                            OFFICE OF THE ATTORNEY GENERAL

                                      State of California


                                     JOHN K. VAN DE KAMP

                                        Attorney General


                          ______________________________________

                  OPINION            :

                                     :          No. 89-1204

                  of                 :

                                     :

       JOHN K. VAN DE KAMP           :          June 6, 1990

           Attorney General          :

                                     :

       RODNEY O. LILYQUIST           :

        Deputy Attorney General      :

                                     :

______________________________________________________________________________

               THE HONORABLE JESSE R. HUFF, DIRECTOR OF FINANCE, has requested
an opinion on the following question:

             Which year is a school district's "base year" for purposes of receiving state
reimbursement of voluntary desegregation costs?

                                           CONCLUSION

               A school district's "base year" for purposes of receiving state reimbursement of
voluntary desegregation costs is the 1984-1985 fiscal year if the district incurred desegregation costs
audited and approved by the Controller for that year. If the district initiated its desegregation
program after the 1984-1985 fiscal year, its "base year" is its first fiscal year of implementing its
desegregation plan.

                                             ANALYSIS

                Education Code section 422491 authorizes local school districts to submit claims to
the state for the reimbursement of the costs of desegregating their schools. Subdivision (a) of
section 42249 states:

                 "Any school district which maintains a voluntary program designed to
        remedy the harmful effects of racial segregation may, if the program meets the
        criteria of this section, present a claim for reimbursement for the costs of the program
        . . . ."

Section 42247 places a limit upon the amount that the state will reimburse a district each year for
its desegregation costs. The limit is stated as a percentage of the costs incurred by the district during


   1
    All unidentified section references hereafter are to provisions of the Education Code.

                                                   1.                                          89-1204

a prior year commonly known as the "base year." The amount of the base year costs restricts all
future annual claims to be paid by the state. Section 42247 provides:

               "(a) Notwithstanding any other provision of law, reimbursements authorized
       by Section . . . 42249 for desegregation costs incurred in the 1985-86 fiscal year, and
       each fiscal year thereafter, shall not exceed the following amounts:

               ".......................

                (2) For desegregation programs initiated after the 1984-85 fiscal year, the
       amount in excess of one-fifth of the audited costs approved by the Controller for the
       first full year of operation, adjusted pursuant to Section 42247.2, and provided that
       the school district has contributed in the prior fiscal year not less than one-fifth of the
       audited costs approved by the Controller for that fiscal year. For purposes of this
       paragraph, desegregation programs initiated after the 1984-85 fiscal year shall not
       include expansion of desegregation activities by school districts that were reimbursed
       pursuant to Section 42249 for desegregation costs incurred during the 1984-85 fiscal
       year, except as otherwise provided by Section 42247.2.

               "(3) For all other desegregation programs, the amount in excess of one-fifth
       of the audited desegregation costs approved by the Controller and incurred in the
       1984-85 fiscal year, adjusted pursuant to Section 42247.2, and provided that the
       school district has contributed in the prior fiscal year not less than one-fifth of the
       audited costs approved by the Controller for that fiscal year.

               "(b) Claims for reimbursement of desegregation program costs shall be
       subject to audit by the Controller to determine all or the following:

               "(1) Whether the costs and programs are for purposes of desegregation or
       alleviation of the harmful effects of racial segregation, as provided in the plan filed
       by the district pursuant to Section 42247.1.

             "(2) Whether the costs are increased costs which exceed the district's
       expenditure levels for regular educational programs.

               "(3) Whether the costs are excessive or unreasonable." (Emphases added.)2

                The question presented for analysis concerns the determination of a school district's
base year for purposes of section 42247. Which prior year of the district is the one upon which all
future reimbursement claims must be calculated? We conclude that the base year is the 1984-1985
fiscal year unless the district initiated its desegregation program thereafter, in which case the base
year becomes the first fiscal year of implementing its desegregation plan.

                 Preliminarily, we note that "[c]laims for reimbursement of desegregation program
costs shall be subject to audit by the Controller to determine . . . [w]hether the costs are excessive
or unreasonable." (§ 42247, subd. (b)(3).) This statutory mandate is consistent with other legislative
directives for the Controller to audit all claims prior to the payment of state funds. (See Gov. Code,
§§ 925.6, 12410.) We have previously concluded that the Controller's authority to audit claims filed

   2
   The adjustments authorized by section 42247.2 allow increases for inflation and for increased
enrollment (average daily attendance).

                                                   2.                                            89-1204
against the state's treasury is constitutionally based. (71 Ops.Cal.Atty.Gen. 275 (1988).) "Money
may be drawn from the Treasury only through an appropriation made by law and upon a Controller's
duly drawn warrant." (Cal. Const., art. XVI, § 7; see Flournoy v. Priest (1971) 5 Cal.3d 350, 354
["The obvious purpose of this requirement is to insure the Controller's concurrence in the
expenditure of state funds"].)

                 If it is found that the district incurred desegregation costs for the 1984-1985 fiscal
year and its claim for that year has been audited and approved by the Controller, that ends the
inquiry. The state reimbursement program does not cover the "expansion of desegregation activities
by school districts that were reimbursed pursuant to section 42249 for desegregation costs incurred
during the 1984-85 fiscal year, except as otherwise provided by Section 42247.2." (§ 42247, subd.
(a)(2).) Reading subdivision (a)(2) in light of subdivision (a)(3), we do not believe that a district
may "terminate" its 1984-1985 desegregation activities and "initiate" a new program thereafter. A
district that has "audited desegregation costs approved by the Controller and incurred in the 1984-85
fiscal year" (§ 42247, subd. (a)(3)) has already initiated its program by the 1984-1985 fiscal year,
and "initiation" is a one-time event. The base year for the district would thus be the 1984-1985
fiscal year under subdivision (a)(3) of section 42247.

              If the Controller finds that a school district did not incur desegregation costs during
the 1984-1985 fiscal year, he must determine which year is the district's "first full year of operation."
(§ 42247, subd. (a)(2).) This phrase could have several meanings. One interpretation would be the
first twelve month period for which a school district incurs desegregation costs in initiating a
program. Another would be the first school year in which a desegregation plan is being
implemented, including any changes in attendance patterns. Does the term "operation" include the
planning and organizational stages of a desegregation program?

                 In addressing this issue, we note that the Controller is to audit claims for
reimbursement to determine "[w]hether the costs and programs are for purposes of desegregation
or alleviation of the harmful effects of racial segregation, as provided in the plan filed by the district
pursuant to Section 42247.1." (§ 42247, subd. (b)(1).) Section 42247.1 requires a district to "submit
to the Superintendent of Public Instruction and the Controller a copy of the district's desegregation
plan . . . ." The Superintendent of Public Instruction has adopted regulations (Cal. Code of Regs.,
tit. 5, §§ 90-101) concerning a district's formulation of a desegregation plan, including stages for
identifying the district's segregated schools, obtaining community involvement in and support of
desegregation activities, holding public hearings on ways to implement the desegregation of schools,
providing in-service training for staff, and making curriculum reforms for the enhancement of
quality integrated education. Many of these desegregation activities may occur prior to any changes
in attendance patterns.

               In construing the language of section 42247, we are "to ascertain the intent of the
Legislature so as to effectuate the purpose of the law." (Dyna-Med, Inc. v. Fair Employment &
Housing Com. (1987) 43 Cal.3d 1379, 1386.) "In doing so we look first to the words of the statute,
giving them their usual and ordinary meaning." (Committee of Seven Thousand v. Superior Court
(1988) 45 Cal.3d 491, 501.)

               The term "operation" commonly means "doing or performing of a practical work or
of something involving practical application of principles or processes . . . the quality or state of
being functional or operative . . . capacity for action or functioning." (Webster's New International
Dict. (3d ed. 1966) p. 1581.)

               We believe that by use of the phrase "first full year of operation" in section 42247,
the Legislature intended for a school district's base year to begin when it begins to implement its

                                                   3.                                           89-1204

desegregation plan. Prior to that time, the program may have been "initiated" and may have incurred
costs but is not "operational" or "functioning" as a practical matter. While the planning and
organizational stages are necessary prerequisites to the carrying out of a program's goals and
purposes, they do not signify that the plan is being "executed" through attendance pattern changes.
In this regard, the phrase "first full year of operation" may be distinguished from such other phrases
used in the statute as "desegregation costs" and "desegregation activities." The latter two phrases
would encompass the time, effort, and funds expended by a district in initiating a desegregation
program.

                Normally the legislative history of a statute is helpful in construing ambiguous
language so as to effectuate the Legislature's intent. (See Long Beach Police Officers' Assn. v. City
of Long Beach (1988) 466 Cal.3d 736, 743; People v. Jeffers (1987) 43 Cal.3d 984, 993.) Here, the
legislative history respecting the enactment of section 42247 (Stats. 1985, ch. 180, § 1) does not
shed light on the meaning of the phrase "first full year of operation." However, when section 42247
was amended in 1987 (Stats. 1987, ch. 259, § 2), the Legislature amended another statute to treat
a similar problem faced by school districts operating desegregation programs under federal court
orders. As explained in the report of the Senate Rules Committee:

               "ANALYSIS: Existing law (AB 38, Ch. 180, 1985):

               ".......................

              "2. Provides that 1985-86 be used for the base year for future funding of
       desegregation claims under court orders that became final prior to January 1, 1986.
       (Problem: On December 31, 1985, San Jose Unified School District was given a
       court order to desegregate. The district spent the second semester of 1985-86
       preparing for the relocation of students which began in the 1986-87 school year,
       making 1986-87 its first year of full implementation.)

               ".......................

               "This bill:

               ".......................

               "2. Permits districts being reimbursed for desegregation costs under a federal
       court order final before January 1, 1986, but not implemented until 1985-86, to be
       reimbursed for their 1985-86 costs (half-year) and to use their first full year of costs
       (1986-87) as the base year for future funding. (Under current law, the base year is
       1985-86.)"

Other statements in the committee reports are consistent with this declaration of legislative purpose
that the first full year of operation (the base year) begins with the actual implementation of a
desegregation plan, not with the plan preparation and organizational stages. This legislative history
also demonstrates that the base year is the first fiscal year of implementation.

                 We reject the argument that the first full year of operation begins when all the
students have been reassigned under a district's voluntary desegregation program. This construction
of subdivision (a)(2) of section 42247 misplaces the word "full." Also, this proposed construction
would be contrary to the Legislature's intent as evidenced by its prohibition against reimbursing a
district's costs for the "expansion of desegregation activities." (§ 42247, subd. (a)(2).)


                                                  4.                                          89-1204

                Finally, the administrative procedure is for a district to submit an estimated cost claim
at the beginning of a fiscal year. (See § 42249.2, subd. (c).) The Controller pays the claim and then
performs an audit and "approves" the claim after the fiscal year has closed. It is possible that a claim
will be readjusted once it has been audited; the Controller in fact may disapprove it entirely. For
purposes of section 42247, it is not the amount initially paid by the Controller that is critical in
setting the base year limit; rather, it is "the audited costs approved by the Controller" (subd. (a)(2))
or "the audited desegregation costs approved by the Controller" (subd. (a)(3)) upon which all future
computations must be based.3

                In answer to the question presented, therefore, we conclude that a school district's
base year for purposes of receiving state reimbursement of voluntary desegregation costs is the
1984-1985 fiscal year if the district incurred desegregation costs audited and approved by the
Controller for that year. If the district initiated its desegregation program after the 1984-1985 fiscal
year, its base year is its first fiscal year of implementing its desegregation plan.

                                               *****




  3
   The request for our opinion included an example of a school district that had been paid $181,000
for its 1984-1985 fiscal year claim. The Controller subsequently audited the claim and rejected it
because no costs had been incurred for that year. Under these circumstances the district's base year
would not be the 1984-1985 fiscal year.

                                                   5.                                          89-1204
