Educators Sue to Block Tax Charge : Finances: School districts say they cannot afford to pay fees to counties. Law was designed to help recoup funds cut by the state.

State educators filed suit in Sacramento on Friday to block a new law that permits counties to charge school districts for collecting and distributing their share of property tax revenues.

The law, which could cost California school districts up to $150 million this year, was challenged in a class-action suit by state Supt. of Public Instruction Bill Honig, the California School Boards Assn., the Community College League of California and others. The suit was filed against the state and all 58 counties.

The controversial law was approved last July as part of the budget compromise. It allows counties to charge school districts, cities and special districts fees to collect and distribute property tax revenues.

A spokeswoman for the state school boards association said implementation of the law would result in “an unjust loss of funds for students.”

“We acknowledge that counties are having a very difficult time balancing their budgets, but there needs to be a solution that does not undermine school financing,” Mary A. Standlee, association president, said.

The lawsuit, filed in Sacramento County Superior Court, pits school districts against counties when both are reeling from massive cuts in state aid by Gov. Pete Wilson. The state faces a revenue shortfall of up to $10 billion this year.

“It’s unfair to set two groups of have-nots fighting for the scraps and that is what the fee bill does in essence,” said William L. Rukeyser, a spokesman for Honig.

County officials say they intend to defend the law vigorously. However, they also say they are sympathetic to the financial plight of school districts and have met with education officials to streamline the lawsuit to speed it through the courts at minimal cost to taxpayers.

“There is some mutual sympathy between the county supervisors and the school board members; we’ve been pitted against each other unwillingly,” said Jim Botz, Sonoma County counsel and a member of the litigation subcommittee for the County Supervisors Assn. of California.

Arthur Walenta, Contra Costa County assistant county counsel, said the state law involves “robbing Peter to pay Paul.”

“This should be looked at as an interim, unsatisfactory way of addressing a major problem in the funding of all local public agencies,” Walenta said. “The Legislature is going to have to become more responsible.”

The law was designed to help counties recoup state funds slashed from mental health, child welfare and court administration programs.

If upheld, it would require the Los Angeles Unified School District to reimburse the county $8.4 million, or $13.23 per student, for the cost of administering local property taxes this year. Like most school districts statewide, Los Angeles faces deepening financial problems. It must cut $88 million from its $3.9-billion budget by June 30 on top of $220 million in cuts made last fall.

Los Angeles school district officials, who support the lawsuit, say they do not know where they will find the funds to pay the county.

“I am certainly hoping that Honig will come out victorious in this action,” said Bob Jones, budget director for the Los Angeles district. “Counties are just trying to shift the cost to school districts that are having tremendous financial problems.”

County officials argue that school districts learned last summer about the property tax law and should have prepared for it. Botz said most counties in California have figured the added revenues into their budgets and would face “a budgetary crisis” if the money does not materialize.

Several counties have agreed to postpone implementing the law for a year to give school districts time, but Los Angeles County is not among them, he said. County officials could not be reached for comment.