ELA wins major ruling on mandated cost funding 

Legislature’s practice of deferring payments unconstitutional

In a major legal victory for schools, a San Diego Superior Court judge ruled Dec. 4 that the Legislature’s practice of budgeting $1,000 for each of the current 38 mandated programs applicable to schools and indefinitely deferring payment on the balance due on claims is unconstitutional. The judge’s ruling prohibits this deferral practice in the future.

At stake in the case is an estimated $160 million in covered activities each year going forward. “By budgeting only $1,000 and deferring the balance due, lawmakers and the governor have relied upon a gimmick to balance the education budget,” said Richard Hamilton, director of the California School Boards Association’s Education Legal Alliance.

Judge Charles R. Hayes issued the 12-page ruling that agreed with arguments made by attorneys representing CSBA and other petitioners that the California Constitution requires the state to budget full reimbursement of local governments (including school districts) for the cost of state-imposed mandates.

The state’s practice since 2002 (with the exception of 2006) of only budgeting $1,000 for each mandate created the cost shift voters prohibited with Proposition 4, approved in 1979, after schools lost the ability to raise revenues on their own.

Judge Hayes agreed, stating in his decision: “The state has improperly shifted the costs for state-mandated programs from the state to the school districts and county offices of education. This practice requires the districts and county offices to continue to provide state-mandated programs and services while deferring payment for those services to some unknown future date well beyond the one-year period of time contemplated in the government code. This could not have been the intent of the California voters when approving Proposition 4.”

The state Attorney General’s office, which represented the governor’s Department of Finance in the case, never challenged the notion that money was owed schools or that it mandated activities. But Judge Hayes dismissed the state’s position that the practice did not cause harm to schools.

“The adverse effects of the state’s failure to provide funding for mandated programs are being experienced by virtually all of the state’s school districts,” Hayes wrote in his decision.

“Districts have been forced to divert increasing amounts from their ‘unrestricted’ funds—funds that are necessary to support the core educational program—state-mandated programs that may or may not reflect local needs and priorities.”

CSBA was joined in this litigation by Clovis Unified School District, Riverside Unified School District, San Diego Unified School District, San Diego County Office of Education and San Jose Unified School District. The lawsuit was funded by the Education Legal Alliance with contributions from School Innovations & Advocacy. Petitioners were represented by Deborah Caplan and Eugene Hill of Olson, Hagel & Fishburn, LLP, with input from SI&A’s Chief Counsel, Abe Hajela.