Calls the tunes. This is an old phrase that doesn't get nearly enough attention. It's beautiful in its simplicity - if you accept the money, you have to accept the conditions surrounding it. This is very much the assessment given to the law schools who argued against having military recruiters on campus because of the military's "don't ask, don't tell" policy when their position was shot down in the courts. The schools accepted federal dollars, and in exchange for receiving these funds, the schools were obliged to accept recruiters as a condition. The schools wanted the sweet, but didn't want the bitter, and thus fought against this requirement, and were rightly defeated.
While this lesson has been learned in the law school financing sector, apparently, this lesson was lost on the Christian Legal Association at the Hastings College of Law in San Francisco. The Association sought formal recognition from the law school. There's nothing wrong with that, our law school had a Christian Law Society; I knew several members and the faculty advisor and they are all good people. They sought funding in the form of activity fees. This is absolutely fine - again, it's a student organization and they are allowed to seek these funds. Finally, they wanted the right to deny entry into their club all non-Christians and any gay students. This they cannot do. You see, the school has a policy that requires an open membership policy of all their student groups - in other words, you can't discriminate, something stipulated in the Court document holding against the Christian Law Society. This is perfectly a Constitutional holding, as the requirement passes the Lemon Test - there is clearly a legitimate secular purpose whose primary effect neither promotes nor hinders a particular religious belief, and the activity clearly does not foster excessive entanglement between the government activity and religious concerns.
The school is a public (state funded) school. The students pay for the student activities. The funds for student activities comes from the funds paid by the students. It should be a no-brainer that if an organization wants access to these funds, they're going to have to accept the conditions that come with having that access.
Whoever pays the piper calls the tunes. The school says nothing about what this Christian Law Society's members should believe. It says nothing about what any member of any student organization should believe. It merely says - "if you want to be a recognized student organization, then you have to have an open membership policy." Perfectly reasonable.
Now, the Society had an option - they could have remained an unrecognized student organization, which would then have allowed them to alienate anyone they wanted. But, they wanted recognition, and thus needed to accept the restrictions given them.
I have no issue with student organizations, even Christian, Buddhist, Muslim, or Taoist ones. What I take issue with is the absurd premise that by forcing one organization to play by the same rules as all other student organizations, the school is somehow restricting their First Amendment rights, or assaulting Christianity.
For more on this topic, I suggest reading this post at Americans United.