Frances KINLAW et al., Plaintiffs/Appellants, v. STATE of California, Kenneth Kizer as Director of the Department of Health Services, etc., et al., Defendants/Respondents.
Appellants allege that they, and the class they purport to represent, are taxpayers and persons in need of medical care they cannot afford. They allege that the State of California and Kenneth Kizer, Director of the Department of Health Services of the State of California, (hereafter collectively state) have violated Proposition 4, as embodied in the California Constitution, article XIIIB, which set limits on state and local government spending. Section 6 of article XIIIB (hereafter section 6) generally precludes the state from avoiding the spending limits it must observe by shifting programs and their attendant financial burdens, which were a state responsibility prior to the effective date of article XIIIB, to localgovernments (hereafter counties). It does so by requiring the state to provide the funding to the counties for the costs of either new programs or higher levels of services in existing programs, mandated by the Legislature or any state agency on the counties. Appellants allege that the state has shifted its financial responsibility for the funding of health care for the poor onto the counties without providing the necessary funding, and that as a result the state is evading its constitutionally-mandated spending limits. Appellants further allege they and the class they claim to represent cannot, consequently, obtain adequate health care from the counties, which lack the state funding to provide it.
The state contends that appellants lack standing either as taxpayers or as persons allegedly injured by their inability to obtain the medical care they need, and that the administrative remedies provided to counties but not to individuals bar this action. The state, which concedes that it fully funded this indigent health care program prior to the imposition of the article XIIIB spending limit, and that it thereafter required the counties to assume a substantial portion of the financial responsibility therefor, argues such action was constitutional.
In denying appellants' motion for a preliminary injunction, the trial court held that appellants lacked standing to bring this action, and that the state's funding shift of the program to the counties was not a state-mandated new program or higher level of service as defined by section 6. The court thereafter granted summary judgment to the state on the ground appellants lacked standing. Appellants appeal from both decisions of the trial court.
We will conclude that appellants have standing to bring this action to enforce the constitutional spending limit of article XIIIB, and that this action is not barred by the existence of administrative remedies available to counties but not to individuals.
We will hold that the shift of a portion of the cost of medical indigent care by the state to Alameda County constituted a state-mandated new program under the provisions of article XIIIB, which triggers that article's provisions providing for a subvention of funds by the state to reimburse Alameda County for the costs of such program it was required to assume.
I. FACTS AND PROCEDURAL HISTORY
The relevant facts are undisputed.
In 1978, the electorate of California through Proposition 13 added article XIIIA to the California Constitution, which, inter alia, established amaximum limit on the ad valorem tax on real property of 1 percent of such real property's full cash value.1 Effective July 1, 1980,2 the electorate through Proposition 4, also known as the Gann or “Spirit of 13” Amendment, added article XIIIB to the Constitution, imposing, inter alia, spending limits on the state and counties.3 Section 6 provides as follows: “Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the state shall provide a subvention of funds to reimburse such local government for the costs of such program or increased level of service, except that the Legislature may, but need not, provide such subvention of funds for the following mandates: [¶] (a) Legislative mandates requested by the local agency affected; [¶] (b) Legislation defining a new crime or changing an existing definition of a crime; or [¶] (c) Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975.”
From 1971 until 1982, and thus at the time article XIIIB became effective, counties were not required to pay for the provision of health services to medically indigent adults (MIA's), whose health needs were met through the state-funded Medi–Cal program. While the counties did make general contributions to the Medi–Cal program (which covered persons other than MIA's) from 1971 until 1978, at the time article XIIIB became effective in 1980, the counties were not required to make any financial contributions to Medi–Cal; and it is, therefore, undisputed that at such time the counties were not required to provide financially at all for the health needs of MIA's. The state funded all such needs of MIA's.
In 1982, the Legislature passed Assembly Bill No. 799 ((1981–1982 Reg.Sess.) Stats.1982, ch. 328, pp. 1568–1609) (hereafter AB 799), which removed MIA's from the state-funded Medi–Cal program as of January 1, 1983, and thereby transferred to the counties, through the County Medical Services Plan (CMSP) which AB 799 created,4 the financial responsibility to provide health services to approximately 270,000 MIA's. AB 799 required that the counties provide health care for MIA's, yet appropriated only 70 percent of what the state would have spent on MIA's had those persons remained a state responsibility under the Medi–Cal program.
Since 1983, the state has only partially defrayed the costs to the counties of providing health care to MIA's. Such state funding to counties has held relatively constant, in the range of more than $400 million per year. The state, however, included the full amount of its former obligation to provide for MIA's under the Medi–Cal program in the year preceding July 1, 1980, as part of its article XIIIB “appropriations limit”; i.e., as part of the base amount of appropriations on which subsequent annual adjustments for cost of living and population changes (see fn. 3, ante ) would be calculated. About $1 billion has been added to the state's adjusted spending limit for population growth and inflation solely because of the state's inclusion of all MIA expenditures in the appropriation limit established for its base year, 1979–1980. The state has not made proportional increases in the sums provided to counties to pay for the MIA services funded by the counties since January 1, 1983.
At hearings below, appellants presented uncontradicted evidence regarding the enormous impact of these statutory changes upon the finances and population of Alameda County. That county now spends about $40 million annually on health care for MIA's, of which the state reimburses about half. Thus, since Proposition 4 became effective to protect the county from increased financial obligations due to state-mandated programs, Alameda County's obligation for the health care of MIA's has risen from zero to more than $20 million per year. The county has inadequate funds to discharge its new obligation for the health care of MIA's; and as a result, according to uncontested evidence from medical experts presented below, “The delivery of health care to the indigent in Alameda County is in a state of shambles; the crisis cannot be overstated․” “Because of inadequate state funding, some Alameda County residents are dying, and many others are suffering serious diseases and disabilities, because they cannot obtain adequate access to the medical care they need․” “The system is clogged to the breaking point․ All community clinics ․ are turning away patients.” “The funding received by the county from the state for MIA[']s does not approach the actual cost of providing health care to the MIA[']s. As a consequence, inadequate resources available to county health services jeopardize the lives and health of thousands of people․”
For purposes of illustration only, we cite two examples from the mass of uncontradicted evidence presented below on the impact of the lack of state funding on health care for indigents in Alameda County.
In one instance, a patient arrived at a county emergency room with internal bleeding. Despite the need for prompt care, delays due to overextended personnel and lack of resources caused him to wait more than eight hours before he could be admitted to the hospital. Twelve hours later, after further delays, despite the fact he was recognized to have “a condition that [could] lead to rapid death,” the patient was dead from the effects of internal bleeding and shock.
Second, of an estimated 50 to 100 foot amputations undertaken on diabetic patients, “[a]t least half” would have been avoided if adequate or timely care had been available.
Appellants filed this action together with an application for a preliminary injunction on October 29, 1987, seeking declaratory and injunctive relief requiring that the state provide funding for MIA's as appellants alleged was required by article XIIIB. The action was brought by the named appellants who alleged standing as taxpayers, pursuant to Code of Civil Procedure section 526a (hereafter section 526a), and as a class of persons 5 in need of medical care who were adversely affected by the state's alleged violation of the Constitution.
The state opposed the issuance of the requested preliminary injunction, by arguing that appellants lacked standing and had failed to exhaust administrative remedies, as well as by responding on the merits. Although acknowledging appellants had demonstrated irreparable injury, the trial court denied the request for a preliminary injunction on the ground that they could not prevail in the action because the funding transfer for MIA's was not a state-mandated new program or higher level of service within the meaning of article XIIIB, and on the further ground that appellants lacked standing. Appellants timely appealed.
Appellants and respondents then filed cross-motions for summary judgment, and the lower court granted the state's motion “on the ground thatthese [appellants lack standing] to maintain this action.” Again, appellants timely appealed.
A. Appellants' Standing
Appellants have standing as taxpayers to challenge the state's alleged violation of the constitutionally imposed spending limits. An unbroken line of precedent decided under section 526a,6 a statute utilized by appellants in bringing this action, confers such standing to prevent any illegal expenditure or waste of public funds. (See, e.g., Blair v. Pitchess (1971) 5 Cal.3d 258, 267–268, 96 Cal.Rptr. 42, 486 P.2d 1242 [Blair confirms that section 526a authorizes taxpayers suits against state officials to enjoin illegal actions concerning state funds. “The primary purpose of this statute, originally enacted in 1909, is to ‘enable a large body of citizenry to challenge governmental action which would otherwise go unchallenged in the courts because of the standing requirement.’ (Comment, Taxpayers' Suits: A Survey and Summary (1960) 69 Yale L.J. 895, 904.) [¶] California courts have consistently construed section 526a liberally to achieve this remedial purpose.”]; accord, Central Valley Chap. 7th Step Foundation v. Younger (1979) 95 Cal.App.3d 212, 232, 157 Cal.Rptr. 117; Hooper v. Deukmejian (1981) 122 Cal.App.3d 987, 1018–1019, 176 Cal.Rptr. 569.) Article XIIIB is a portion of the state Constitution limiting governmental power on behalf of the citizens of this state without the necessity of further implementation by legislation, and this suit by appellants is not forestalled because of the necessity of antecedent legislative action.7 (Cf. People v. Vega–Hernandez (1986) 179 Cal.App.3d 1084, 1092, 225 Cal.Rptr. 209.)
“Ballot summaries and arguments are accepted sources from which to ascertain the voters' intent and understanding of initiative measures.” (In re Lance W. (1985) 37 Cal.3d 873, 888, fn. 8, 210 Cal.Rptr. 631, 694 P.2d 744.) Here, the voters passed Proposition 4 after being assured that it “[will] limit state and local government spending,” and “[will] close loopholes government bureaucrats have devised to evade the intent of Proposition 13.” (Arguments in Favor of Proposition 4 [arg. signed by Paul Gann, a chief proponent of Propositions 13 and 4, and Assemblywoman and Assembly Minority Leader Carol Hallett], Ballot Pamp., Proposed Amend. to Cal. Const. with arguments to voters, Special Statewide Elec. (Nov. 6, 1979) p. 18.) Further, “No government should have an unrestricted right to spend the taxpayer's money.” (Ibid. [arg. signed by Speaker of the Assembly Leo McCarthy].)
The jurisdiction of the courts may be “properly invoked” where parties have “alleged actual or potential adverse effects resulting from the adoption and ultimate operation of the [constitutional] article,” requiring resolution of issues “of great public importance” arising under these provisions of the state Constitution, as passed by initiative. (Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 219, 149 Cal.Rptr. 239, 583 P.2d 1281 [challenge to Cal. Const., art. XIIIA].) We will reject the state's implicit argument in opposing appellants' standing that the voters who passed Proposition 4 simply intended to insert a dead letter into the Constitution, unenforceable by a taxpayer acting under section 526a.
1. Appellants' Action is Not Barred Because of an Administrative and Legal Remedy Available to Alameda County
The state begins its analysis of the standing question by implying that appellants lack taxpayer standing because they have a stake in the controversy and prospectively may realize a gain from it. No credible authority is cited for this position, and it is apparently not seriously pursued. The state then shifts to its major argument that, since appellants are really trying to assert the rights of the counties, and since the Legislature has provided by the Commission on State Mandates (hereafter commission) an administrative mechanism for counties to follow in resolving disputes over state-mandated funding,8 appellants' suit is barred for their failure to exhaust administrative remedies. We reject the state's arguments.
Appellants' interest in this controversy as taxpayers is direct, not derivative. They contend that state funds, constitutionally required to be applied to finance Alameda County's indigent medical care, are being unconstitutionally withheld or diverted by the state to other purposes. Their interest in this litigation does not turn upon whether their county of residence also asserts an interest in the controversy, which latter interest must be administratively resolved by the commission. (Govt.Code, § 17550 et seq.) 9
It is true that, if it desires to file suit, a county must first exhaust its administrative remedies by proceeding before the commission. (See Govt.Code, § 17552 [commission “provide[s] the sole and exclusive procedure by which a local agency ․ may claim reimbursement ․,” emphasis added]; accord County of Contra Costa v. State of California (1986) 177 Cal.App.3d 62, 74–75, 222 Cal.Rptr. 750.) However, appellants are not a “local agency.” They cannot initiate such a proceeding before the commission, and they should not be barred from court for their failure to do what the law does not allow.10 Any effort by appellants to circuitously seek relief by writ of mandate to compel litigation by Alameda County, even if not barred because the actssought to be compelled are discretionary (see section IIA2, post ), would be an exercise in futility which the law neither countenances nor requires. For all these reasons, appellants' have standing; and their suit is not barred. (Ross v. Superior Court (1977) 19 Cal.3d 899, 912, 141 Cal.Rptr. 133, 569 P.2d 727 [Where an administrative remedy is available only to a state official, not individuals, “it is clear that the proceeding was not barred by the exhaustion of remedies doctrine.”]; Van Atta v. Scott (1980) 27 Cal.3d 424, 447–448, 166 Cal.Rptr. 149, 613 P.2d 210 [“[T]he existence of [other parties] directly affected by the challenged governmental action ․ has not been held to preclude a taxpayers' suit. Numerous decisions have affirmed a taxpayer's standing to sue despite the existence of potential plaintiffs who might also have had standing to challenge the subject actions or statutes.”]; California State Employees' Assn. v. Williams (1970) 7 Cal.App.3d 390, 395, 86 Cal.Rptr. 305 [“The taxpayers' standing is not impaired by a concurrent power of the State Personnel Board to investigate the same charge of illegality. The board's supervisory and investigative power does not rise to the level of an ‘administrative remedy’ for solution of the taxpayers' grievance.” Emphasis added.]; Ogo Associates v. City of Torrance (1974) 37 Cal.App.3d 830, 834, 112 Cal.Rptr. 761 [“Yet the doctrine of exhaustion of administrative remedies has not hardened into inflexible dogma. [Citation.] It contains its own exceptions, as when ․ pursuit of an administrative remedy would result in irreparable harm [citations], when the administrative agency cannot grant an adequate remedy [citations], and when the aggrieved party can positively state what the administrative agency's decision in his particular case would be. [Citations].” Emphasis added.].)
The state's argument on this point, that appellants' constitutional claim should be barred because they allegedly failed to comply with a statute setting forth an administrative remedy which they could not have invoked in any event, would improperly elevate a procedural futility to a legal principle grounded neither in law nor common sense and must be rejected.
2. A County's Decision to File a Claim or an Action at Law to Compel Subvention of State Funds for Medical Care of the Indigent is a Discretionary Act and Not Amenable to an Action by Appellants in Mandamus
The state also argues that appellants should be limited to a remedy in mandamus against Alameda County to compel it to file a claim against the state on the issues in dispute here. However, it has long been established that a petitioner, even one alleging standing as a taxpayer, cannot challenge the decision of local officials not to pursue a lawsuit, the prosecution of which is a discretionary act not amenable to compulsion. (Dunn v. Long Beach L. & W. Co. (1896) 114 Cal. 605, 609, 610–611, 46 P. 607 [“We think that the demurrer ought to be sustained.” “Under these circumstances the [petitioner's] proposition that it is the duty of the present board of trustees to put the city into litigation ․, and that they have no discretion to refuse to do so, cannot be successfully maintained.”]; Silver v. Watson (1972) 26 Cal.App.3d 905, 909, 910, 103 Cal.Rptr. 576 [Demurrer properly sustained. “If the governing body has discretion in the matter, the taxpayer may not interfere.” “If in the light of these circumstances the supervisors honestly believed the county had no cause of action, it was well within the discretion of the board to forbear. [¶] ․ [¶] In the case at bench, plaintiff is asking the court to substitute its own discretion for that of the supervisors with respect to a particular claim.”]; see also Whitson v. City of Long Beach (1962) 200 Cal.App.2d 486, 505, 506, 19 Cal.Rptr. 668 [“[A] municipality has the power to settle and compromise claims in its favor or against it․” “A citizen and taxpayer cannot maintain an action ․ when there is no immediate duty enjoined upon the governing body or the municipality to bring a similar action, but they have discretion to refuse to bring it.”]; cf. Knoff v. City etc. of San Francisco (1969) 1 Cal.App.3d 184, 197, 81 Cal.Rptr. 683 [taxpayers could properly compel local government to exercise its discretion as to whether to seek recoveries for unlawfully low tax assessments, but trial court properly did not seek to compel the initiation of a lawsuit in any particular case, since that was a matter for the discretion of the local body].)
Moreover, strong considerations of public policy and practical necessity require appellants have a remedy independent of that supplied by statute to the counties. For example, in order to obtain sufficient funding for their courts, many counties have elected to receive state funds under the Brown–Presley Trial Court Funding Act. (Govt.Code, § 77000 et seq.) This election may, in the discretion of the Governor, constitute a waiver of the counties' rights to proceed before the commission on all claims for reimbursement for state-mandated local programs which existed and were not filed prior to passage of the trial funding legislation.11
A county's decision to proceed on a claim or subsequent lawsuit seeking reimbursement of its MIA funding, even if not waived by opting into the Brown–Presley Trial Court Funding Act (fn. 11, ante ), is clearly discretionary. So is a county's decision to accept trial court funding under that act in return for a waiver of its reimbursement rights for state-mandated local programs. Either decision classically illustrates the sort of discretionary act by the county which is immune from judicial control by mandamus. (See generally 8 Witkin, Cal.Procedure (3d ed. 1985) Extraordinary Writs, § 80, p. 720 [“Mandamus cannot be used to control the discretion of an administrative officer or agency.”].) 12
In short, we see no basis on which, as the state argues, appellants have no standing here and should be left to a remedy in mandamus against Alameda County. They could not compel Alameda County by mandamus to file a claim for reimbursement with the commission, and could not compel Alameda County to file an action as a county aggrieved by the test case ruling of the commission in the Los Angeles and San Bernardino claims.
3. Appellants' Standing to Sue the State is Not Limited Because of Alleged Standing to Sue Alameda County
Finally, the state urges that appellants lack standing to sue the state because they are limited to actions against Alameda County to compel provision of the necessary health care funding. There are two fatal flaws in this argument.
First, the fact that Alamedy County might arguably have an action to enforce a claim against the state does not impair appellants' standing as taxpayers, under section 526a, to sue the state for its violation of the constitutional spending limit. (Van Atta v. Scott, supra, 27 Cal.3d at pp. 447–448, 166 Cal.Rptr. 149, 613 P.2d 210.) We believe a logical extension of this principle dictates that, even if appellants arguably have a cause of action for alleged violation of statute by the county, their ability to assert a cause of action involving the same subject matter against the state on the theory of a constitutional violation is not for that reason impaired or precluded. Put another way, appellants' standing as taxpayers to seek to compel the state to refrain from an unconstitutional act is not vitiated simply because they could alternatively or conjunctively seek related relief from the county.
Second, appellants in this case did sue the county. The county responded by contending that it lacked the ability to fund the health program in question because the state had unconstitutionally shifted this financial obligation to the county. The county then joined in appellants' summary judgment motion, seeking a declaration that the subject health program was a state-mandated new program under the Constitution. The state does not challenge the evidence presented by appellants and county officials that the county lacks the financial ability to provide the funding for the program which the state requires. Appellants cannot be required to pursue a remedy against the county which is futile, especially when delay causes irreparable harm to their interests. (Ogo Associates v. City of Torrance, supra, 37 Cal.App.3d at p. 834, 112 Cal.Rptr. 761.)
Taxpayer suits against counties of the type suggested by the state are additionally likely to spawn a multiplicity of suits to establish priority for various other county programs, many of them also mandated by the Legislature through statute, in order to protect such programs from adverse fiscal effects resulting from any judgment directing specific utilization of moneys by the counties from their limited available sources for health care programs for MIA's. Such suits, seeking different and mutually inconsistent spending priorities as well as different remedies for individual taxpayers, would be virtually impossible to consolidate for class action treatment. Aside from these considerations, however, adoption of the state's suggestion would only substitute a Dickensian welter of litigation against the financially strapped counties for this taxpayer action against the state. That solution will not efficiently or effectively address the root cause of the dispute we confront in this case.
We reject the state's suggestion that we should here overrule precedent of many years on the issue of taxpayer standing, in order to immunize the state from the remedy sought for an alleged violation of the Constitution. (Blair v. Pitchess, supra, 5 Cal.3d at pp. 267–268, 96 Cal.Rptr. 42, 486 P.2d 1242.)
4. Conclusion Re Standing
The lower court erred in denying injunctive relief to appellants, and in granting summary judgment against them, on the ground they lacked standing to bring this suit.
B. The Merits
1. The Purpose of Section 6
As here pertinent, section 6 provides: “Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the state shall provide a subvention of funds to reimburse such local government for the costs of such program or increased level of service․” (Emphasis added.) As proponents of article XIIIB clearly declared, that measure “[will not] allow the state government to force programs on local governments without the state paying for them.” (Ballot Pamp., Proposed Amend. to Cal. Const. with arguments to voters, Special Statewide Elec. (Nov. 6, 1979) p. 18.)
The Supreme Court acknowledges that: “The concern which prompted the inclusion of section 6 in article XIII B was the perceived attempt by the state to enact legislation or adopt administrative orders creating programs to be administered by local agencies, thereby transferring to those agencies the fiscal responsibility for providing services which the state believed should be extended to the public.” “Section 6 had the additional purpose of precluding a shift of financial responsibility for carrying out governmental functions from the state to local agencies which had had their taxing powers restricted by the enactment of article XIII A in the preceding year and were ill equipped to take responsibility for any new programs.” (County of Los Angeles v. State of California, supra, 43 Cal.3d at pp. 56, 61, 233 Cal.Rptr. 38, 729 P.2d 202.)
This analysis was reiterated in Lucia Mar Unified School Dist. v. Honig (1988) 44 Cal.3d 830, 835–836, 244 Cal.Rptr. 677, 750 P.2d 318: “Section 6 was intended to preclude the state from shifting to local agencies the financial responsibility for providing public services in view of these restrictions on the taxing and spending power of the local entities. [Citation.]” Reimbursement by the state to a county is required “if the state transfers fiscal responsibility to a local agency for a program the state deems desirable.” (Id., 44 Cal.3d at p. 836, fn. 7, 244 Cal.Rptr. 677, 750 P.2d 318.)
2. The “[P]rogram” Requirement of Section 6
In City of Sacramento v. State of California (1984) 156 Cal.App.3d 182, 190–194, 203 Cal.Rptr. 258, the Court of Appeal discussed the meaning of section 6, in considering its effect on a state statute requiring local governmental employers to pay into the state unemployment insurance system on behalf of their employees; the court interpreted the statute as one requiring a state-mandated cost and held it created a “state-mandated local program” under the provisions of section 6. In County of Los Angeles, supra, the Supreme Court disapproved of the analysis of section 6 by City of Sacramento with this observation: “Approaching the question as to whether the expense was a ‘state mandated cost,’ rather than as whether the provision of an employee benefit was a ‘program or service’ within the meaning of the Constitution, the [City of Sacramento ] court concluded that reimbursement was required.” (County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 58, fn. 10, 233 Cal.Rptr. 38, 729 P.2d 202.)
County of Los Angeles defined “program” as used in section 6 as “programs that carry out the governmental function of providing services to the public, or laws which, to implement a state policy, impose unique requirements on local governments and do not apply generally to all residents and entities in the state.” (43 Cal.3d at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202.) The court there considered legislation requiring counties and other employers to increase certain workers' compensation benefits; and held that no “program” was thereby created because the additional costs to counties of increased benefits to their employees, which the legislation required, were simply an incidental impact of a law generally applicable to all employers of the state and were, hence, outside the scope of section 6.
Carmel Valley Fire Protection Dist. v. State of California (1987) 190 Cal.App.3d 521, 234 Cal.Rptr. 795 discussed the Supreme Court's “program” analysis in County of Los Angeles, supra, as follows: “[T]he Court concluded that the term ‘program’ has two alternative meanings: ‘programs that carry out the governmental function of providing services to the public, or laws which, to implement a state policy, impose unique requirements on local governments and do not apply generally to all residents and entities in the state.’ [Citation.] ․ [O]nly one of these findings is necessary to trigger reimbursement․” (P. 537, 234 Cal.Rptr. 795, emphasis in original.)
The funding of indigent medical care obviously carries out the governmental function of providing a public service to the indigent population requiring care. The state legislative requirement that Alameda County fund a substantial part of such medical care of its indigent population implements a policy and program created by state legislation. The funding of the program which Alameda County challenges imposes unique requirements on counties not applicable to all residents and entities in the state.
In short, Alameda County's required funding of its indigent medical care meets both of the alternative meanings of the term “program” enunciated in County of Los Angeles, supra, as explained by Carmel Valley Fire Protection Dist., supra.
3. The “[N]ew” Program Analysis Under Section 6
We next analyze the issue of whether this “program” of payment by Alameda County for medical care of the indigent is a “new program” or a “higher level of service,” either of which triggers state subvention of funds in reimbursement of county's payments therefor under section 6.
The parties agree that the state was paying the full cost of the program for the medical care of the indigent poor for about three years prior to, and at the time of, the effective date of section 6; and that afterward the state required local entities to accept substantial financial responsibility for the program.
Respondents contend these facts cannot require state reimbursement of the county for two reasons.
The state first argues that the program of required funding of indigent medical care by counties had its antecedent roots in state legislation predating section 6; 13 and that the counties, therefore, had a preexisting duty to pay for what cannot, consequently, be deemed a “new program” created by AB 799 within the literal meaning of section 6.
As a second and corollary argument, the state urges that its previous reimbursement to counties for indigent medical care represented a temporary assumption of a county financial responsibility to and through the effective date of section 6. The state claims that such a temporarily assumed financial responsibility for a preexisting obligation may be partly or wholly reassigned and transferred to the counties without violating section 6, because a program that preexisted the effective date of both section 6 and the funding shift is not a “new” program.
We find neither argument persuasive. The state's position ignores the clear holding of the Supreme Court that the state's subvention requirement under section 6 is not vitiated simply because the “program” preexisted the effective date of article XIIIB. The alternate phrase of section 6, “ ‘higher level of service[,]’․ must be read in conjunction with the predecessor phrase ‘new program’ to give it meaning. Thus read, it is apparent that the subvention requirement for increased or higher level of service is directed to state mandated increases in the services provided by local agencies in existing ‘ programs.’ ” (County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202, emphasis added.)
In Lucia Mar, supra, an analogous position was argued and rejected. Lucia Mar involved funding for education of the severely handicapped. The state Department of Education operated schools for severely handicapped students. Prior to 1979, school districts were required by statute to contribute to education of those students from the district at the state schools. In 1979, those statutes requiring such district contributions were repealed; and the state assumed full responsibility for funding, a state responsibility existing when section 6 became effective on July 1, 1980. The state funding responsibility continued until June 28, 1981, when Education Code section 59300 (hereafter section 59300) requiring school districts to share in these costs became effective.
The plaintiff district and others filed a test claim before the commission,14 contending they were entitled to state reimbursement under section 6. The commission's denial of the claim found plaintiffs were not entitled to state reimbursement, on the rationale that the increase in costs to the districts compelled by section 59300 imposed no new program or higher level of services. The trial and intermediate appellate courts affirmed on the ground that section 59300 called for only an “ ‘adjustment of costs' ” of educating the severely handicapped, and that “a shift in the funding of an existing program is not a new program or a higher level of service ” within the meaning of article XIIIB. (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at p. 834, 244 Cal.Rptr. 677, 750 P.2d 318, emphasis added.)
The Supreme Court reversed, holding the contribution required of school districts by section 59300 was a “program” within the definition of that term in County of Los Angeles, supra, because it provided a public service and because the financial requirements imposed on the school districts were not imposed on all the state's residents.
Lucia Mar rejects the state's theories underlying its contentions that the funding shift to Alameda County of the subject program's costs does not constitute a new program. “[There can be no] doubt that although the schools for the handicapped have been operated by the state for many years, the program was new insofar as plaintiffs are concerned, since at the time section 59300 became effective they were not required to contribute to the education of students from their districts at such schools. [¶] ․ To hold, under the circumstances of this case, that a shift in funding of an existing program from the state to a local entity is not a new program as to the local agency would, we think, violate the intent underlying section 6 of article XIIIB. That article imposed spending limits on state and local governments, and it followed by one year the adoption by initiative of article XIIIA, which severely limited the taxing power of local governments․ [¶] The intent of the section would plainly be violated if the state could, while retaining administrative control of programs it has supported with state tax money, simply shift the cost of the programs to local government on the theory that the shift does not violate section 6 of article XIIIB because the programs are not ‘new.’ Whether the shifting of costs is accomplished by compelling local governments to pay the cost of entirely new programs created by the state, or by compelling them to accept financial responsibility in whole or in part for a program which was funded entirely by the state before the advent of article XIIIB, the result seems equally violative of the fundamental purpose underlying section 6 of that article.” (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at pp. 835–836, 244 Cal.Rptr. 677, 750 P.2d 318, fn. omitted, emphasis added.)
Neither the letter nor the spirit of section 6 dispenses with the need for state subventions, because the program for which funding is shifted had been one temporarily performed by the state prior to and at the effective date of article XIIIB, as the state contends. Indeed, this temporary performance theory is no more than an extension of the state's preexisting program argument, i.e., the state allegedly temporarily performed a preexisting program.
When article XIIIB became effective, the health needs of the poor were state supported; and county funding was unnecessary. The relevant question is not whether the counties earlier paid for this care, but whether it was the state or the counties which bore the financial responsibility for this program when article XIIIB became effective on July 1, 1980. (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at pp. 833, 836, 244 Cal.Rptr. 677, 750 P.2d 318.) The state bore the total responsibility at that time; and under article XIIIB, which froze the status quo on its effective date, the state cannot transfer to the counties that portion of the financial responsibility for the indigent health care program it now seeks to evade.15
The state's arguments are also undercut by the fact that it continues to use the approximately $1 billion in spending authority, generated by its previous total funding of the health care program in question, as a portion of its initial base spending limit calculated pursuant to sections 1 and 3 of article XIIIB. At the time of the hearing in the trial court, the state continued to claim the total amount of that previous funding as part of its base spending limit, adjusted annually for changes in the cost of living and population (Cal. Const., art. XIIIB, § 1), while spending very little of the adjusted increase of that spending limit for indigent health care. It rationalizes this position by reiterating that the MIA program was always a county responsibility, for which the state only temporarily assumed financial responsibility.16 The state, on this rationale, has abandoned payment of a substantial portion of its prior fiscal burden in funding all the MIA program for Alameda County, while continuing to claim the fiscal benefit of all such prior program funding for purposes of establishing, and subsequently calculating annual increases on, the state's spending limits under article XIIIB.
However, article XIIIB, section 3, subdivision (a) expressly provides: “In the event that the financial responsibility of providing services is transferred, in whole or in part, ․ from one entity of government to another, ․ the appropriations limit of the transferee entity shall be increased ․ and the appropriations limit of the transferor entity shall be decreased․” In the words of the legislative analyst, “Any increase in one entity's limit would have to be offset by an equal decrease in the other entity's limit.” (Ballot Pamp., Proposed Amend. to Cal. Const. with arguments to voters, Special Statewide Elec. (Nov. 6, 1979) p. 20.) No such offsetting increase and decrease appear to have been made here, resulting in a greater spending limit for the state and a more stringent one for Alameda County than either should have. “[R]eimbursement is required if the state transfers fiscal responsibility to a local agency for a program the state deems desirable.” (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at p. 836, fn. 7, 244 Cal.Rptr. 677, 750 P.2d 318.)
The state alternatively claims support for its preexisting duty argument in the following emphasized language from Lucia Mar: “[B]ecause section 59300 shifts partial financial responsibility for the support of students in the state-operated schools from the state to school districts—an obligation the school districts did not have at the time article XIIIB was adopted—it calls for plaintiffs to support a ‘new program’ within the meaning of section 6.” (P. 836, 244 Cal.Rptr. 677, 750 P.2d 318, fn. omitted, emphasis added.)
The state analyzes the emphasized language as distinguishing Lucia Mar from this case; i.e., it urges Lucia Mar reached its result only because the “program” requiring school district funding in that case was not required by statute at the effective date of article XIIIB. The state then urges the case at bench is distinguishable because it contends Alameda County had a continuing obligation required by statute antedating that effective date, which had only been temporarily suspended when article XIIIB became effective.
It is true that in Lucia Mar the involved program required no school district funding obligation when article XIIIB became effective, because no existing law compelled its performance; and that the program involved in this case, even if created by statute prior to passage of article XIIIB, required no Alameda County funding obligation when article XIIIB became effective because the state funded it. The state misses this salient point. The application of section 6 in such circumstances does not depend upon when the program was created, but upon when the cost of funding the program was transferred from state to county.
The Supreme Court clearly did not ground its conclusion in Lucia Mar, that the educational program there in issue was a “new” program as to the school districts, on the presence or absence of any antecedent statutory obligation therefor. Lucia Mar determined that whether the program was new as to the districts depended on when they were compelled to assume the obligation to partially fund an existing program which they had not funded at the time article XIIIB became effective.
Our function is to “ ‘declare the law and define the rights of the parties under it.’ ” (Marin Water etc. Co. v. Railroad Com. (1916) 171 Cal. 706, 711–712, 154 P. 864.) The state's position on the undisputed facts cannot be squared with the constitutional language of section 6 and the Supreme Court holding in Lucia Mar. Accordingly, appellants are entitled to a declaration that the state's shift of financial responsibility for the health care of MIA's to Alameda County is a state-mandated 17 new program as to the county within the meaning of section 6.
The judgments denying preliminary injunction and granting summary judgment for respondents are reversed. The case is remanded to the trial court for further proceedings in accordance with the views expressed herein.
1. Proposition 13 “was generally aimed at controlling ad valorem property taxes and the imposition of new ‘special taxes,’ ” while the later-added constitutional provision (art. XIIIB, § 1 et seq.), billed as “ ‘the next logical step to Proposition 13,’ ” was intended to place certain limitations on growth of appropriations at both state and local government level, in particular placing limits on authorization to spend the “ ‘proceeds of taxes.’ ” (City Council v. South (1983) 146 Cal.App.3d 320, 333, 194 Cal.Rptr. 110.)
2. California Constitution, article XIIIB, section 10.
3. Article XIIIB, section 1 provides: “The total annual appropriations subject to limitation of the state and of each local government shall not exceed the appropriations limit of such entity of government for the prior year adjusted for changes in the cost of living and population except as otherwise provided in this Article.”
4. AB 799 mandated two key elements of the local CMSP programs: eligibility and a standard of care. The counties' financial eligibility standards could not be more restrictive than prevailing Medi-Cal standards. (Wel. & Inst. Code, § 16704, subd. (c)(3).) We need not here address the precise standard of care applicable, beyond noting that state law mandates such a standard upon the counties. (Cf., Cooke v. Superior Court (1989) 213 Cal.App.3d 401, 413, 261 Cal.Rptr. 706 [recognizing ” statutory command that [health care] relief be provided humanely”]; Board of Supervisors v. Superior Court (1989) 207 Cal.App.3d 552, 564, 254 Cal.Rptr. 905 [recognizing ”requirements that the counties fulfill their duty to provide medical care for all indigent people, and that such care be comparable to that enjoyed by the nonindigent”; emphasis in original].)
5. The trial court disposed of this case on motion for summary judgment before any class certification order was made. Respondents do not contend appellants lack standing under section 526a because there is no such certification order.
6. Section 526a provides: “An action to obtain a judgment, restraining and preventing any illegal expenditure of, waste of, or injury to, the estate, funds, or other property of a county ․, may be maintained against any officer thereof, or any agent, or other person, acting in its behalf, either by a citizen resident therein, or by a corporation, who is assessed for and is liable to pay, or, within one year before the commencement of the action, has paid, a tax therein․”
7. Since we find appellants have standing herein under the provisions of section 526a, we deem it unnecessary to rule on appellants' alternative argument that standing is conferred by reason of their identity as indigent persons, or members of a class of persons, in need of medical care for whose benefit funding for medical care is statutorily provided.
8. See Government Code section 17550 et seq and footnote 10, post. These statutes created a mechanism to resolve intra-governmental disputes over the reimbursement of counties for costs of state-mandated local programs. The process is available only to governmental agencies (Govt.Code, § 17552) and not to individuals.
9. The primary focus of our inquiries in analyzing the issue of appellants' standing, or of the merits of their claim, discussed post, is not on what the Legislature intended in creating this forum for resolution of intra-governmental disputes as to state mandates. Our focus, instead, must be on “what the voters meant when they adopted article XIII B in 1979.” (County of Los Angeles v. State of California (1987) 43 Cal.3d 46, 56, 233 Cal.Rptr. 38, 729 P.2d 202.)
10. The state has advised us that the administrative remedy here has already been exhausted by proceedings brought before the commission by the counties of Los Angeles and San Bernardino, on behalf of those counties and all others; and that the commission has refused to allow other parties to bring such claims. The commission's decision in those proceedings rejected the counties' claims. (Decisions No. CSM–4285 and CSM–4299, dated April 27, 1989, of the Commission on State Mandates, Claim of County of Los Angeles and County of San Bernardino, co-claimants.)
11. “(a) The initial decision by a county to opt into the system pursuant to Section 77300 shall constitute a waiver of all claims for reimbursement for state-mandated local programs not theretofore approved by the State Board of Control, the Commission on State Mandates, or the courts to the extent the Governor, in his discretion, determines that waiver to be appropriate; provided, that a decision by a county to opt into the system pursuant to Section 77300 beginning with the second half of the 1988–89 fiscal year shall not constitute a waiver of a claim for reimbursement based on a statute chaptered on or before the date the act which added this chapter is chaptered, which is filed in acceptable form on or before the date the act which added this chapter is chaptered. A county may petition the Governor to exempt any such claim from this waiver requirement; and the Governor, in his discretion, may grant the exemption in whole or in part. The waiver shall not apply to or otherwise affect any claims accruing after initial notification. Renewal, renegotiation, or subsequent notification to continue in the program shall not constitute a waiver. [¶] (b) The initial decision by a county to opt into the system pursuant to Section 77300 shall constitute a waiver of any claim, cause of action, or action whenever filed, with respect to the Trial Court Funding Act of 1985, Chapter 1607 of the Statutes of 1985, or Chapter 1211 of the Statutes of 1987.” (Govt.Code, § 77203.5, emphasis added.)“As used in this chapter, ‘state-mandated local program’ means any and all reimbursements owed or owing by operation of either Section 6 of Article XIII B of the California Constitution, or Section 17561 of the Government Code, or both.” (Govt. Code, § 77005, emphasis added.)
12. Of course, even if mandamus were here available, because the county arguably is deemed to have no discretion to waive its rights or decline to pursue a claim, we would simply have to treat this as a writ proceeding, with the appellants realigned as petitioners and the state realigned as the real party in interest. (See People v. Cimarusti (1978) 81 Cal.App.3d 314, 320, 146 Cal.Rptr. 421 [“ ‘the matter being only one of form,’ ” action converted to writ proceeding by court of appeal].) The pursuit of a remedy in mandamus is particularly pointless here, where the adverse result of the commission action on Alameda County's claim can be positively stated by reason of the commission's prior rejection of identical claims of other counties, and its apparent refusal to entertain further such claims of Alameda County and other counties. (Ogo Associates v. City of Torrance, supra, 37 Cal.App.3d at p. 834, 112 Cal.Rptr. 761; see fn. 10, ante.)
13. For example, Welfare and Institutions Code section 17000 (added by Stats.1965, ch. 1784, § 5, p. 4090), former Welfare and Institutions Code section 2500 (added by Stats.1937, chs. 369 and 464, pp. 1097, 1406), and Health and Safety Code section 1442.5, subdivision (c) (added by Stats.1974, ch. 810, § 3, p. 1764).
14. Government Code section 17500 et seq.
15. Both the state's positions only arguably establish that county responsibility for health care for MIA's was not an “entirely new program [ ],” but rather was an instance in which the counties were compelled to provide a “higher level of service,” the imposition of which implicates the subvention requirements of section 6. (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at p. 836 and fn. 8, 244 Cal.Rptr. 677, 750 P.2d 318.)“[T]he intent underlying section 6 was to require reimbursement to local agencies for the costs involved in carrying out [such] functions peculiar to government․” (County of Los Angeles v. State of California, supra, 43 Cal.3d at p. 56, 233 Cal.Rptr. 38, 729 P.2d 202.)
16. The alleged preexisting duty of the counties, urged by the state as a rationale supporting its argument that no new program resulted from the state's action here, was expressly one of last resort, which became effective only if the state failed to assume financial responsibility. (Welf. & Inst.Code, § 17000 [“Every county and every city and county shall relieve and support all incompetent, poor, indigent persons, and those incapacitated by age, disease, or accident, lawfully resident therein, when such persons are not supported and relieved by their relatives or friends, by their own means, or by state hospitals or other state or private institutions.” Emphasis added.].)
17. No claim is made here that the funding of medical services for the indigent shifted to Alameda County is not a program “ ‘mandated’ ” by the state; i.e., that Alameda County has any option other than to pay these costs. (Lucia Mar Unified School Dist. v. Honig, supra, 44 Cal.3d at pp. 836–837, 244 Cal.Rptr. 677, 750 P.2d 318.)
PETERSON, Associate Justice.
KLINE, P.J., and BENSON, J., concur.