Though Jackson City Schools Superintendent Phil Howard said the school's Christian student club had a right to hang the painting, on display at Jackson Middle School since 1947, because it constituted free speech in a "limited public forum."
But school officials felt that the lawsuit would put too large a strain on the district's finances.
“Our insurance company denied coverage, and we cannot risk taxpayer money at this time,” Howard said in a statement.
After the club moved the portrait to the local high school, the American Civil Liberties Union of Ohio and the Freedom From Religion Foundation, representing the parents and student, filed a restraining order to have the portrait taken down.
Howard also told Fox 28 in Columbus that there was risk the Christian student group, the Hi-Y club, would consider a lawsuit.
Obama 'selfie' photographer speaks out: 'Photos can lie'
Mena Suvari shares her delightfully awkward Christmas card photo