STATE OWES SCHOOLS, SUIT SAYS: Districts join advocates in seeking $1 billion for mandated programs + Background Press Release

by Judy Lin - Sacramento Bee

Wednesday, November 21, 2007 -- Education advocates are expected to file suit today against the state of California for shortchanging school districts $1 billion – a move they say has left districts feeling used like "credit cards."

The California School Boards Association, joined by a handful of school districts, wants the state to reimburse K-12 districts for programs they say the state required and should have paid for.

"The state expects schools to foot the bill for millions of dollars in mandated costs that they do not fund and rarely pay back," Kathy Kinley, president of the California School Boards Association, said in a statement.

Richard L. Hamilton, director of the Educational Legal Alliance, said the state owes school districts $415 million for programs it underfunded and $475 million for programs it never funded. The current budget contains $160 million in unfunded programs, he said.

"These are claims filed by school districts over the years," Hamilton said.

Kinley argued that the state paid only a fraction of what it owed this year, appropriating just $38,000.

Finance Department spokesman H.D. Palmer said the Schwarzenegger administration has not seen the lawsuit, which is expected to be filed in Sacramento Superior Court.

"We will have further comment once we have reviewed the particulars of this lawsuit," Palmer said. "Regardless of the suit, K-12 has been and will be receiving the lion's share of budget dollars even in a challenging fiscal environment."

Under a change in the state constitution instituted in the wake of property-tax-cutting Proposition 13, the state is required to reimburse local agencies when it mandates new programs or a higher level of service.

In the past, state finance officials have said school districts became increasingly demanding in requesting payment over the years.

Education advocates say Gov. Arnold Schwarzenegger and the Legislature have avoided paying for a wide range of additional responsibilities given to schools.

The anticipated lawsuit is expected to seek reimbursement of "new programs and higher levels of service" the state demanded of school districts. School districts involved in the suit argue they never got paid.

Besides the school boards association, plaintiffs include the San Diego County Office of Education, Riverside Unified School District, San Jose Unified School District and Clovis Unified School District.

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Background Press Release: CSBA, EDUCATION LEGAL ALLIANCE FILE LAWSUIT TO COMPEL PAYMENT BY STATE FOR MANDATES ON K-12 SCHOOLS

2007-08 mandates cost $160 million, only $38,000 appropriated in budget

FOR IMMEDIATE RELEASE November 20, 2007

by Brad Sherwood, CSBA Public Information Officer | Office: 916-669-3244

The California School Boards Association’s Education Legal Alliance, along with the San Diego County Office of Education, Riverside Unified School District, San Jose Unified School District and Clovis Unified School District as co-petitioners/plaintiffs, on November 21 will file a lawsuit against the State of California challenging its authority to defer state mandate payments to public schools. The case seeks to compel the state to comply with its constitutional obligation to fully reimburse school districts and county offices of education for all new programs or higher levels of service imposed upon them by the state. The case also seeks to set aside as unconstitutional those provisions of law by which the state has justified the “deferral” of its debt to school districts/ county offices.

“The state expects schools to foot the bill for millions of dollars in mandated costs that they do not fund and rarely pay back,” said Dr. Kathy Kinley, CSBA president. “Although the cost of the K-12 mandates for 2007-08 is estimated at $160 million, this year’s state budget appropriates only $38,000, or $1,000 per mandate statewide. The carry-over debt from prior years is approximately $415 million.”

Background:

For a number of years, CSBA and its Education Legal Alliance, as well as other education associations working on the state budget, have questioned the authority of the state to essentially defer payment of the 38 K-12 reimbursable state-mandated programs.

Starting with the 2002-03 fiscal year, the Legislature has failed to include an appropriation in the budget act to fully fund the mandate claims submitted by school districts/county offices. Instead, the Legislature has included in the budget acts, and the Governor has approved, only $1,000 per mandate, even though the costs of these mandates, and the claims submitted, far exceed that amount. The carried-over debt is known as the “credit card debt.”

The 2006-07 state budget appropriated some $900 million to fund the accumulated debt and added some funding for 06-07 mandates. However, this appropriation failed to pay off the past debt and was inadequate to cover the current year obligation. In the 2007-08 budget, the Legislature and the Governor have again pulled out the “credit card,” thus, deferred payments are a reality along with a continuation of previous debt incurred.

Summary of Case:

In 1978, California voters approved Proposition 13 which imposed significant constitutional limitations on the ability of state and local governments to impose new taxes, especially increased property taxes. A year later, constitutional spending limits were imposed on state and local governments, including school districts. In order to prevent the state from shifting financial responsibility for new programs or services to local entities (whose taxing powers had been limited via Proposition 13), the voters imposed a constitutional requirement that whenever the state mandates a new program or

higher level of service on any local government (including school districts), it must reimburse the local government for the costs incurred.

Thus, school districts/county offices are being forced to bear the costs of new programs and higher levels of service mandated by the state, until some future time when the state chooses to appropriate funding. The last time this “credit card” debt occurred, school districts/county offices had to wait five fiscal years before any effort was made to pay off the deferred debt.

Status of the Case:

The lawsuit will be filed November 21 in San Diego County Superior Court and the state has 30 days to respond. The case is California School Boards Association Educational Legal Alliance et al v. State of California.