Directed by the Legislature to reconsider whether the MRP constitutes a reimbursable mandate in light of statutory changes since the commission ruling, the commission has reversed itself effective July 1. The same legislation that directed the reconsideration also amended Government Code section 17556(f) to prohibit the commission from finding a reimbursable mandate when the new program or higher level of service is “necessary to implement, reasonably within the scope of,” or expressly included in a voter-approved ballot measure. Previously this section only prohibited reimbursement for duties expressly included in a voter approved ballot measure. The commission has now ruled that the MRP is “necessary to implement and reasonably within the scope of” the mandate reimbursement provisions of the voter-approved Article XIII B, Section 6.
CSBA’s Education Legal Alliance along with others from the education community contemplate bringing legal action challenging the constitutionality of Government Code section 17556(f) and the recent action by the commission. In the meantime, members of the education community have apparently secured an agreement with the Schwarzenegger administration that MRP claims will be paid at least for 2006-07 claims processing pending continuing discussions regarding mandate funding and reform. The education community groups also seek the repeal of the 2005 amendment to Government Code section 17556(f), which is relied upon by the commission in reversing itself and finding that no reimbursable mandate exists for the MRP effective July 1.
In a related matter, 10 school districts and community college districts, led by Clovis USD, have filed a lawsuit against state Controller Steve Westly over the pattern and practice of arbitrary and capricious audits of claims for mandate reimbursement. As examples, 15 State Controller’s Office audits involving seven different state-mandated programs are identified. The districts note that 85 percent of the total costs claimed have been reduced, amounting to at least $17.5 million for claims filed for fiscal years 1997-98 through 2002-03.
At the heart of the matter is the unreasonable and unauthorized documentation required by the SCO for substantiation of the claim. The districts seek remedies that include a court directive that the state controller refrain from imposing arbitrary and capricious documentation standards and audit methods not expressed in statutes or regulations, that the audits be reopened and audited in accordance with lawful requirements and that funds be restored with interest.
Thus, the state’s recent actions to greatly reduce school district’s ability to gain reimbursement for state mandated programs are or soon will be under legal attack.
CSBA sues over mandated costs
The California School Boards Association’s Education Legal Alliance filed a lawsuit (result) in Sacramento Superior Court last month against efforts by the state government to renege on its obligation to reimburse local governments for the cost of complying with state mandates.
“This is a blatant effort by state government to avoid its constitutional obligation to reimburse schools, cities and counties for state-mandated programs,” said Scott P. Plotkin, executive director of CSBA. “Local governments, and especially schools, are being hung out to dry by the state when it refuses to cover the costs for programs or operations it requires.”
Joining CSBA’s Education Legal Alliance in the litigation are the Sweetwater Union High School District, Fresno County, Los Angeles County and the city of Newport. The suit targets the state government, the Commission on State Mandates and Controller Steve Westly.
Voters approved Proposition 4 in 1979 to prevent the state from forcing programs on local governments without paying for them. School Accountability Report Cards, some Brown Act open government requirements and the processing of mandate reimbursement requests were among the requirements determined to be reimbursable by the Commission on State Mandates, the agency responsible for identifying mandated costs and determining how much local agencies should be reimbursed for them.
But the commission reversed itself, ending the state’s responsibility to reimburse those costs, after Assembly Bill 138 was enacted in 2005 to require the commission to reconsider its prior decisions.
“AB 138, from whatever angle you examine it, is wrong,” Plotkin said. “Instead of tearing down walls in our bureaucratic structure, it builds new ones. The state must be held accountable when it puts local entities in a financial bind—there is just no other way to look at it.”
School districts entitled to repayment for state mandates
By Juliet Williams, Associated Press Writer
Monday, March 19, 2007
School districts and local governments are entitled to be repaid for the cost of running programs the state Legislature requires them to operate, a Sacramento County Superior Court judge ruled in a decision published Monday.
The California School Boards Association, the city of Newport Beach, Sweetwater Union High School District in San Diego County and the counties of Fresno and Los Angeles sued the state over a bill passed in 2005. They objected because it allowed the state to avoid reimbursing school districts for the costs associated with operating state mandated-programs.
In a ruling dated March 13 but published Monday, Judge Gail Ohanesian said the state cannot avoid paying for the oversight of state-mandated programs by declaring them as necessary to implement a voter-approved ballot measure.
School districts said the legislation, which was attached to a budget trailer bill, could cost them as much as $300 million in administration costs for functions such as overseeing charter schools or compiling annual school accountability reports.
The law did not affect funding for the actual programs, but rather the potential reimbursement to local districts. An analysis compiled for legislators who were voting on the bill specifically said it would not affect schools.
When legislators approve new requirements for school districts or local governments, the districts typically operate the programs, report back to the state, then apply to be repaid for the costs of overseeing them.
"This is a small yet key victory for districts in doing things that the state has required," said Brian Lewis, executive director of the California Association of School Business Officials, which was not a party to the lawsuit but has lobbied against the change in law.
Lewis said his group is working with new state Controller John Chiang, a Democrat elected in November, to create clear rules regarding state audits of the programs.
Garen Casaleggio, a spokesman for Chiang, said the state controller last month asked the Legislature to free up as much as $450 million in outstanding funding owed to school districts for state mandates.
Eugene Hill, a Sacramento attorney who represented the petitioners, said the decision also requires the Commission on State Mandates to reconsider at least four decisions in which it denied reimbursements to schools.
School districts sue over state's failure to pay for mandates
By Juliet Williams, Associated Press Writer
November 21, 2007
Several school districts and a statewide association representing them sued the state on Wednesday for nearly $1 billion the districts say they are owed for programs the state forces them to offer but hasn't paid for.
The lawsuit, filed in San Diego County Superior Court, challenges the state's authority to defer payments for the 38 mandatory programs, which the districts say the state has done by failing to include full funding for them in the last five state budgets.
The California School Boards Association argues in its lawsuit that the state is constitutionally obligated to pay the full cost of programs it forces local governments, including school districts, to run. This year, as in previous years, the governor budgeted just $38,000, or $1,000 per program for those school mandates.
The lack of funding "forces school districts to divert their limited discretionary revenues from the core educational program and use those revenues to accommodate an increasing number of state mandates," the lawsuit said.
Among the mandates are pupil health screenings, which CSBA estimates cost districts nearly $4 million a year; meeting the state's graduation requirements, at a cost of nearly $66 million a year; and reporting attendance figures, which cost districts about $3.8 million a year.
Richard Hamilton, director of CSBA's Educational Legal Alliance, which filed the suit, said the state owes school districts $415 million for programs it underfunded and $475 million for programs it never funded, as well as another $160 million to run the programs this year.
Administration spokesman Bill Maile said the state Department of Finance had not yet seen the lawsuit, and could not immediately comment. Still, he said, the state is meeting its obligation to schools.
"K-12 has, and will continue to receive, the lion's share of budget dollars, even with the fiscal challenges we face," Maile said.
Last week, the nonpartisan Legislative Analyst's Office forecast a $10 billion state budget shortfall over the next two years, which could force deep cuts in spending.
The LAO has referred to the underfunding of state education mandates as "credit card debt" and has urged the state to repay it, according to the lawsuit.
Because voters limited the ability of local governments to collect new tax revenues when they approved property tax-slashing Proposition 13 in 1978, they also later made it a constitutional requirement that the state reimburse local governments whenever it mandates a new program or a higher level of service.
The state repaid about $900 million in accumulated debt and costs for school mandates in the 2006-07 budget, but it failed to pay off the entire debt and didn't fully pay for this year's programs, CSBA said.
"The state expects schools to foot the bill for millions of dollars in mandated costs that they do not fund and rarely pay back," CSBA president Kathy Kinley said in a statement.
The San Diego County Office of Education, Riverside Unified School District, San Jose Unified School District and Clovis Unified School District also were named as plaintiffs in the lawsuit.
The case is California School Boards Association Educational Legal Alliance et al v. State of California.
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