The California School Boards Association (CSBA) extended its historical leadership position in education funding advocacy by filing a lawsuit on Sept. 22 against the State of California challenging the withholding of $3.9 billion in Proposition 98 education funding under the 2026–27 State Budget. CSBA contends the withholding violates the State Constitution’s minimum funding requirement for public schools and community colleges. The action follows CSBA’s announcement last week that it would bring a new, independent challenge alongside its existing Proposition 98 litigation for separate but related abuses of the education funding guarantee.
The dispute concerns the disparity between the minimum education funding guarantee calculated by the state under Proposition 98, and the amount the state is currently allocating in the budget — a difference of $3.9 billion. CSBA maintains that recognizing an obligation for future payment is not the same as meeting that obligation and does not resolve the constitutional question raised by withholding mandated, voter-approved funding that is required to first be applied to support for public schools. As a result, the association filed suit on Sept. 22 against the State of California, California Director of Finance Joe Stephenshaw and Controller of the State of California Malia Cohen.
“Our lawsuit asks the court to resolve a fundamental question: whether the state can calculate the guaranteed funding required under Proposition 98 and then withhold a portion of that guarantee from schools for its own convenience,” said CSBA CEO & Executive Director Vernon M. Billy. “Proposition 98 is not a credit card or piggy bank that can be raided gratuitously by the state. Our objective is to secure the funding required by the constitution and provide school districts and county offices of education with greater certainty about the resources available to serve students.”
CSBA’s ongoing litigation against the state addresses how the guarantee is calculated. The new case initiated by the Sept. 22 filing addresses whether the state is meeting the obligation that calculation established, and whether it is satisfying the requirements of Proposition 98.
Approved by voters in 1988, Proposition 98 establishes a constitutional minimum funding requirement for public schools and community colleges. During the development of this year’s budget, the administration cited unclear revenue projections as a reason for delaying funding. CSBA denies that this concern authorizes the state to withhold a portion of the calculated guarantee, especially given voters passed Proposition 98 to stabilize school funding in unpredictable times. The association has maintained throughout the budget process that fiscal uncertainty must be addressed without changing the requirements of Proposition 98.
“For school boards, the amount and timing of state funding affect decisions about staffing, class sizes, counseling and other student services,” said CSBA Interim General Counsel Bob Tuerck. “This litigation seeks clarity about the state’s obligations so school districts and county offices of education can plan with a more reliable understanding of the funding available to them.”
Continuing CSBA’s history of school funding advocacy and litigation
The new lawsuit is separate from CSBA’s ongoing case filed on Sept. 23, 2024, through its Education Legal Alliance against the State of California and the director of the Department of Finance. That case challenges a provision of Education Code Section 41206.04 that directs the state, under specified circumstances involving delayed tax collections, to exclude certain previously allocated education funding from calculations used to establish future Proposition 98 guarantees. CSBA alleges that the provision conflicts with the State Constitution and could lower future funding requirements.
Earlier CSBA litigation also addressed the calculation and payment of Proposition 98 funding. In 2019, a settlement resolving three lawsuits provided for repayment of $686 million in prior-year underpayments to schools and community colleges. The agreement also addressed provisions governing future funding calculations and certification. Those cases involved the treatment of childcare expenditures, accounting adjustments and the state’s obligation to resolve previously identified funding shortfalls.
This year’s filing follows months of advocacy over the proposed withholding. On May 5, CSBA convened statewide education leaders, local educators and students at River City High School in West Sacramento to address the initial $5.6 billion proposed withholding. On May 21, CSBA joined other Education Coalition members at the State Capitol to call for payment of the full guarantee after the proposed withholding was reduced to $3.9 billion. The adopted budget retained that withholding.
“A dollar delayed is a dollar denied to today’s students. Our legislative advocacy and our litigation address the same underlying responsibility ensuring that the funding requirements established by California voters are carried out now, not at some indeterminate future date of the state’s choosing,” Billy said. “In the meantime, we will continue working with state leaders to secure necessary school funding while asking the courts to resolve these questions about compliance with Proposition 98, so California’s students receive every resource to which they are entitled.”
