WASHINGTON (AP)--Federal officials in charge of grant money go too far in restricting involvement by religious groups, the White House argued in a report Thursday.

Head Start centers shouldn't be forced to remove religious signs from walls, the report says, and housing regulations shouldn't bar organizations dubbed ``primarily religious'' from participating in community development programs. The report, mandated by an executive order signed by President Bush during his second week of office, includes data from five agencies--Health and Human Services, Education, Labor, Justice and Housing and Urban Development. Each one searched for institutional barriers that prevent religious groups from taking part in government programs.

The final report, titled ``Unlevel Playing Field,'' argues that federal agencies have the power under current law to open their doors wider to religious organizations yet often act as if they don't, taking constitutional concerns about the separation of church and state too far.

``It is not Congress, but these overly restrictive agency rules that are repressive, restrictive and which actively undermine the established civil rights of these groups,'' the report concludes. ``Such excessive restrictions unnecessarily and improperly limit the participation of faith-based organizations that have profound contributions to make in civil society's efforts to serve the needy.''

The broader question--whether religious groups should be allowed to offer more programs with government money--has been the subject of a six-month debate in Congress.

Legislation approved by the House would make it clear that such groups may compete for grants without putting aside their own religious character. In part, Thursday's White House report serves as an explanation for why that legislation is needed, although it argues that agencies should really act on their own to change things.

The report concludes that federal agencies have a ``widespread bias'' against religious groups, routinely rejecting them from government programs or requiring them to remove religious activity in order to get money. Some agencies, it says, unfairly put religious groups into two categories: ``too religious'' and ``secular enough.''

Where participation is not banned outright, the report says, religious organizations often face an ``unwelcoming environment.''

The report also concludes:

  • It's very hard to measure precisely how much federal money religious groups now get, though anecdotally it appears that they get very little. That's partly because they choose not to apply for it, fearing they will be forced to strip away their religious character.

  • Federal officials have largely ignored ``charitable choice'' laws, which open government welfare, drug treatment and community development programs to religious groups. They've done little to help states and local governments comply with the new rules.

  • Very little is done to measure how well the groups that get the bulk of government money actually perform, meaning there's little rationale for giving the same groups the big contracts every year.

  • Cumbersome regulations and requirements make it hard for smaller organizations--both religious and secular--to participate in government programs.
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