The Supreme Court decided in a 5-4 ruling that the upstate New York town is free to begin its town meetings with a prayer. Justice Anthony Kennedy wrote for the majority, "ceremonial prayer is but a recognition that, since this nation was founded and until the present day, many Americans deem that their own existence must be understood by precepts far beyond that authority of government to alter or define."

Greece, New York has had prayers said at the beginning of its meeting for years, using a rotating group of religious officiants from area congregations. But the town of almost 100,000 is mostly Christian, as are most of the congregations. The Rochester Democrat-Chronicle explains:

The legal tussle began in 2007... Susan Galloway and Linda Stephens, a Jew and an atheist, took the board to federal court and won by contending that its prayers - often spiced with references to Jesus, Christ and the Holy Spirit -- aligned the town with one religion. Once the legal battle was joined, town officials canvassed widely for volunteer prayer-givers and added a Jewish layman, a Wiccan priestess and a member of the Baha'i faith to the mix. Stephens, meanwhile, awoke one morning to find her mailbox on top of her car, and part of a fire hydrant turned up in her swimming pool.

The four Justices who dissented were the court's liberals, and Justice Elena Kagan argued, "Greece's town meetings involve participation by ordinary citizens, and the invocations given — directly to those citizens — were predominantly sectarian in content... In my view, that practice does not square with the First Amendment's promise that every citizen, irrespective of her religion, owns an equal share in her government."

In 1983, the Supreme Court ruled in Marsh vs. Chambers that the Nebraska Legislature could begin its sessions with a prayer. Slate points out, "Yet, while Marsh accepted legislative prayer, it implied there would be limits. One part of the opinion provided that legislative prayer could not be 'exploited to proselytize or advance any one, or to disparage any other, faith or belief.' In another, the court noted approvingly that Nebraska’s chaplain had dropped Christian references from his prayers following a complaint. So Marsh seemed to impose a limit on prayers—they could not be too denominational—but the court never explained precisely where the line should be drawn."

The AP has background about the federal ruling about Greece: "[The] three-judge panel of the 2nd U.S. Circuit Court of Appeals said that even with the high court's 1983 ruling, the practice of having one Christian prayer after another amounted to the town's endorsement of Christianity."

However, the Obama administration had the Justice Department file an amicus brief supporting prayer before meetings, declaring, "The unbroken history of the offering of prayer in Congress, for example, has included a large majority of Christian prayer-givers and a substantial number of prayers with identifiably sectarian references. Neither federal courts nor legislative bodies are well suited to police the content of such prayers, and this Court has consistently disapproved of government interference in dictating the substance of prayers."

You can read the Supreme Court decision here (PDF); Kennedy wrote, "Government may not mandate a civic religion that stifles any but the most generic reference to the sacred any more than it may prescribe a religious orthodoxy."