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The Legislature Has Authority To Determine How It Will Pay For Existing Mandates, And Additional Revenue Is Not The Only Way The Legislature Can Satisfy Its Mandate Obligations
The California Constitution requires that when the Legislature or any state agency mandates a new program or higher level of service on any local government including a school district, county office of education, or community college district, the State provide funds to reimburse that local government for the costs of the program or increased level of service. The Legislature created the Commission on State Mandates to decide whether a school district is entitled to reimbursement for costs mandated by the state.
State law provides a two-step procedure for school districts to petition the Commission to find a state mandate. First, a school district must file a test claim with the Commission. After a public hearing, the Commission decides whether the statute mandates a new program or increased level of service. Second, if the Commission determines there are costs mandated by the state, it must determine the amount the State will provide to the local entity for reimbursement and adopt parameters and guidelines for the reimbursement. In 2010, the Legislature amended state law to allow the state to seek to amend the reimbursement parameters and guidelines.
The two mandates at issue, in this case, apply to K12 district. Those are the Graduation Requirements (GR) mandate and the Behavioral Intervention Plans (BIP) mandate. The GR mandate required all students to complete two science courses in order to graduate from high school. The Commission determined in 1987 that this provision imposed a reimbursable state mandate. The BIP mandate arose from legislation that required the State Board of Education to adopt regulations for “the use of behavioral interventions with individuals with exceptional needs receiving special education and related services.” In 2000, the Commission found that the adopted regulations imposed a reimbursable mandate. In 2013, the Legislature repealed those regulations, which eliminated the BIP mandate.
In 2010, the Legislature passed a law that allowed the state to reallocate existing education funding to fund the mandates rather than providing additional funding.
The California School Boards Association and various school districts and county offices of education filed a special petition in 2011 asking the trial court to review and reverse the State’s decision regarding funding for the mandates. CSBA alleged the state law violated the California Constitution regarding the payment of costs for a state mandate. CSBA did not challenge the state law under Proposition 98, the constitutional amendment that prescribes a minimum level of state funding for education.
The trial court denied CSBA’s petition, and CSBA appealed. The Court of Appeal affirmed the trial court’s decision and found the state was not limited to providing “additional revenue that was specifically intended to fund the costs of the state mandate” when funding a state mandate. CSBA sought review in the California Supreme Court, which agreed to review the case.
CSBA continued to argue that the state may not “identify pre-existing education funding as mandate payment” but must instead allocate “additional funding” to satisfy its mandate reimbursement obligation under the California Constitution. In contrast, the State argued there was no such constitutional requirement, and the Legislature had the flexibility to meet its requirements under the California Constitution in a number of ways, including designating state funding to offset the cost of the mandate.
The Supreme Court found that the California Constitution required the state to “provide a subvention of funds to reimburse” local governments for the costs of state mandates, but it did not prescribe how the Legislature must provide for such reimbursement. In the absence of any limitations on the Legislature’s budgeting authority stated in the California Constitution, the Legislature retained broad power to decide how best to meet the reimbursement requirement. The Legislature may increase, decrease, earmark, or otherwise modify state education funding in order to satisfy reimbursement obligations, so long as its chosen method is consistent with Proposition 98 and other constitutional guarantees.
Therefore, the Legislature acted within its authority when it acted the 2010 statutes directing the use of previously non-mandate state funding prospectively to cover the costs of the existing GR and BIP mandates. Moreover, CSBA did not show that the designated funds were insufficient to cover the GR and BIP mandates in any individual school district.
Finally, CSBA also argued that the law allowing the state to seek to amend the reimbursement parameters and guidelines violated the separation of powers because it allowed the state to overrule the Commission’s determinations regarding reimbursable costs, which previous courts found to final and binding unless set aside after judicial review. Accordingly, CSBA argued the proper way to revisit a mandate determination was to file a test claim with the Commission. The Court held CSBA’s argument was not applicable in this case because the state never sought to change the Commission’s underlying GR and BIP mandate determination. Moreover, the changes in state law did not ify the Commission’s decisions, so the state laws did not violate the separation of powers.
California Sch. Boards Assn. v. State of California (2019) 8 Cal. 713.