Supreme Court ruling may reduce local control over education

The California Supreme Court's opinion in California School Boards Association v. State of California, 2019 DJDAR 11837 (Dec. 19, 2019) (hereinafter, "CSBA v. State") presents the specter of ushering in a new era of state mandated programs applicable to school districts and county offices of education, with a corresponding reduction in local control over education. In CSBA v. State, the court held that the Legislature may require school districts and county offices of education to utilize unrestricted state funding to offset the cost of state mandated programs, rather than provide new funding. The opinion thus lays the groundwork for the Legislature to create new mandated programs utilizing unrestricted state funding, leading to an overall reduction in funds available to address local priorities.

State Mandates Reimbursement Process and the Mandates at Issue

Article XIII B, Section 6, subdivision (a), of the California Constitution provides, "Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State shall provide a subvention of funds to reimburse that local government for the costs of the program of increased level of service." The Legislature established the Commission on State Mandates (CSM) which is responsible for determining whether a statue or regulation imposes a reimbursable state mandate and, if so, the amount of reimbursements. Government Code Section 17556 provides that the CSM shall not find state-mandates costs if "[t]he state [or] executive order [alleged to impose the mandate] or an appropriation in a Budget Act or other bill provides for offsetting savings to local agencies or school districts that result in no net costs to the local agencies or school districts, or includes additional revenue that was specifically intended to fund the costs of the state mandate in an amount sufficient to fund the cost of the state mandate."

At issue in CSBA were two requirements imposed on school districts: the Graduation Requirements mandate, which required all students to complete two science courses in order to graduate from high school; and the Behavioral Intervention Plans (BIP) mandate, which required the State Board of Education to adopt regulations for the use of behavioral interventions for individuals with exceptional needs receiving special education and related services. The CSM previously determined both the Graduation Requirements program and the BIP regulations were reimbursable state mandates.

In 2010, the Legislature passed Senate Bill 856 and Assembly Bill 1610, respectively, which required state funding provided to school districts to be used to offset the costs for the Graduation Requirements and BIP mandates. The California School Board Association and various school districts and county offices of education (collectively, "petitioners") petitioned for a writ of mandate, challenging the Legislature's actions, and arguing that these new laws violate Article XIII B, Section 6 of the state Constitution, by not providing new funding to offset the cost of the subject state mandates.

CSBA v. State

Rejecting the petitioners' challenge, the court held that while Article XIII B requires the state to reimburse local governments for the costs of state mandates, it does not prescribe how the reimbursement will be provided. In the absence of such a directive, the Legislature retains broad power to determine how best to meet the reimbursement requirement. On that premise, the court described several methods by which the Legislature could meet the reimbursement requirement without violating article XIII B: (1) provide new funding; (2) eliminate a different program or funded mandate to free up funds to pay for a new mandate; (3) identify new offsetting savings or offsetting revenue; (4) designate previously unrestricted funding as prospectively allocated for the mandate; or (5) suspend the mandate and render it unenforceable for one or more budget years.

The court disagreed with the petitioners' argument that the Legislature may not identify preexisting funding as mandate payments. The petitioners had conceded during oral argument that the Legislature could have reduced each school district's unrestricted funding while simultaneously increasing the amount of restricted funding in order to cover the cost of a mandate. The court reasoned that the Legislature's action of designating unrestricted funding as a mandate payment was a permissible way to reach the same result.

The petitioners had also argued the Legislature could not re-designate unrestricted funds as mandate payments because such funds are local "proceeds of taxes" pursuant to Government Code Sections 7906 and 7907. The court rejected this argument, reasoning that the Legislature is not required to maintain unrestricted funding at any particular level and there is no restriction against the Legislature's designation of funds that were previously proceeds of taxes to mandate payments. The court explained that although the Legislature's designation of previously unrestricted funding as mandate reimbursements leaves school districts with less unrestricted funding, this alone does not violate the Constitution. Instead, the court left open the possibility that an as-applied challenge may be brought if the costs of a mandate exceed the cost of state funds designated for reimbursement, but such was not the situation the case before it.

Finally, the petitioners argued that because the CSM determined the Graduation Requirements program and the BIP regulations were mandates and rejected the unrestricted funds as a source of mandate reimbursement, the Legislature cannot overturn the CSM's decision by relabeling the very same funding as offsetting revenue for purposes of determining the mandate reimbursements. The court, however, found that the Legislature has not attempted to classify the Graduation Requirements program and the BIP regulations as non-mandates and has provided sufficient funding for them. The Legislature is within its power to specify how mandates will be paid and thus has not altered or impacted the CSM's original decision in anyway.

CSBA v. State risks the prospective erosion of the flexibility and local control provided for in the California Constitution as it relates to K-12 education. The Legislature now has judicially sanctioned authority to impose new mandates on school districts and county offices of education, and then to designate unrestricted funding as offsetting for the costs. Such an outcome may likely lead to increasing state control of education as local education agencies must comply with increasing state mandated programs coupled with a simultaneous decrease in unrestricted funding -- funding which would have otherwise been used for programs that address local needs. Under the rationale in CSBA v. State, if the Legislature were to continue with the practice challenged and upheld in the case relative to the traditional state mandate reimbursement process, it may not be until the Legislature imposes so many mandates that their costs cannot be covered by unrestricted funding, will local education agencies have legal grounds to demand new funding from the state under Article XIII B. 