Thursday, July 15, 2004
Judge Rules State May Not Defer Payment to Counties For Mental Health Costs of Disabled Children
By a MetNews Staff Writer
A decision this month by a Sacramento Superior Court judge could shift as much as $36 million in annual costs of mental health services for disabled students from Los Angeles County to the state, a county lawyer said yesterday.
In a case brought by San Diego County, Judge Jeffrey L. Gunther ruled July 2 that the state’s policy of deferring reimbursement for services mandated under legislation adopted in 1984 and 1990 was unconstitutional. Article XIII A of the state Constitution, added by Proposition 13 in 1978, and Article XIII B, added by Proposition 4 the following year, limit property taxes and require the state to reimburse local governments for newly mandated programs and services.
Deputy County Counsel Rich Mason said he believes it is the first time “a judge has agreed with the argument that the Constitution requires the funding, and if you don’t have the funding, you don’t have the mandate in these specific areas.”
Mason said he expects Gunther’s ruling to be appealed. If it is upheld, he said, the state “would have to respond in way that would reasonably implement the decision up and down the state of California.”
The ruling has no immediate applicability to Los Angeles County, which was not a party to the suit, Mason noted. But he said county officials are “very interested” in the ruling and “will be following it very closely.”
He pointed out that while Gunther’s ruling theoretically permits San Diego County to stop providing the mandated services, since the mental health needs of disabled children are at stake unilateral action by counties is unlikely even in the wake of any appellate decision.
“Nobody has any interest in having the services not be provided,” Mason said.In 1984, after passage of the federal legislation requiring that children with disabilities receive a free public school education, the state enacted Government Code provisions placing the burden of satisfying portions of that obligation on counties.
Under AB 3632, counties must provide outpatient mental health services, day treatment, or residential care for children with disabling conditions who need such services. In 1996, AB 2726 added amendments requiring counties to provide out-of-county residential care when appropriate and necessary to enable disabled students to benefit from their educational programs.
A Commission on State Mandates rules on claims by local governments for reimbursement of mandated expenses.
San Diego County estimated it spent $9 million last fiscal year, and more than $30 million over the last three years, on AB 3632 and AB 2726 services. But the state appropriated only $1,000 to reimburse all 58 counties for those services for the last two fiscal years, deferring reimbursement of the remainder.
San Diego brought its suit under Government Code Sec. 17612(c), which allows local agencies to seek a declaration in Sacramento Superior Court that an unfunded mandate is unenforceable and an injunction blocking its enforcement.
Gunther, ruling on San Diego County’s motion for judgment on the pleadings, said the county does not have to pay for the services.
“The Court declares that the County of San Diego need not provide AB 3632 or AB 2726 services, absent adequate funding from the State,” he wrote.
Gunther rejected the state’s contention that relief under the statute is available only if the Legislature suspends a mandate or deletes all funding for it, not where payment of reimbursement has been deferred. Attorneys for the state, he noted, argued that since Sec. 17561.5 provides for payment of mandate reimbursement claims with interest, an inference that prompt payment is not required was justified.
“The—argument that the Constitutional provisions and statutory scheme do not require the Legislature to promptly pay the County of San Diego for the unfunded mandate is—rejected by this Court,” Gunther wrote. “The State is prohibited from imposing unfunded mandates on local entities, shifting its financial responsibility for carrying out governmental functions to local agencies, which are ill equipped to assume increased financial responsibilities because of the taxing and spending limitations that Articles XIII A and B impose.”
Los Angeles Principal Deputy County Counsel Thomas M. Tyrrell said the ruling “does break some ground” in a long history of litigation over unfunded mandates in which local governments have had few victories to point to.
“My perception is that it is an important decision, if it’s upheld by an appellate court,” Tyrrell declared.
He said Los Angeles County claimed reimbursement for $23.5 million in AB 3632 expenditures and $12.6 million in AB 2726 expenses just for the 2003-2004 fiscal year.
A spokesperson for the Attorney General’s Office said lawyers there are conferring with the state Department of Finance and have not yet decided what their next step will be.
A statement released by the office of San Diego Board of Supervisors Chairwoman Dianne Jacob characterized Gunther’s ruling as permitting San Diego County to “transfer the performance of these services to the State.”
The statement added:
“The County will work to ensure that clinically appropriate transition plans are developed so that each student’s case can be transferred without service interruption.”
But Mason said Gunther’s ruling contains no language dealing with any transfer of responsibility, merely declaring that San Diego has no obligation to perform the services if there is no funding for them.
San Diego County Counsel John Sansone said Gunther also rejected the state’s request for a stay of the ruling. He said the Board of Supervisors went through a “very thoughtful process for selecting this mandate” as the subject of the action, since federal law imposes the obligation to perform the required services on the state.
If the county is relieved of the mandate, the state must assume it, Sansone said.
Sansone said the total cost of the AB 3632 and AB 2726 expenditures last year, for which the state appropriate $1,000, was approximately $130 million. During the budgeting process last year the state’s legislative analyst estimated the total accumulated deferred mandate reimbursements at $1.2 billion, he said.
Sansone said the case was the first he was aware of to be brought under Sec. 17612(c). He questioned whether the state’s argument that, because it appropriated $1,000 each year, it had not “delete[d]” funding within the meaning of that statute would fare any better on appeal than it did before Gunther.
“The judge just didn’t buy it,” Sansone declared.
Copyright 2004, Metropolitan News Company