The seperation of church and state is implied in the 1st amendment with "Congress shall make no law respecting the establishment of religion, or prohibiting the free exercise therof." This means that the state cannot force children to go to a public school or have a state based church. This is to protect everyone's religious views to the extent it does not harm another.
Buses can take kids to parochial and public schools becuase it is in the best interest of the children to have that transportation, but it cannot require a reciting of a prayer.
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