Unfunded State Mandates

San Diego Unified School District, et al. v. State of California – California Court of Appeal, Third District (Case No. C090477)

MEMBER(S) INVOLVED: San Diego Unified School District; San Jose Unified School District; Clovis Unified School District; Grossmont Union High School District; Newport-Mesa Unified School District; Poway Unified School District; Castro Valley Unified School District; East Side Union High School District; and Fullerton Joint Union High School District.

IMPORTANCE OF STATEWIDE ISSUE:

The mandate requirement in the California Constitution requires the State to pay for any programs that it imposes on local governments, including school districts. Districts rely on this reimbursement, and the obligation to pay for mandated programs helps keep a check on state programs mandated on local governments. The state’s attempt to chip away at the mandates reimbursement system and transfer the financial burden of state-mandated programs to districts harms school districts that have followed the mandate reimbursement procedure and are legitimately anticipating the additional funding. If allowed to stand, the lower court’s decision would permit the state to retroactively eliminate outstanding reimbursement obligations due to the school districts for mandates that existed prior to the enactment of the statutes in question.

SUMMARY OF THE CASE:

The California Constitution requires the Legislature to reimburse local government, or provide “subvention,” whenever the Legislature or any state agency mandates a new program or higher level of service. (Cal. Const., art. XIIIB, § 6, subd. (a).) In so doing, the California Constitution prevents the state from creating unfunded mandates and shifting the costs for those mandates to local agencies like school districts. If agencies successfully challenge these mandates before the Commission on State Mandates, they are entitled to reimbursement for the costs mandated by the state.

This case involves two statutes enacted in 2017 and 2018, Government Code sections 17581.96 and 17581.97. Both statutes were included in bills that also appropriated one-time funds to local educational agencies. The statutes stated that the amounts allocated to individual school districts “shall first satisfy any outstanding claims” for reimbursement for state-mandated costs under article XIIIB, section 6 of the California Constitution. In other words, the state provided one-time money to school districts and county offices and then, pursuant to Government Code 17581.96 and 17581.97, required school districts with outstanding and owed mandate claims to utilize those funds to first satisfy those accrued mandate claims from any prior fiscal year. This effectively transferred the burden of programs that had previously been deemed unfunded mandates from the State back to the general funds of school districts.

Nine school districts filed suit arguing the Government Code provisions violated the guarantee provided by article XIIIB, section 6, undercutting the constitutional protection by effectively transferring the burden of the programs from the state to the general funds of school districts. The trial court rejected these arguments and the districts appealed.

CURRENT STATUS AND/OR OUTCOME:

On May 7, 2021, the ELA filed an amicus brief in support to the school districts. The brief clarified that while the state’s attempt to reduce the reimbursement funding due to districts is similar to its action allowed by the California Supreme Court in CSBA v. State in December 2019, the “offsetting revenue” in that case was prospectively mandated, as opposed to this retroactive attempt to eliminate debt for mandated costs that have already been acknowledged and incurred by the state.

The appellate court will hear oral argument from the parties on November 19, 2021.