Wolf, out of curiosity, if the problem is only the State’s inability to pay anything to a facility that teaches religious studies, then why not (at least for the higher grades, say 6+) have the Yeshiva portion of the education take place in local shuls, and then have the Yeshivos teach only secular studies in their buildings and be fully funded by the State?
This would probably bring Tuition down to a fraction of what it is now.