A lawyer for the government has told Saskatchewan's Appeal Court that the province does not want to tie education funding to the religion of its students.

Tom Irvine told the Appeal Court on Tuesday that Catholic and public schools are both part of Saskatchewan's education system, and separate schools have more constitutional protection than public ones.

The province is appealing a judge's ruling that prohibits funding of non-Catholic students attending separate schools.

A judge ruled in 2017 that provincial funding for non-minority faith students attending separate schools infringed on equality rights and religious neutrality. Justice Donald Layh said the key issue was the provincial policy of funding separate schools based solely on student enrolment without regard to students' religion.

The decision caused concern among parents and with former premier Brad Wall, who at the time warned it could lead to over-populated public schools and possibly empty some Catholic schools.

Irvine told court that the government views religious neutrality to mean providing funding for public education for all -- without the requirement of a baptismal certificate or religious test.

He argued the 2017 ruling means the government is required to ask families and students attending separate schools what their religion is and to consider religion when it comes to distributing funds.

"That is not religious neutrality," he said.

Because school attendance is closely tied to access to funding, the ruling would result in religious segregation and possible discrimination, Irvine argued.

"This conception of religion neutrality would require the government to restrict access to a publicly funded school based solely on religion," he said. "The government should not be asking people their religion as a condition of accessing a public service."

The Appeal Court is set to hear from the Good Spirit School Division on Wednesday.

The dispute over funding began in 2003 when the division, formerly called the Yorkdale School Division, shuttered its kindergarten-to-Grade 8 school in the town of Theodore because of declining enrolment. The division planned to bus its 42 students to the community of Springside, 17 kilometres away.

In response, a local group created its own Catholic school division and opened St. Theodore Roman Catholic School.

Good Spirit filed a lawsuit in which it argued that the new Catholic division was not created to serve the community's Catholics, but rather to prevent students from being bused to a neighbouring town.

"A constitutional provision meant to protect minority religious rights had been harnessed for different purposes," said court documents filed for the appeal on behalf of Good Spirit.

Irvine told court that St. Theodore is not a "sham," but a valid separate school because it was established by a minority of Catholics who exercised their rights to do so and provides religious instruction.

Irvine said legislation that sets out the rights of separate schools doesn't draw a link between attendance and religion, but was intentionally silent on the issue.

A lawyer for Christ the Teacher Roman Catholic school division, which St. Theodore belongs to, told court that Good Spirit was motivated to retain students because it would receive funding.

"It doesn't have anything to do with religion," said Collin Hirschfeld. "It's about money."

Dwight Newman, who teaches law at the University of Saskatchewan, says he wouldn't be surprised if the case ends up in the Supreme Court.

"These questions on how to read religious freedom today, alongside other parts of the Constitution, are a challenging legal question."

He says the province wants to win in court, so it doesn't need to rely on the notwithstanding clause in the Charter of Rights to keep funding students who attend Catholic schools, regardless of their religion.