A federal appeals court has ruled that the government may continue to subsidize an AmeriCorps program that places volunteer teachers in religious schools, a decision with potentially significant consequences for President Bush's Faith-Based and Community Initiative. The ruling by the U.S. Court of Appeals for the District of Columbia Circuit was a setback for the American Jewish Congress, the New York-based nonprofit advocacy group that filed the lawsuit. The decision reversed a lower federal court by finding that the AmeriCorps program did not involve direct government funding of religious activity and did not violate the Constitution's Establishment Clause. The appeals court also upheld AmeriCorps' direct payment of public funds to religious organizations for the reimbursement of expenses associated with the administration of the government-sponsored program.