You are thinking of the 1971 case, Lemon v Kurtzman. In Lemon, the Supreme Court laid out a three part test for whether state government aid for secular activities in religious schools is constitutional. It has always been clear that the Constitution forbids state aid for religious activities.
The 3-part test is:
Is the purpose of the state law authorizing the aid secular? That is, was the intent to further non-religious objectives.
Is the law’s primary effect one that neither advances nor inhibits religion?
Would the law lead to “excessive government entanglement with religion”?
In the Lemon cases, the Court held that providing teachers to religious schools went too far, but that paying for textbooks did not.
The Court has tinkered with the 3-part test over the years. For example, in Meek v. Pittenger (1975), the Court found that providing $12 million worth of maps, charts, films, and audio-visual equipment went too far.
It is important to remember that the current Court has a very different inclination with respect to this sort of issue than it did in the mid-70s!
For an excellent discussion of this issue, go to the link below.
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