DETROIT (CN) – Settling a lawsuit over independent adoption and foster care agencies that won’t work with gay couples, Michigan on Friday became the first state in the nation to bar such organizations from receiving state tax dollars.

“Discrimination in the provision of foster care case management and adoption services is illegal, no matter the rationale,” Michigan Attorney General Dana Nessel said in a statement this afternoon. “Limiting the opportunity for a child to be adopted or fostered by a loving home not only goes against the state’s goal of finding a home for every child, it is a direct violation of the contract every child placing agency enters into with the state.”

Kristy and Dana Dumont. (Photo courtesy of the ACLU of Michigan)

Leslie Cooper, deputy director of the ACLU LGBT & HIV Project, said in an interview that Michigan is the first state to reverse the tide of states laws allowing adoption agencies to discriminate based on religious grounds. “We are pleased we now have one less state doing that,” Cooper said.

The policy reversal came after two lesbian couples and a woman who went through the Michigan foster care system as a teen brought a federal discrimination suit in 2017.

“We are so happy that for same-sex couples in Michigan who are interested in fostering or adopting, opening their hearts and homes to a child no longer comes with the risk of being subjected to the discrimination we experienced,” Kristy and Dana Dumont, one of the plaintiff couples, said in a statement.

“We are hopeful that this will mean more families for children, especially those who have been waiting years for a family to adopt them,” the Dumonts added. “And we can’t wait to welcome one of those children into our family.”

Residents of Dimondale who have been married since 2011, the Dumonts note that they were turned down as adoptive parents by St. Vincent Catholic Charities despite having good jobs, a big yard and extra bedrooms for a growing family.

Erin and Rebecca Bask-Sutton. (Photo courtesy of the ACLU of Michigan)

They were joined in the suit by Erin and Rebecca Busk-Sutton, a Detroit couple married since 2014 who claim Bethany Christian Services told them: “same-sex couples aren’t our area of expertise.”

Taking aim at the state, the couples said that agencies like St. Vincent and Bethany were able to get away with discriminatory policies because of a 2015 Michigan law that allows state-funded private adoption agencies to deny gay and lesbian couples adoption based on religious reasons.

The Michigan Department of Health and Human Services contracts adoption and foster care services to private agencies, many of which use religious criteria to screen prospective parents.

Because those agencies use taxpayer dollars, however, the plaintiffs said they must adhere to anti-discrimination statutes.

Earlier this year President Donald Trump referenced the suit during the National Prayer Breakfast, lamenting that St. Vincent’s was “defending itself in court for living by the values of its Catholic faith.”

Trump told the crowd that “my administration is working to ensure that faith-based adoption agencies are able to help vulnerable children find their forever families while following their deeply held beliefs.”

Michigan’s previous administration shared many of those views. The ACLU’s Cooper noted that Michigan’s previous attorney general stonewalled her organization when it reached out to clarify the state’s position on the lawsuit. “They refused to talk with us,” Cooper said.

After the Democratic Nessel took office in January, however, the state quickly recommended resolving the case in the couples’ favor.

Under the settlement, the state health department agrees to maintain nondiscriminatory provisions in its foster care and adoption agency contracts. The department also could terminate contracts with private agencies that refuse to adopt to same-sex couples or otherwise-qualified LGBTQ individuals, under the settlement agreement.

The department also established an online form prospective parents can fill out if they believe they have been discriminated against.

Independent agencies can still choose not to accept specific children based on religious objections. Once they accept a referral from the state, however, they cannot rely on those same objections to discriminate against a prospective parent.

The couples have agreed to dismiss their lawsuit and will pay their own attorney fees as part of the settlement.

A lawyer for St. Vincent has not responded to an email seeking comment.

Among those unhappy with today’s settlement is the Becket Fund for Religious Liberty, which intervened on behalf of the Christian agencies in the suit.

“The Michigan attorney general and the ACLU are trying to stop the state from working with faith-based adoption agencies,” Lori Windham, senior counsel at Becket said in a statement. “The result of that will be tragic. Thousands of children will be kept from finding the loving homes they deserve.”

Cooper said in an interview that “there is a myth being perpetrated that there are a shortage of agencies.”

“The truth is that there is a shortage of available families,” Cooper added.

As in the LGBT battle in Michigan, Trump backed Miracle Hill Ministries in South Carolina against claims that it discriminated against non-Protestant families. The administration provided a waiver in January to federally funded foster care agencies to deny services based on religious grounds.

“As Americans, our fundamental right to practice religion, regardless of our faith, will not be in jeopardy under this administration,” said South Carolina Governor Henry McMaster, who had requested the waiver.