McG: The meaning of the phrase has evolved to mean a prohibition on state-sponsored promotion of any religion. (Or, at least, promoting anything less than all religions - But even then some atheists will bring suit, b/c then they've been excluded.)

If state (taxpayer) funds are involved, directly or indirectly, for something such as maintenance of a religious whatever, there's trouble.

For example, if a government entity leases land to the Boy Scouts, and Boy Scouts espouse religious viewpoints, then the lease must be at fair market value. (The Boy Scouts can try to be non-denominational, and even try to present evidence of Jewish and Muslim members, but that's not good enough to prevent suit by atheists.)