the statement "government cannot sponsor religioous
activies" is too general. Remember there is no such clause in the constitution. Separation of state and church and similar statements are derived from the establishment clause of the First Amendment to the US constitution which reads "Congress shall make no law respecting an establishment of religion...". It can be interpreted different ways, one of them is being that the government should not favor one religion over another or no religion. According to
http://en.wikipedia.org/wiki/Separation_of_church_and_state, this view is being held by ACLU and the supreme court. Clearly, according to this interpretation, the government can provide religious services as long as those services include all religions.