The California School Boards Association is suing California over what the association says is a failure to comply with the state’s school funding formula, Proposition 98, raising the possibility of disastrous impacts on education funding for years to come.
“Throughout the 2024 education budget process, the California Department of Finance, Gov. Gavin Newsom and the state legislature repeatedly introduced or retained budget provisions contradicting both the letter and intent of Proposition 98,” Albert Gonzalez, president of the California School Boards Association, said Thursday.
The lawsuit against the state and Joe Stephenshaw, the director of the state’s Department of Finance, stems from Newsom’s proposal to address the state’s $27.6 billion budget deficit by reinterpreting Prop 98, the 1988 voter-approved, constitutional mandate that guarantees minimum funding amounts for California public schools and community colleges.
Newsom did not immediately respond to a request for comment.
H.D. Palmer, the spokesperson for the Department of Finance, said the department “respectfully rejected” the school board association’s dispute of the budget revisions earlier this summer and said the California Constitution specifically allows for school funding amounts to be based upon a best estimate until actual data is available.
“After reviewing their comments and contentions, we responded that they were ‘respectfully rejected’ — and then explained in detail why our determination was both correct and constitutional,” Palmer said. “After their review, we’re confident that the court will reach the same conclusion.”
Newsom’s administration has said California schools received $8.8 billion more funding than they should have for the 2022-23 school year thanks to lower income tax revenues and a processing delay caused by the 2023 winter storms. To address that error, Newsom proposed the funds would be designated as prepayments for the future – meaning the money wouldn’t count in calculating baseline funds moving forward and essentially giving the state a zero-interest loan.
But because Prop 98 allocates school funding through a complex formula that builds on prior years’ funding amounts to determine how much money schools receive each year, any change in the formula could reduce school funding for years to come.
Outraged educators called the cuts “unconstitutional” and warned the change could fundamentally threaten the way schools receive state funding. After a battle in Sacramento between the California Teachers Association and the state legislature, Newsom agreed to lower the amount of funding that would be considered previously allocated to schools from $8.8 billion to $6.2 billion. And those funds would still be calculated within the Prop 98 formula, meaning the change wouldn’t impact future years’ funding amounts.
“As we grapple with a massive deficit in our state, it’s vital for allies to work together to protect fundamental public services that our communities deserve,” the California Teachers Association said in a statement announcing the agreement between the union and Newsom.
But the California School Boards Association has said it was not included in those negotiations. And the organization’s president, Gonzalez — also a member of Santa Clara Unified School District’s board of education — said the “scaled back” revisions are still concerning.
“Even the manipulation that remains is unacceptable, as it 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,” Gonzalez said.
Gonzalez said the organization had hoped to avoid litigation, but California’s “refusal to abandon the Prop 98 manipulation left no recourse but a lawsuit.”
The association said the lawsuit is not intended “to blow up” the entire education budget.
In an attempt to avoid a repeat of this year’s budget battle, the state’s approved budget says it has the right to exclude any excess funds given to schools from the Prop 98 formula when the state is working off tax estimates instead of actual numbers, usually during times of natural disaster, like the 2021 wildfires and the 2023 winter storms.
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The California School Boards Association argues that would allow the state to essentially take back the money it had given to schools and fundamentally undermines Prop 98. And the association said while the state claims the reduction of funds would only occur infrequently, the chance of repeat situations increases as California faces a greater likelihood of storms and fires due to climate change.
The association is asking the courts to declare the move unconstitutional and demand the Department of Finance allocate funds to schools even when the amount exceeds what schools would have received under the minimum funding guarantee.
“CSBA believes the courts will find, as we do, that this provision…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,” Gonzalez said.
