Declaring that the relationship between states and church-related schools has become increasingly confrontational, the author proposes that judicial solutions should be more flexible. Courts called upon to balance the interest of a state and a church-related school have generally ruled either for the state or the school. Two cases are analyzed that are representative of these two alternatives. A recent third case suggests somewhat of a midpoint between the other two and further suggests a way out from the inequities of the either-or approach. The author observes that, where two or more purposes can exist for a set of regulations, there is a need for clarity as to whether some regulations are designed to fulfill one purpose only and not others. The author admonishes state regulatory agencies and state legislatures to demonstrate flexibility in recognizing that legitimate educational purposes can be accomplished by different means. (MLF)