A split Supreme Court ruled in Christian Legal Society v. Martinez that the University of California's Hastings College of the Law can legally deny recognition and funding to a Christian student group that will not let gays join [clarification: would not let non-celibate gays be voting members or voted into leadership positions]. Neal McCluskey writes on the Cato Institute blog, in his post Having Public Colleges Means Limiting Freedom, that "Quite simply, when public universities decide which groups do or do not get taxpayer funds, and which professors are or are not hired, government is deciding those things, and that is ultimately incompatible with both free inquiry and, more importantly, a free society." Kind of like the endless pro-big government "progressive" narrative on government-funded PBS.
If Hastings were a private college, there would (ideally) be no issue with its deciding which groups to fund or not fund. A conservative religious school would chose to fund the conservative Christian group, and a liberal college wouldn't. With public institutions, or private institutions receiving government funding, the state gets to decide. Sometimes you and/or I will agree with those decisions, and sometimes we won't. But that's politics (i.e., who has got the power of the state behind them, at this time).
More. Justice Samuel Alito's dissent cites an amicus curiae brief filed in opposition to Hastings College of Law by Gays and Lesbians for Individual Liberty (GLIL). The dissent can be read here. GLIL is mentioned on page 29:
...the Court argues that the accept-all-comers policy, by bringing together students with diverse views, encourages tolerance, cooperation, learning, and the development of conflict-resolution skills. ... These are obviously commendable goals, but they are not undermined by permitting a religious group to restrict membership to persons who share the group's faith. Many religious groups impose such restrictions. ... Our country as a whole, no less than the Hastings College of Law, values tolerance, cooperation, learning, and the amicable resolution of conflicts. But we seek to achieve those goals through "[a] confident pluralism that conduces to civil peace and advances democratic consensus-building," not by abridging First Amendment rights. Brief for Gays and Lesbians for Individual Liberty as Amicus Curiae 35.
Furthermore. Cathy Young writes in "A Dangerous Precedent" at Reason.com: "How would people feel if, at a public university that happened to be dominated by religious conservatives, a gay-rights group was denied recognition because it refused membership to people who openly espouse anti-gay views?"