THERE is no question who the supreme authority is in Karen Regular's first-grade classroom, where youngsters watch a video of a squeaky-voiced puppet tell them: ''He's got the whole world in His hands.''
Nor in Betty Lou Slade's fourth- grade class, where lettering over a chalkboard reads: ''Let the beauty of the Lord our God be upon us.''
Welcome to the Eugene Vaters Pentecostal Academy, a K-6 school with 346 students in St. John's, Newfoundland's capital. Like all schools here, Vaters is both religious and fully funded by taxpayers.
As debate rises in the United States over the merits of such funding, Newfoundland's all-church-run school system, which has existed for nearly three centuries, is about to see historic change in the opposite direction.
Amid a fusillade of accusations by church groups that their rights are about to be trampled, the Canadian Parliament will debate in coming weeks the Newfoundland government's call to revoke the constitutional provision that established Newfoundland's denominational school system.
''Our fear is that if government has its way today, and our school goes purely public, someone's going to come here [whose parents] object to Christianity in any form,'' says Byron Head, principal at Eugene Vaters Pentecostal Academy. ''In the US [public schools] lost the Lord's Prayer that way.''
Newfoundland's system is unique in Canada. The province sets educational standards and pays the costs, but seven denominations manage and operate schools. By contrast, the constitutional church-state separation in the US prevents government from funding religious schools.
Newfoundland's denominational system was written into the Canadian Constitution when Newfoundland joined the Canadian federation in 1949. To change it requires a constitutional amendment. Led by Premier Clyde Wells, the provincial legislature Oct. 31 voted 31 to 20 to seek an amendment. That led to the Canadian Parliament's deliberations.
But before it sought the change, the provincial government won popular backing for school reform when Newfoundlanders voted 54 to 46 percent in a September referendum to remove the right of provincial churches to build and operate publicly funded schools.
In the weeks leading up to the historic vote, Protestants and Roman Catholics fought the reform in an unusual display of unity.
''We see this as a direct attack on minority rights,'' says Gerald Fallon, executive director of the Catholic Education Council in St. John's. ''Never in the history of Canada has the government taken away minority rights.''
The province says it can save C$30 million [US$22 million] annually by replacing the province's 27 school boards, operated by the Roman Catholic, Pentecostal, and five other denominations, with 10 interdenominational boards.
But church groups are adamant that the provincial government's move is really aimed at stripping churches of their constitutional rights and replacing religious-based schools with secular ones. Control over teacher hiring, for example, would be lost.
''I think there's a general trend across Canada that public-sector schooling is the only way to school children,'' Mr. Fallon says. ''We don't agree with that.''
Some analysts, however, suggest that other factors too sensitive for the government even to articulate in its campaign constituted the major reason a majority of Newfoundlanders wanted their system changed.
''About 70 percent of people say some religion in the school is okay,'' says Mark Graesser, a political scientist at Memorial University in St. John's. ''But they feel religious indoctrination is no longer desirable. They feel it's a discriminatory system that favors established religions against Baptists, Lutherans, Jews, and Buddhists.''
If Parliament votes through the necessary constitutional change, as many expect, it will mean a radical shift that some say will wipe out much, if not most, religious education in the province. With no strong tradition of private schooling, many predict that few parents will be willing to pay extra to send their children to religious schools.
''The idea of Catholics paying to operate their own schools as they do in US is laughed at here,'' says Professor Graesser, who has polled extensively on the school issue.
Some warn that the impending shift in Newfoundland could have a ripple effect in other provinces. Ontario, Alberta, Quebec, and Saskatchewan all have constitutional protection for public funding for Catholic schools.
''If government can use a referendum to take away rights of a religious minority, then no minority in Canada is safe,'' says Patrick Meany, president of the Ontario Separate School Trustees Association, which represents 53 Catholic school boards with 600,000 students across Ontario.
Other observers argue that Newfoundland is not likely to set a precedent. Indeed, some see a counter trend. A Jewish group in Ontario has filed a legal action seeking Canada's Supreme Court to rule that Jewish schools also must receive public funding - a position Catholic school officials in Ontario say they support. That, in turn, could lead to funding for Muslim and other denominations.
Meanwhile, school officials in Newfoundland say there is a last-ditch effort under way to lobby Prime Minister Jean Chretien. If that fails, something more than education will be lost, they say.
''If I feel a child needs spiritual counseling, there's nothing to prohibit me from praying with him or her,'' says Eugene Vaters's principal, Mr. Head. ''We're afraid we'll end up like a lot of schools in Canada and the US where that privilege has been taken away.''