State Court Upholds School Aid Reimbursement

A divided state Supreme Court on Thursday left intact a lower-court ruling on state aid to local governments that could cost the state billions of dollars.

The cost prediction was contained in the state’s appeal of a ruling in December by an appeals court in Sacramento that set broad standards for the state’s obligation to reimburse school districts for federally required programs.

“We fear that it could have a very severe economic impact on an already depleted state budget,” Deputy Atty. Gen. Daniel Stone, who wrote the state’s appeal, said Thursday.

He said he believes there were other federally mandated programs that fell into the same funding category as the education programs that were the subject of the ruling. Stone said he did not know what those programs were or how much they might cost the state if broad reimbursement standards were applied.

On the other hand, a ruling in the state’s favor would shift to local taxpayers the burdens of any costs that are not covered by federal aid.

“We had to cut back (other school programs) because of special education, which is mandated by the state,” said W. Craig Biddle, lawyer for a group of Riverside County school districts that sought state reimbursement. “Our view is, if you’re not going to give us the money, then let us make the decisions (on which programs to fund). If you’re going to make the decisions, then fully fund it.”

With four votes needed to grant a hearing in the seven-member court, only Chief Justice Malcolm Lucas and Justices Joyce L. Kennard and Armand Arabian voted for review.

The case now returns to a state commission to decide how much the state owes Riverside County schools for federally required programs for handicapped students in 1980-81. The county superintendent has filed a claim with the state for more than $7 million as a precedent-setting test case. The appeals court said that statewide, claims for those programs would exceed $2 billion from 1980-81 to 1985-86.

The court’s action also makes the appeals court’s standards binding on the commission and on all trial courts statewide.

The case involves a 1979 initiative that required the state to reimburse local agencies for all programs required by the state, but not for programs required by federal law. Federally mandated programs are to be funded locally and exempted from limits on local taxing and spending also imposed by the 1979 initiative.

In a dispute over payment for programs required by a 1975 federal law entitling handicapped students to an equal education, the 3rd District Court of Appeal said the key question was whether the law left the state free to decide which level of government paid the costs.

“If the state freely chose to impose the costs upon the local agency as a means of implementing a federal program, then the costs are the result of a reimbursable state mandate” and must be paid by the state, said Justice Keith Sparks in the 3-0 ruling.