Several months of negotiations between the California School Boards Association's Education Legal Alliance and other attorneys representing public schools and the governor's office have finally yielded a settlement in the 20-year-old dispute over special education costs. Since 1980, school districts have been dipping into their general funds - to the tune of more than $1 billion - to cover program costs that the state required, yet provided no additional funds to operate.
The settlement will give school districts $520 million for past expenses, negotiators say. The agreement also provides another $100 million each year for the ongoing cost of providing services to students with special needs, such as reduced class sizes and instructional aides.
The first payout under the settlement, a lump sum of $270 million, will occur by the end of the fiscal year on June 30. Another $250 million for past expenses will be paid out over 10 years, beginning in fiscal year 2001-02. The agreement includes $100 million to be added to special education funding each year for ongoing expenses.
Payments for past expenses can be used at the school's discretion, whereas ongoing funds are earmarked for special education.
The $45.25 per ADA for prior-year claims is unrestricted money provided as a one-time payment, says Wayne Johnson, president of CTA, which was a major player in the effort to win an agreement.
"This part, as well as $4.525 per ADA of the allocations to come over the next 10 years, is intended to be a reimbursement of general fund money that was spent over the past 20 years to cover state mandates."
The $100 million in increased funding allocated to special education local planning areas (SELPAs) - an estimated $17.50 per ADA - will be restricted money.
The agreement, announced by the governor's office Oct. 26, falls well within the 120-day period schools had to file claims with the state controller's office. Settling with school districts now benefits the state by reducing its liability for past expenses.
"This settlement," says Gov. Gray Davis, "affords school districts the opportunity to focus on what is really important - educating California's students and implementing programs targeting student achievement, rather than spending time and resources locating documents and receipts for the past 20 years."
Schools win by avoiding the cumbersome and time-consuming process of filing itemized claims. They will now be reimbursed on the basis of their average daily attendance, with no application required. The settlement also removes the threat of legal appeals that could delay payment for years, says Richard Hamilton, lead attorney for the California School Boards Association's Education Legal Alliance. The alliance, has led the effort to resolve the test claim filed by the Riverside County superintendent of schools in 1981.
After the case weathered numerous legal challenges, the Commission on State Mandates decided in June to proceed with the claims process. At that time, the commission adopted parameters and guidelines for submitting claims to the state controller. The controller, in turn, issued claiming instructions on Aug. 14, setting in motion a 120-day claim period. The agreement applies to all public school districts, county offices of education and special education local planning areas, or SELPAs.
"To us, this was a fairness issue," says Patty Arvin, chair of CTA's Special and Alternative Education Committee. "Because the state required services that weren't paid for, it impacted programs for all students."
Three steps must still occur to finalize the settlement. First, the Legislature must forward a funding bill for the governor's signature. Hamilton said he expects the legislation to be approved on an urgency basis, probably by March. Second, a Department of Finance lawsuit will seek a court order to suspend the claiming process. Third, a majority of school districts, county offices and SELPAs must sign off on the agreement to waive their claims.
