California school funding work-around draws a lawsuit

The California School Boards Association is suing the state over a Proposition 98 work-around included as a trailer bill in the budget.

Proposition 98, often referenced throughout California’s state budget process, constitutionally mandates the state to allocate a certain percentage of the state budget to education each year.

The 2024 Education Omnibus Budget Trailer Bill, approved in July, violates the state constitution by undermining voter-approved Proposition 98, according to the lawsuit filed by the state school board’s Education Legal Alliance.

The school board association alleges in the lawsuit that Gov. Gavin Newsom’s spending plan, which included the trailer bill, violates the state constitution and could endanger school funding.

In an attempt to preserve funding for schools as it worked to reduce a deficit, the state made up the shortfall by borrowing from the state’s general fund.

“The California Constitution cannot be discarded for convenience or dismissed at the whim of the Department of Finance, the legislature, or the governor,” said CSBA President Albert Gonzalez. “California’s electorate passed Proposition 98 to provide a stable and predictable source of funding for public schools and community colleges. This lawsuit is an effort to defend the voters’ will, the state constitution, and the resources our students need.”

Newsom’s press office didn’t immediately, respond to a request for comment, but the state’s Department of Finance had sent CSBA a response this summer when it first took issue with the certification of Proposition 98, and by extension, the action taken by the legislature in this year’s budget regarding school funding and Proposition 98.

The state’s Department of Finance responded in a two-page letter that “respectfully rejected,” CSBA’s claims and explained in detail why the DOF’s determination was both correct and constitutional.

“After their review, we’re confident that the court will reach the same conclusion,” H.D. Palmer, DOF spokesman said in an emailed response.

According to CSRB, the trailer bill “undermines Proposition 98’s constitutional provisions and sets a precedent for funding school districts, county offices of education, and community colleges below the constitutionally mandated minimum funding guarantee.”

The lawsuit was prompted by a desire to protect needed resources for students and preserve the stability of California’s school funding, according to the alliance.

Throughout the 2024 education budget process, the California Department of Finance, Newsom, and the legislature repeatedly introduced or retained budget provisions contradicting both the letter and intent of Proposition 98, according to the lawsuit.

The state already approved the fiscal year 2024-25 budget, so the lawsuit won’t affect money already allotted to schools, but the association hopes a judge will overturn what they described as Newsom’s “funding maneuver.”

The trailer bill sets up a scenario in which in the years following delayed tax collections, the complex calculation outlined in Proposition 98 would set the minimum threshold lower by excluding funds previously allocated to transitional kindergarten-14 schools from the calculation, according to the Alliance statement. “The subversion of Proposition 98 began with the governor’s January budget proposal, intensified with the May revise, and due to CSBA advocacy, was scaled back in subsequent versions of the budget,” the alliance said.

The change “removes a funding safety net that has served schools for more than three decades and could be used by future governors and legislatures to avoid complying with the Proposition 98 funding guarantee,” according to the alliance.

The alliance added that more severe financial circumstances than California currently faces were dealt with using the tools enshrined in Proposition 98.

“It was CSBA’s hope that the current budget scenario would be addressed in a similar manner and without the need for litigation, but the state’s refusal to abandon the Proposition 98 manipulation left no recourse but a lawsuit,” alliance said.

It also opens the door for what the alliance referred to as “future Proposition 98 manipulations.”

“CSBA believes the courts will find, as we do, that this provision of the state’s education budget trailer bill defies the expressed will of the voters, violates the California Constitution, destroys the common practice of funding public schools, and subjects students to unacceptable risks in the form of diminished resources to support academic achievement and well‐being,” the alliance said.