Level 3 Developer Fees are Again Moving Forward after Latest Court Decision

August 2016
Number 55

A recent court decision has again opened the door for eligible school districts to impose ‘Level 3’ developer fees. As Lozano Smith previously reported, the State Allocation Board (SAB) took unprecedented action in May to authorize eligible school districts to collect Level 3 fees. SAB’s determination that state funds are no longer available for new school construction, which triggers the Level 3 fees, was challenged in court by the California Building Industry Association (CBIA), and a temporary restraining order (TRO) was issued halting further action by SAB to allow for collection of Level 3 developer fees. On August 22, 2016, the Sacramento County Superior Court issued a ruling denying CBIA a preliminary injunction and lifting the TRO. As a result of this latest ruling, SAB is again permitted to authorize school districts to impose Level 3 developer fees. (For further discussion of the SAB’s actions, see 2016 Client News Brief No. 33.) In light of a possible appeal by CBIA and the upcoming November statewide bond election, the question of how to move forward remains somewhat clouded.

Level 3 fees were intended as part of Senate Bill (SB) 50 essentially to replace matching funds from the state for new construction and modernization projects when state funding is not available. As a result, they roughly double ‘Level 2’ fees currently being collected by eligible school districts. As soon as the SAB took its action in May, CBIA immediately filed a lawsuit claiming that state funds remained available, largely because hardship funds for the Seismic Mitigation Program still exist. The TRO issued by the court in May did not resolve the CBIA’s claims for the long-term.

After considering the further arguments made by CBIA and SAB, the court found that no state funding is available within the meaning of SB 50, in large part because the amount approved by SAB for “next in line” funding applications exceeds the amount of available state funds for new construction. The court concluded that CBIA had demonstrated “no likelihood of success on the merits” of its claims and terminated the TRO. As a result, the SAB may now proceed to “notify the Secretary of the Senate and the Chief Clerk of the Assembly, in writing” of its determination that state funds are not available, which will open the door to the levying of Level 3 fees by individual school districts in accordance with law.

Although the recent ruling is good news for many school districts, it also may not be the end of the story. CBIA has expressed intent to oppose all efforts by the SAB to authorize Level 3 fees. It is possible that CBIA may rapidly appeal the superior court’s decision, and further may request that the trial court or the court of appeal stay the decision, in another attempt to halt imposition Level 3 fees. Additionally, the court’s denial of the injunctive relief does not terminate CBIA’s case, which may continue to move forward in the court.

In addition to a potential appeal, there are several practical issues facing school districts interested in levying Level 3 fees. Only school districts who are eligible for Level 2 fees may impose Level 3 fees; this issue will not be immediately relevant for school districts who have been eligible only for Level 1 statutory fees. Additionally, adoption of Level 3 fees may be only a temporary measure in place for the next several months. If voters approve the Kindergarten through Community College Public Education Facilities Bond Act of 2016 (Proposition 51), a $9 billion school bond measure on the November ballot, Level 3 fees will likely no longer be authorized once the SAB again begins to approve and fund apportionments.

Another consideration is that Level 3 fees are, by the terms of SB 50, a “supplemental” fee above the amount of the Level 2 fee. Once state funds are received, the supplemental amount (the difference between the Level 2 and Level 3 fees) must either be reduced from the state’s future funding to a school district or must be reimbursed to the developer who paid the fee. School districts can negotiate with developers as to whether and how the Level 3 supplement may be reimbursed to developers. With these thoughts in mind, and with the political pressure that developers may bring in some communities around the impact of school fees on the cost of housing, school districts should carefully evaluate whether and how to levy Level 3 fees and address the reimbursement issue at this time.

Should eligible school districts decide to proceed, they should first review their existing school facilities needs analyses and previously adopted board resolutions for Level 2 fees to determine what procedural steps remain to impose the Level 3 fees. School districts are encouraged to work with their legal counsel to ensure that they are taking the appropriate and necessary steps to impose Level 3 fees. It is very likely that local developers and CBIA will be watchdogging Level 3 fee imposition and that school districts may face legal challenges to any perceived procedural defect.

Lozano Smith’s developer fee handbook addresses imposition of Level 3 fees and related procedures, and remains available to current Lozano Smith school district clients at no cost, and to other school districts at a low cost. School districts that have not previously ordered the handbook can do so here or by contacting Client Services at clientservices@lozanosmith.com or (800) 445-9430.

For any questions about school impact fees, or Level 3 fees in particular, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Harold Freiman

Megan Macy

Shawn VanWagenen

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

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California Supreme Court Provides Clarification on Application of Anti-SLAPP Provisions to Claims Involving both Protected and Non-Protected Speech

August 2016
Number 54

Resolving a statewide split in authority, the California Supreme Court has clarified the scope of California’s anti-SLAPP provisions (Code Civ. Proc., § 425.16, et seq.), which prohibit efforts to chill free speech and access to the courts, and their application to causes of action arising from protected and unprotected activity, often called “mixed causes of action.” In Baral v. Schnitt (August 1, 2016, No. S225090) __ Cal.4th __ <http://www.courts.ca.gov/opinions/documents/S225090.PDF&gt;, the Supreme Court stated unequivocally that any legal claim challenging both protected and unprotected speech, no matter how pled, is subject to a “special motion to strike” as provided by the anti-SLAPP statute.

California’s anti-SLAPP law protects a person’s rights of petition and free speech in connection with public issues by subjecting lawsuits based on any of the “protected” activities listed therein to a special motion to strike, which may eliminate the claims early in the litigation process. Complaints based on these types of activities are prohibited as they are considered “strategic lawsuits against public participation,” or “SLAPPs,” designed to chill the exercise of certain rights, including free speech rights and right of access to the courts. An anti-SLAPP motion may only be overcome if the plaintiff defending it is able to demonstrate a probability of succeeding with their claim. If a defendant makes a successful anti-SLAPP motion, then the portions of the complaint successfully challenged by the motion are thrown out and he or she is entitled to reasonable attorney’s fees.

The Supreme Court’s ruling brings much-needed clarity to what until now has been a murky situation fueled by conflicting opinions from the state’s courts of appeal and eliminated an oft-used end-run around the statute. Prior to the ruling, litigants would “plead around” an anti-SLAPP motion by basing causes of action in a complaint on a mix of protected and unprotected speech. This tactical maneuver is now clearly ineffective in avoiding an anti-SLAPP motion. The ruling may also reduce lawsuits partially based on free speech, petitioning activity and other “protected activity” included in California’s anti-SLAPP statute – especially considering that the party on the losing end of an anti-SLAPP motion is responsible for the other party’s attorney fees.

In Baral, two former business partners were embroiled in litigation over the sale of their company. One of the partners filed a complaint against the other, alleging among other things that the other partner intentionally prevented him from participating in an audit designed to value the company in anticipation of the sale. In response to the complaint, the second business partner filed an anti-SLAPP motion, claiming that the audit was protected speech. The trial court denied the motion, ruling that the state’s anti-SLAPP law did not apply because the causes of action listed in the lawsuit were based on both protected and unprotected speech; in other words, the causes of action were “mixed.” The Court of Appeal agreed, relying on earlier case law that said that a cause of action alleging both protected and unprotected speech is not subject to the special motion to strike.

The Supreme Court overturned the Court of Appeal’s decision. In doing so, it recognized that California’s appeals courts offered differing opinions regarding mixed causes of action and whether they were subject to the protections of the anti-SLAPP statutes. The Supreme Court said that since the state’s anti-SLAPP law is designed to protect a defendant’s conduct “from the undue burden of frivolous litigation,” its protections should not be foreclosed based on the way a complaint is framed.

For further information on this case or California’s anti-SLAPP law, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Paul McGlocklin

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

U.S. District Court in Texas Issues Preliminary Injunction Enjoining Federal Departments of Justice and Education’s Joint Guidance on Transgender Student Rights in Schools under Title IX

August 2016
Number 53

A United States District Court in Texas has issued a preliminary injunction barring the United States Department Justice (DOJ), Department of Education (DOE) and other federal agencies from enforcing the DOJ and DOE’s May 13, 2016 joint guidance regarding the rights of transgender students in schools under Title IX of the Education Amendments of 1972 (Title IX) and Title IX’s regulations (Joint Guidance). (See 2016 Client News Brief No. 31.) (State of Texas v. United States (N.D. Tex. Aug. 21, 2016, No. 16-00054).) The plaintiffs in the case include the states of Texas, Alabama, Wisconsin, West Virginia, Tennessee, Arizona, Maine, Oklahoma, Louisiana, Utah, Georgia, Mississippi, and Kentucky.

While only certain states are plaintiffs in this case, and the issuing court is located in Texas, the preliminary injunction states that it applies to “all states,” thus appearing to enable states across the nation to “invoke” the preliminary injunction as a basis to halt DOJ and/or DOE actions regarding enforcement of the joint guidance. This said, the injunction also expressly notes that its effect does not reach state laws on point. At this time, it is unclear how the federal government will proceed with regard to states and school districts within states that are not parties to this litigation, including California and its school districts. An emergency appeal of the court’s preliminary injunction by the defendant federal agencies is anticipated.

Perhaps most importantly for California school districts, as most are aware, California’s Assembly Bill (AB) 1266 has been in effect in this state since January 2014. AB 1266 provides that a student must be permitted to participate in sex-segregated school programs and activities, including athletic teams and competitions, and use facilities consistent with his or her gender identity, irrespective of the gender listed on the student’s records. The California Department of Education issued a legal advisory and FAQs on complying with AB 1266 earlier this year. (See 2016 Client News Brief No. 16.) Thus, regardless of whether this most recent federal court order may halt federal agency enforcement of the joint guidance related to transgender students, school districts in California must continue to comply with state law under AB 1266 (Ed. Code, § 221.5, subd. (f).)

As a final note, the United States Supreme Court recently signaled that it may be poised to grant review in a case out of the United States Court of Appeals, Fourth Circuit, which directly involves the DOJ and DOE’s interpretation of Title IX and its regulations relative to transgender students, and as stated in the joint guidance. The Fourth Circuit ruling at issue held that the federal interpretation of Title IX and its regulations relative to transgender student rights and restroom/locker room access was entitled to “controlling weight.” If the United States Supreme Court were to grant review in the case, it remains unclear whether any ultimate opinion in that case relative to federal law would have any impact on California’s AB 1266.

If you have questions about this preliminary injunction order discussed above, or state or federal law regarding transgender student rights, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Sloan Simmons

Aimee Perry

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

California Energy Commission Sets Eligibility Deadline for Proposition 39 Funds

August 2016
Number 52

Local educational agencies (LEAs) must act soon to be eligible for funding under the Proposition 39 program. The California Energy Commission (CEC) stated earlier this month that energy expenditure plans (EEPs) will not be accepted after August 1, 2017. That leaves less than one year for LEAs to complete their EEPs.

The California Clean Energy Jobs Act, enacted by voter initiative (Prop 39) in 2012, provides funds to all LEAs in California for a variety of energy efficiency and conservation projects. In order to be eligible for funding, LEAs must submit an EEP to the CEC and receive approval. The EEP must include detailed information regarding proposed energy efficiency measures including energy savings, energy cost savings, measure costs, rebates, and other non-repayable funds to demonstrate a qualified savings-to-investment ratio. (For more information about the Prop 39 program and recent changes to the applicable guidelines, see 2016 Client News Brief No. 40.)

Until recently, the only significant deadline of concern to LEAs was June 30, 2018, which is the last day to “encumber” funds under the Prop 39 program. An encumbrance is defined by the California Department of Education as a “commitment in the form of a purchase order or offer to buy goods or services.” That means that LEAs have until June 30, 2018, to enter into an agreement to buy goods or services with Prop 39 funds. However, the CEC has now created the August 1, 2017 deadline with the intent of allowing sufficient time for “the planning process to receive allocation amounts, identify project energy measures and specifics, EEP development, submittal and approval, funding disbursement, and conclude with encumbering funds by the June 30, 2018, deadline.” This new eligibility deadline substantially shortens the window of opportunity to qualify for Prop 39 funding.

As this new deadline is likely to create a rush to complete EEPs, LEAs that have not already done so should begin the process now. If you have any questions regarding the Prop 39 program or energy efficiency and conservation projects, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Devon Lincoln

Shawn VanWagenen

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Court of Appeal Confirms that CalPERS Members Must Have Base Salary Listed on Publicly Available Pay Schedule

August 2016
Number 51

A California appeals court has affirmed earlier rulings that retirement benefits under the California Public Employees’ Retirement System (CalPERS) may only be based on salaries listed on publicly available pay schedules. In June, the California Court of Appeal, Third District upheld a CalPERS decision that significantly reduced the retirement benefits of the City of Vallejo’s former city manager. (Tanner v. California Public Employees’ Retirement System (June 28, 2016, No. C078458) ___ Cal.App.4th ___ <http://www.courts.ca.gov/opinions/documents/C078458.PDF>.)

Joseph Tanner’s original contract with the City of Vallejo provided an annual base salary of $216,000 plus other types of compensation, including an automobile allowance, employer contributions to a deferred compensation plan, management leave paid as salary and payment of Tanner’s required CalPERS contribution. The additional items of pay listed separately in his contract were to be converted to base salary. The city subsequently amended its agreement with Tanner to include the special compensation items as base salary, resulting in a base salary of $305,844. Tanner worked approximately two years under the revised contract and then retired. Shortly after his retirement, CalPERS notified Tanner that it would compute his retirement benefit solely on the original base salary of $216,000.

CalPERS provides retirees with a defined benefit plan that bases a member’s retirement benefits on a formula that takes into account a member’s years of service credit, age at retirement and final compensation. In the CalPERS system, “compensation earnable,” or the portion of an employee’s compensation reported to CalPERS, includes only “payrate” and “special compensation.” Generally payrate, irrespective of whether an employee is a member of a group or class of employees, means the employee’s normal monthly rate of pay or base pay that must be paid in cash pursuant to a publicly available pay schedule.

Tanner argued that his amended employment contract and a related “cost analysis” document prepared by city staff that described the calculation of Tanner’s increased base pay functioned as a pay schedule. The court of appeal rejected this argument, explaining that the amended employment contract, or documents relating to that amended contract, do not equal or substitute for an adopted “pay schedule” under Government Code section 20636 and therefore cannot be used to establish “payrate” under applicable retirement law. The court concluded that these documents only applied to Tanner personally and did not apply to any other person or position, noting that the city “made an exceptional arrangement with Mr. [Tanner] to provide him significant compensation … well above the salary paid to the last Vallejo city manager.” Furthermore, the City Council failed to adopt these documents as “pay schedules.” The court concluded that it would be difficult for a member of the public to locate the new base salary figure in either document.

The court noted that the purpose of having a publicly available pay schedule is to provide transparency by permitting the public to identify the “payrate” that will or may be used to determine the amount of an employee’s retirement benefit. This requirement was part of a reform effort in the early 1990s to combat pension spiking (i.e., intentional inflation of a public employee’s final compensation upon which their retirement benefits are based). Finally, the court noted that a broad interpretation of what constitutes a pay schedule would permit an agency to provide additional compensation to a particular high-ranking official any time a document listing his or her pay became publicly available, which is contrary to the law’s intent of requiring that all CalPERS members be paid off a publicly available pay schedule.

This decision impacts all school administrators and local government employees who do not have their base salary or pay rate listed on a publicly available pay schedule. An employment contract alone will not be sufficient. Employers should be aware that in 2011, CalPERS adopted regulations at title 2, California Code of Regulations, section 570.5, setting forth the requirements for a document to constitute a pay schedule. Employers should ensure that the adopted pay schedules applicable to all CalPERS members comply with these regulatory requirements.

If you have questions about this decision or any other issues impacting retirement benefits, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Inna Volkova

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

IRS Issues Proposed Regulations Regarding Opt-Out Payments and the Affordable Care Act

August 2016
Number 50

The Internal Revenue Service (IRS) released proposed regulations on July 8, 2016 that would require employers to include the dollar value of opt-out payments as part of an employee’s required medical benefit premium cost contribution when calculating affordability of health care coverage under the Affordable Care Act (ACA). The IRS treatment of opt-out arrangements impacts the employer mandate to provide affordable health care through the ACA.

Pursuant to the employer mandate of the ACA, if an employee’s required contribution toward medical premium costs exceeds a specified percentage of an employee’s household income, an employer may be subject to penalties. As we reported earlier this year, the IRS issued Notice 2015-87 (Notice) on December 29, 2015. (See 2016 Client News Brief No. 28.) The notice provided guidance on how various health care coverage models will be treated for purposes of determining an employee’s required contribution towards the cost of self-only employer-sponsored medical benefit coverage.

Opt-Out Payments: IRS Requires Value of Non-Eligible Opt-Out Payments to be Added to Cost of Employee’s Contribution in Affordability Calculation Formula

Opt-out arrangements were addressed in the notice. The notice distinguished between (1) unconditional opt-out arrangements (i.e., where a payment is provided to an employee solely because the employee declined coverage) and (2) conditional opt-out arrangements (i.e., where a payment is conditioned on an employee satisfying a meaningful requirement in addition to declining coverage). The proposed regulations reframe this distinction. Under the proposed regulations, employers are required to include the amount of an opt-out payment in the affordability formula calculating an employee’s required contribution for purposes of the employer mandate regardless of whether the employee actually receives the opt-out payment, unless the arrangement qualifies as an “eligible opt-out arrangement.”

For example, consider an employer that offers its employees a $50 per month opt-out payment for declining health care coverage that would otherwise cost employees at least $200 per month for self-only coverage. Under the proposed regulations, the employer would combine the value of the opt-out payment with the cost of coverage and report the monthly required employee contribution as $250 per month unless the opt-out payment was made pursuant to an eligible opt-out arrangement.

Eligible Opt-Out Arrangements

In order to qualify as an eligible opt-out arrangement, the arrangement must provide all of the following:

  1. The employee’s right to receive the opt-out payment must depend on:
    1. The employee declining to enroll in the employer-sponsored coverage; and
    2. The employee providing reasonable evidence of alternative minimum essential coverage (other than coverage in the individual health-care coverage market) for the employee and the employee’s expected tax family. Having an employee attest in writing may qualify as reasonable evidence of alternative coverage.
  2. An opt-out payment will not be made if the employer knows or has reason to know that the employee or any member of the employee’s expected tax family does not have or will not have the alternative coverage;
  3. Evidence of the alternative coverage must be provided no less frequently than every plan year to which the eligible opt-out arrangement applies; and
  4. Employees must provide evidence of the alternative coverage no earlier than a reasonable period of time before the commencement of the period of coverage to which the eligible opt-out arrangement applies.

For purposes of the employer mandate, the proposed regulations regarding opt-out arrangements are expected to be applicable for plan years beginning on or after January 1, 2017, as long as the opt-out arrangement was in place on or before December 16, 2015.

Collective Bargaining Agreement Opt-Out Provisions

The proposed regulations also clarify that an opt-out arrangement required under the terms of a collective bargaining agreement in effect before December 16, 2015 will be treated as having been adopted prior to December 16, 2015. Further, an employer party to such a collective bargaining agreement is not required to add the amount of an opt-out payment to the employee’s required contribution when applying the affordability calculation until the later of: (1) the beginning of the first plan year that begins following the expiration of the collective bargaining agreement in effect before December 16, 2015 (disregarding any extensions on or after December 16, 2015) or (2) the applicability date of the regulations (currently anticipated to be January 1, 2017).

Section 125 Plans

Note that the proposed regulations also provide an exception for employer contributions to a section 125 plan that can be used by the employee to purchase minimum essential coverage. The IRS does not consider these payments “opt-out payments,” regardless of whether the employee may receive the amount as a taxable benefit. However, please note that employer contributions to a section 125 plan may also impact affordability if the plan is not structured as a “health flex contribution.”

In light of these proposed regulations, employers with opt-out arrangements should review their arrangements for relief eligibility and/or potential impacts on the affordability of employer-sponsored health care coverage.

For a discussion of how opt-out payments may also impact the regular rate of pay for overtime purposes under the Fair Labor Standards Act (FLSA), please refer to our prior Client News Brief regarding the Ninth Circuit Court of Appeals’ decision in Flores v. City of San Gabriel (9th Cir., June 2, 2016, No. 14-56421) __ F.3d __ [2016 U.S. App. LEXIS 10008]. (See 2016 Client News Brief No. 47.)

For further information regarding the treatment of opt-out arrangements, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Karen Rezendes

Niki Nabavi Nouri

 

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

U.S. Supreme Court Reaffirms “Strict Scrutiny” Standard Governing the Use of Race in Public College and University Admissions

August 2016
Number 49

In Fisher v. University of Texas at Austin (June 23, 2016) No. 14-981 579 U.S. __ [2016 U.S. LEXIS 4059], the United States Supreme Court reiterated its 2013 holding that public higher education institutions may only consider an applicant’s race in deciding whether to admit that student if the method by which race is considered is narrowly tailored to meet a compelling state interest (this standards is known as “strict scrutiny”). While courts are entitled to take at face value a higher education institution’s determination that the achievement of the benefits of a racially diverse student body is central to the school’s educational program, the institution must still show that the consideration of race meets the strict scrutiny test.

Fisher was originally filed by a Caucasian woman who was denied admission to the University of Texas at Austin’s undergraduate program in 2008. (Fisher v. University of Texas at Austin (2013) 133 S. Ct. 2411; see 2013 Client News Brief No. 37.) Believing that less qualified applicants were admitted over her due to their race, Fisher sued the university, claiming that the school’s use of race in admissions violated her Fourteenth Amendment right to equal protection of the laws. In the 2008 iteration of the case, the Supreme Court ultimately returned the case back to the lower court to determine whether the university’s plan to use race in admissions met the strict scrutiny standard without deference to the university’s position.

In the Fisher case’s second and most recent trip to the nation’s highest court, the Supreme Court held that the university’s race-conscious admissions program is lawful under the Fourteenth Amendment’s Equal Protection Clause. The court set out three controlling principles for assessing the constitutionality of a public university’s affirmative action program. First, a university must show “with clarity” that its purpose or interest in a racially diverse student body is both constitutionally permissible and substantial, and that its use of racial classifications is necessary to achieve that purpose. Specifically, the court held that the purposes of providing an academic environment that offers a robust exchange of ideas, exposure to different cultures, preparation for the challenges of an increasingly diverse workforce and acquisition of competencies required of future leaders qualify as compelling interests.

Second, the decision to pursue the educational benefits that flow from student body diversity cannot not be executed by imposing a fixed quota or otherwise defining diversity as some specified percentage of a particular racial group.

Third, a university must show that a nonracial approach would not promote its interest in the educational benefits of diversity, and that its race-conscious program would promote that interest, at an acceptable administrative expense. This third prong “does not require exhaustion of every conceivable race-neutral alternative,” but does require colleges and universities to meet the burden of demonstrating that available and workable race-neutral alternatives are inadequate.

Fisher clarifies the very limited measure of deference afforded to public colleges and universities regarding the use of race in admissions. Though courts may defer to the institutions’ reasonable articulations of their compelling interest in using race in admissions, courts will heavily scrutinize the means by which those institutions achieve their goal. As a result, public colleges and universities should review their admissions practices to ensure they comply with the Supreme Court’s rulings in Fisher.

Please note that distinct from federal constitutional equal protection principles covered in Fisher, the California Constitution, article 1, section 31, subdivision (a), put in place through voter approval of Proposition 209, prohibits discrimination or the granting of preference to any individual based on race, sex, color, national ethnicity or national origin in the operation of public education. The most recent judicial opinion involving Proposition 209 was handed down in 2009. In American Civil Rights Foundation v. Berkeley Unified School District (2009) 172 Cal.App.4th 207, the California Court of Appeal held that a school district’s consideration of neighborhood demographics in student assignment for the purposes of achieving social diversity does not violate Proposition 209. This opinion confirms that Proposition 209 is not an absolute bar to consideration of race in policies aimed at achieving social diversity in schools.

If you have any questions regarding the Fisher decisions or higher education legal issues in general, or application of California’s Proposition 209 to K-12 or higher education public schools, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

 

Written by:

Sloan Simmons

Partner

©2016 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.