The legislation has the potential to allow legal action against religious colleges and universities that teach traditional Christian views on sexuality and marriage.
The National Hispanic Christian Leadership Conference wrote the letter which claims SB 1146 would "eliminate religious education in California."
The Washington Times has reported that they argue that it would not allow the education institutions be true to their beliefs.
It says: "At a minimum, if passed, this bill would substantially interfere with the ability of California's faith-based colleges and universities to conduct themselves in a manner consistent with their beliefs.
"This bill would make religious institutions vulnerable to anti-discrimination lawsuits and unprecedented government policing."
The letter also said that the law has the potential to remove faith-based higher learning completely.
State Senator Ricardo Lara, who is behind the SB 1146 bill, said that it will "close a loophole" in state law that gives higher education religious institutions a "license to discriminate."
Mr Lara said in a statement that: "All students deserve to feel safe in institutions of higher education, regardless of whether they are public or private.
"California has established strong protections for the LGBTQ community and private universities should not be able to use faith as an excuse to discriminate and avoid complying with state laws.
"No university should have a license to discriminate."
The legislation would mean that religious universities that get state student financial aid would not be able to discriminate on the basis of gender identity or sexuality when it comes to admissions, housing allocation and hiring.
In the past California has allowed religious institutions to be exempt for anti-discrimination policies.
