SUIT CHALLENGING PROP 98 ALLOCATION FORMALLY REJECTED, REDUCING EDUCATION ‘GUARANTEE’ BY $2 BILLION

By Kimberly Beltran, SI&A Cabinet Report | http://bit.ly/K9inwI

Wednesday, June 06, 2012  ::  A San Francisco Superior Court judge has made final his ruling rejecting claims by a coalition of school groups that last summer’s state budget illegally diverted tax revenue from the General Fund, reducing by some $2 billion what districts were guaranteed under Proposition 98.

Judge Harold Kahn confirmed his tentative March ruling on the matter June 1.

School groups, led by the California School Boards Association and the Association of California School Administrators, argued in a suit filed in September that the 2011-12 budget agreement improperly reduced funding for K-12 public education by excluding some $6 billion in sales tax and vehicle license fee revenue from the general fund without adjusting the Proposition 98 minimum funding calculation.

The sales tax and license fee revenue was placed in a separate fund to reimburse counties for taking on some state responsibilities under Gov. Jerry Brown’s county realignment program.

Schools said the move violated the intent of Proposition 98 – passed by state voters in 1988 to establish a minimum funding guarantee for schools and community colleges – and they are owed $2.1 billion under the measure’s Test 1 scenario, meaning the state must spend a specific percentage of general fund money on schools based on spending done in 1986-87.

In his terse ruling, however, Kahn said simply that there was nothing in the state constitution that prohibited the state from taking the action.

“Nothing in the language of Proposition 98 or its budget materials precludes the Legislature from assigning revenue to a special fund that previously had been deposited in the General Fund,” the judge said. “Nor, if the Legislature does so, nothing in the language of Proposition 98 or its ballot materials requires the Legislature to “rebench” that revenue for purposes of Test 1.”

The plaintiffs in the case, which also include the Los Angeles, San Francisco and Turlock Unified School Districts, are weighing their options following the judge’s ruling.

“We are disappointed in the ruling and we’re meeting with our colleagues to discuss next steps,” said ACSA Assistant Executive Director Julie White, who declined to discuss details at this point.

Following Kahn’s almost identically-worded, tentative judgment in March, H.D. Palmer, spokesman for the governor’s Department of Finance, said the administration was gratified with the ruling.

“We’re pleased that the court has issued a tentative ruling that upholds the Legislature’s determination that realignment funds are not part of the state’s general fund for purposes of Proposition 98 because they have been directed to local public safety programs,” Palmer said in a statement released at the time.

In addition to arguing that the state violated the California Constitution by artificially lowering the Proposition 98 minimum guarantee, the school groups alleged that the state also recognized that its actions would violate the Constitution, and it therefore created a “convoluted and speculative plan” to either retroactively render the diversion of funds inoperative, or to restore the legally required funding at a later date.

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