobby Lobby and the town of Greece, objected to the majority’s decision not to hear the case. It was evident from their dissent (written by Scalia and joined by Thomas) that they viewed the graduation controversy as an extension of the cultural conflict over the exact role religion may constitutionally play in the public square.

“Some there are – many, perhaps – who are offended by public displays of religion. Religion, they believe, is a personal matter; if it must be given external manifestation, that should not occur where others may be offended,” Scalia wrote. “I can understand that attitude: It parallels my own toward the playing in public of rock music or Stravinsky.”

But Scalia quickly made it clear that those who are offended by government-backed religion should be out of luck. He cited the court’s ruling in the Greece case to support his position that holding public school graduations in churches doesn’t violate the First Amendment.

If town councils can sponsor Christian prayers at the risk of offending non-Christian residents, he argued, then surely Elmbrook’s practice passed con­stitutional muster. Offense, he wrote, was not evidence that anyone had been coerced into religious activities.

“It is perhaps the job of school officials to prevent hurt feelings at school events,” he wrote, “But that is decidedly not the job of the Constitution.”

But is Elmbrook really about hurt feelings, or is something bigger at stake?

Americans United has argued that it’s the latter. According to the group, which commenced the lawsuit on behalf of anonymous plaintiffs in 2009, the facts of the case aren’t comparable to unwelcome public performances of rock music or Stravinsky. Instead, it’s about a flagrant violation of the First Amendment.

Documents provided by AU’s legal team reveal that the church’s sanctuary, which is where graduations were held, displayed a large Christian cross above the stage where students received their diplomas. In addition, the area contained Bibles, hymnals, “scribble card[s] for God’s Little Lambs” and promotional cards asking students and their families whether they would like to know “how to become a Christian.”

Students who objected to the religious display had one option: opt out of their own graduation.

Americans United says that’s why the organization filed suit against the school district on behalf of nine anonymous students, graduates and parents. After some initial legal setbacks, the entire 7th U.S. Circuit Court of Appeals ruled in Americans United’s favor. Although the school district had at least temporarily moved its graduations to a school facility by then, it petitioned the Supreme Court to review the ruling anyway.

The dissent by Scalia and Thomas makes it clear how they would have ruled. But it can be argued that by rejecting the case, the court reaffirmed that there are still important safeguards when it comes to the role of religion in public education. Proponents of church-state separation say that this fits squarely within legal precedent. The high court has, after all, ruled repeatedly that public schools are meant to be religiously neutral.

To some members of the Religious Right, however, the court’s decision to deny the case a hearing struck a blow to religious liberty. In an op-ed published on “Western Journalism,” which bills itself as “a blogging platform built for conservative, libertarian, free market and pro-family writers and broadcasters,” Dr. John Sparks wrote, “Concluding that holding a high school graduation ceremony in a local church because of inadequate school facilities violates the First Amendment trivializes the intent of that anti-establishment language.”

He added, “Secondly, it raises ‘offensiveness’ to the level of a constitutional right. Third, it moves closer and closer to the view that the First Amendment establishment clause requires ‘religion’ and ‘government’ to exist in separate, hermetically sealed containers precisely at a time when America’s public institutions are in desperate need of the moral grounding religious foundations provide.” (Sparks is a fellow at the Center for Vision and Values at Grove City College, an evangelical institution in Pennsylvania.)

The Claremont Institute, a right-wing legal outfit, echoed that sentiment, claiming on its website that by rejecting the case, the court had “seriously misinterpreted” the First Amendment.

David Cortman, an attorney for the Alliance Defending Freedom (ADF), which filed a friend-of-the-court brief in the case, was also not pleased. He said in a statement, “Church buildings should not be treated like toxic warehouses simply because they normally house religious activities.”

But to Americans United, the case’s rejection is a victory for religious liberty.

“Because the Supreme Court won’t hear the case, the appellate court’s ruling banning public school graduations in sectarian venues will stand,” explained Alex J. Luchenitser, the group’s associate legal director. “That’s the outcome we’d hoped to see.”

Luchenitser disputed the ADF’s assertion that the ruling treats churches like “toxic warehouses.”

“This case isn’t about trying to force religion out of the public eye,” he said. “This is just about enforcing the Constitution. Public schools are supposed to be religiously neutral. The courts have found that students are a vulnerable group, which means that the law treats schools a bit differently.”

Because religious symbols and evangelistic materials were displayed at an official school event, the Elmbrook district had violated the First Amendment, Luchenitser added.

“Students are in school to learn, not to be proselytized to. That standard shouldn’t be lifted for school events, especially graduations,” the AU attorney observed.

As a result of this case, at least in the states covered by the 7th Circuit, public school students will be guaranteed the right to have their graduations in a secular setting.

Luchenitser said that’s exactly how things should be.

“No student should have to choose between attending their own graduation or subjecting themselves to a religious environment,” he said. “This case has always been about trying to avoid coercion, not offense.”