Simpson University and Shasta Bible College officials are afraid they could lose students under an anti-discrimination bill signed last week by Gov. Arnold Schwarzenegger.

The bill bars discrimination in hiring or services on the basis of sexual orientation by any businesses or nonprofit organizations that receive state funding. The law will apply to those administering government programs filling a variety of needs, including veterans services, legal services and home-loan assistance.

Redding's two Christian colleges urged Schwarzenegger to veto the bill for fear it would deprive them of students who rely on Cal Grants -- state funding to students for higher education. The colleges' hiring policies bar homosexuals.

"The majority of our students are California residents who receive that grant," Simpson President Larry McKinney said. "What I don't know ... is whether there would be any kind of exceptions made for religious organizations" whose beliefs oppose homosexuality, he said.

But the schools have little to worry about because Cal Grants go to the students and not the institution, said Geoff Kors, executive director of the gay-rights organization Equality California. The same goes for CalWORKs grants that pay for preschool and similar financial aid, he said.

If an institution wants government funding to offer a program, it would have to change its hiring and service criteria in order to administer that program.

The bill was signed Monday after passing the Senate 23-13 and the Assembly 45-28. Assemblyman Doug LaMalfa, R-Richvale, and Sen. Sam Aanestad, R-Grass Valley, opposed it, while Assemblywoman Patty Berg, D-Eureka, supported it.

Specifically, the bill adds sexual orientation to a list of characteristics on which discrimination may not be based in state or state-funded programs. Already listed are race, national origin, ethnic group identification, religion, age, sex, color and disability.

The impetus came from reports that a man was harassed and neglected by a state Employment Development Department office because of his mannerisms, said an aide to Sen. Sheila Kuehl, D-Santa Monica, the bill's author.

Conservatives have assailed the legislation, claiming it will lead to denials of funds to businesses and groups because of their religious convictions.

Shasta Bible College President David Nicholas charges that Schwarzenegger is taking Christian conservatives for granted while appealing to liberals.

"We've supported Arnold enthusiastically as governor, ... but we feel he has betrayed us and we feel he has slapped us in the face for doing this," Nicholas said. "This has awesome implications for his popularity among conservatives and Christians in California."

But Kors said the bill received no opposition from religious organizations -- only political ones such as the Capital Resource Institute and the Campaign for Children and Families.

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