Reyes v. State

1

OLENA REYES, a Minor, etc., et al., Plaintiffs and Appellants, v. STATE OF CALIFORNIA et al., Defendants and Respondents SAMAIYA ATKINS, a Minor, etc., et al., Plaintiffs and Appellants, v. STATE OF CALIFORNIA et al., Defendants and Respondents

C095084, C095085

California Court of Appeals, Third District, Sacramento

August 29, 2023

NOT TO BE PUBLISHED

(Super. Ct. Nos. 34202080003489CUWMGDS 34202080003436CUWMGDS)

HORST J. ^[*]

Charter schools in California receive funding based on a specific statutory scheme. As in countless other ways, the COVID-19 pandemic caused the Legislature to take steps, with respect to school funding, to adapt to extraordinary circumstances. In 2020, the Legislature enacted Senate Bill No. 98 (Senate Bill 98) (Stats. 2020, ch. 24) which, insofar as relevant here, amended the Education Code to fix school funding for the 20202021 fiscal year at 2019-2020 fiscal year levels.^[1] Later in 2020, the Legislature enacted Senate Bill No. 820 (Senate Bill 820) (Stats. 2020, ch 110),^[2] which amended the Education Code to provide that a continuing local educational agency shall be eligible for apportionment reflecting growth from 2019-2020 levels to projected 2020-2021 levels. However, Senate Bill 820 further provided the provision for funding taking projected growth into account was not applicable to non-classroom-based (NCB) charter schools. These laws only impacted the 2020-2021 fiscal year and were repealed as of January 1, 2022.

This appeal involves two suits challenging these legislative actions. Plaintiffs in Atkins et al. v. State of California et al. (C095085), a nonprofit public benefit corporation operating the John Adams Academy charter school on three campuses and six students filed an amended petition for a writ of mandate and verified complaint for declaratory relief challenging Senate Bill 98 and Senate Bill 820. Plaintiffs in Reyes et al. v. State of California et al. (C095084), three nonprofit corporations that operated NCB charter schools and 13 students, separately filed a petition for a writ of mandate and verified complaint containing causes of action and prayers for relief largely the same as those in Atkins. After joint briefing and oral argument, the trial court denied the petitions and dismissed the complaints. Plaintiffs appealed and we granted the parties' joint motion for consolidation of the appeals for all relevant purposes.

On appeal, plaintiffs raise two principal contentions. First, they assert their charters, upon approval, created a contractual relationship with defendant State of California (the State) and that the State breached those contracts, thus violating the contract clause of the California Constitution, by unilaterally abandoning their contractual obligation to fund each charter school commensurate with actual enrollment/average daily attendance (ADA). Second, plaintiffs assert the Senate Bills violated their substantive due process rights because they "deprive[d] them of their property rights - rights to receive funding for each student that vested upon approval to operate charter schools for the State and to enroll students."

We affirm.

BACKGROUND

Education and Funding for Education in California

"The Legislature shall provide for a system of common schools by which a free school shall be kept up and supported in each district at least six months in every year, after the first year in which a school has been established." (Cal Const., art IX, § 5.) As of 2020-2021, "California provides instruction and support services to roughly six million students in grades kindergarten through twelve in more than 10,000 schools throughout the state." The State accomplishes this through a "system of 58 county offices of education, 1,000 local school districts, and more than 1,200 charter schools."

The California Supreme Court has recognized "the distinctive and priceless function of education in our society warrants, indeed compels, our treating it as a 'fundamental interest.'" (Serrano v. Priest (1971) 5 Cal.3d 584, 608-609, fn. omitted.) The Supreme Court has also pronounced that, "[s]ince its admission to the Union, California has assumed specific responsibility for a statewide public education system open on equal terms to all," and that, "[i]n view of the importance of education to society and to the individual child, the opportunity to receive the schooling furnished by the state must be made available to all on an equal basis...." (Butt v. State of California (1992) 4 Cal.4th 668, 680.)

The California Constitution contains a provision for public school funding, although this constitutes a floor for such funding: "The entire State School Fund shall be apportioned in each fiscal year in such manner as the Legislature may provide, through the school districts and other agencies maintaining such schools, for the support of, and aid to, kindergarten schools, elementary schools, secondary schools, and technical schools except that there shall be apportioned to each school district in each fiscal year not less than one hundred twenty dollars ($120) per pupil in average daily attendance in the district during the next preceding fiscal year and except that the amount apportioned to each school district in each fiscal year shall be not less than twenty-four hundred dollars ($2,400)." (Cal. Const., art IX, § 6.) While the foregoing furnishes a constitutional minimum for funding, the Education Code specifies that the "system of public school support should assure that state, local, and other funds are adequate for the support of a realistic funding level." (§ 14000.)

"California school finance is enormously complex, but the basic system is that 'funds raised by local property taxes are augmented by state equalizing payments. Each school district has a base revenue limit that depends on average daily attendance, . . . and varies by size and type of district. [¶] The revenue limit for a district includes the amount of property tax revenues a district can raise, with other specific local revenues, coupled with an equalization payment by the state, thus bringing each district into a rough equivalency of revenues.'" (Wells v. One2One Learning Foundation (2006) 39 Cal.4th 1164, 1186, fn. 10 (Wells).)

Charter Schools and the Charter Schools Act of 1992

Charter schools are a relatively recent addition to California's educational landscape. With the enactment of the Charter Schools Act of 1992 (§ 47600 et seq., added by Stats. 1992, ch. 781, § 1) (CSA), "California became one of the first states in the country to authorize charter schools." (Anderson Union High School Dist. v. Shasta Secondary Home School (2016) 4 Cal.App.5th 262, 268, fn. omitted.) "The Legislature intended its authorization of charter schools to improve public education by promoting innovation, choice, accountability, and competition." (Today's Fresh Start, Inc. v. Los Angeles County Office of Education (2013) 57 Cal.4th 197, 205-206 (Today's Fresh Start).)

"Charter schools are 'public schools funded with public money but run by private individuals or entities rather than traditional public school districts.'" (Anderson Union High School Dist. v. Shasta Secondary Home School, supra, 4 Cal.App.5th at pp. 267268, quoting Today's Fresh Start, supra, 57 Cal.4th at p. 205.) "For certain purposes, the [charter] school is 'deemed to be a "school district"' [citation], is 'part of the Public School system' [citation], falls under the 'jurisdiction' of that system, and is subject to the 'exclusive control' of public school officers." (Wells, supra, 39 Cal.4th at p. 1186.)

The process for establishing a new charter school is set forth in the Education Code. (§ 47605.) The process involves circulation of a complying petition for the establishment of a charter school within a school district with the proposed charter. (§ 47605, subd. (a)(1), (3).) Generally, "[f]ollowing review of the petition and [a] public hearing, the governing board of the school district shall either grant or deny the charter within 90 days of receipt of the petition ...." (§ 47605, subd. (b).)

"Charter schools shall be entitled to full and fair funding ...." (§ 47615, subd. (a)(3).) Although the way in which a charter school receives funding is complex, it is sufficient here to note that a charter school's share of state and local public education funds is calculated based on considerations that include its ADA. (Wells, supra, 39 Cal.4th at p. 1186.)

The Senate Bills

In response to circumstances caused by the COVID-19 pandemic immediately before the beginning of the new fiscal year in 2020, the Legislature enacted Senate Bill 98, effective June 29, 2020. Among other things, that legislation added former sections 43500 through 43511 to the Education Code. (Stats 2020, ch. 24, § 34.) By the terms of Senate Bill 98, those provisions were to become inoperative on June 30, 2021, and repealed as of January 1, 2022. (Ibid.) As enacted by Senate Bill 98, former section 43502 provided, in pertinent part: "Notwithstanding Sections 41601, 42238.05 to 42238.053, inclusive, and 46010, for purposes of calculating apportionments for the 2020-21 fiscal year for a local educational agency,^[3] except for a new charter school that is authorized by the governing board of a school district or county board of education on or before June 1, 2020, or approved by the state board at its July 8 and 9, 2020, meeting and that is beginning instruction in the 2020-21 school year, the department shall use the average daily attendance in the 2019-20 fiscal year reported for both the second period and the annual period apportionment that included all full school months from July 1, 2019, to February 29, 2020, inclusive, and extended year average daily...