March 2011
Number 8

In a lawsuit over the funding of educational mandates imposed on local school districts by the state, a California court of appeal has held that the state’s practice of appropriating only a nominal amount for reimbursement of mandate costs while deferring full payment to an unspecified future date is unconstitutional. Despite this finding, the court in California School Boards Association v. State of California (2011) ___Cal.App.4th___ refused to compel the state to reimburse local school districts for $900 million in costs that the districts incurred in order to comply with prior mandates.

The California constitution stipulates that when the Legislature enacts a law requiring a local school district to implement a new program or service, the state must pay the cost and is prohibited from transferring the cost to the school district. The Legislature has imposed many mandates relating to a variety of matters, including student health screenings, teacher incentive programs, criminal background checks, and AIDS prevention programs. Due to ever-increasing budget shortfalls, however, in 2002 state lawmakers began appropriating just $1,000 per year for each of the 38 mandated programs across the state. The state has deferred full appropriation to an unspecified future time, referring to the funding method as an “Education Credit Card.”

The petitioner school districts claimed that the state’s deferral practice was unconstitutional and that they should be reimbursed for costs associated with state-mandated programs. The districtsalso claimed that there was no adequate process by which to challenge their obligation to implement unfunded mandates. The state, on the other hand, argued that it was not in violation of the constitution because the constitutional provisions did not require the mandates to be paid “immediately,” and the nominal funding meant that the mandates did not qualify as “unfunded.” The state also claimed that the relief sought by the school districts was improper because a school district, like other municipalities, is permitted under California Government Code section 17612(c) (“section 17612(c)”) to file an action in Sacramento County Superior Court and receive a judicial declaration that it need not comply with a mandate for one year.

The appellate court ruled that a nominally-funded mandate or a deferred mandate payment is not equivalent to a funded mandate. Instead, it found that the very purpose of the constitutional provisions requiring the state to fund educational mandates is to prevent the state from shifting responsibility for mandate costs to local school districts. By paying for the mandates with a “credit card” with no specified date for full payment, the state defeats the intent of the constitutional provision. The court was unconvinced by the state’s assurances that the full amount would be repaid with interest, noting instead that this repayment method does not address the cost burden associated with the mandates.

Although finding the state’s funding method to be unconstitutional, the court refused to compel the state to reimburse the $900 million in costs the school districts incurred to pay for unfunded mandates, reasoning that the “delicate” system of checks, balances and separation of powers prevented the court from compelling the Legislature to make funding available. The court also held that the proper interpretation of section 17612(c) allows school districts and municipalities to file an action in Sacramento County Superior Court to declare both unfunded and underfunded mandates unenforceable.

The law surrounding educational mandates is developing rapidly, and it is possible that the California Supreme Court may agree to review this decision. School districts should confer with legal counsel to learn more about options for enforcing mandates. If you have any questions about mandates or school finances generally , please do not hesitate to contact one of our eight offices located statewide or consult our website.

Gregory A. Wedner
Sacramento Office

Jonathon Dale
Monterey Office

 © 2011 Lozano Smith