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Filed 5/24/22

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

SAN BERNARDINO CITY UNIFIED SCHOOL 

DISTRICT,

Plaintiff and Respondent,

v.

STATE ALLOCATION BOARD,

Defendant and Appellant.

C092003

(Super. Ct. No. 34-2019-

80003183CUWMGDS)

APPEAL from a judgment of the Superior Court of Sacramento County, 

Steven M. Gevercer, Judge. Affirmed.

Xavier Becerra, Attorney General, Thomas S. Patterson, Senior Assistant Attorney 

General, Anthony R. Hakl, and Jerry T. Yen, Deputy Attorneys General, for Defendant 

and Appellant.

Orbach Huff Suarez & Henderson, Philip J. Henderson, Glenn N. Gould, and 

Zachary N. Scalzo for Plaintiff and Respondent.

After the state gave plaintiff San Bernardino City Unified School District 

(District) hardship funding to build a school, the state demanded that the District return 

funds the District did not use for the project (the project savings). However, Education 
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Code section 17070.63, subdivision (c)1 allows a district to retain project savings for 

other proper purposes when the savings include funds received from the state. The 

District challenged the demand for return of the funding in an appeal to the State 

Allocation Board (Board). The Board upheld the state’s demand, relying on a regulation 

requiring the return of hardship funding. The District then filed an administrative 

mandamus action in the trial court, challenging the Board’s decision and the pertinent 

regulation. The trial court found the regulation conflicted with the statutory scheme and 

entered judgment in favor of the District.

The Board appeals to this court, contending the trial court erred by determining 

that section 17070.63, subdivision (c) allows a district to retain hardship funding, even 

though the regulation requires return of unused hardship funding to the state. We agree 

with the trial court that the regulation relied on by the Board improperly conflicts with 

the statutory scheme, and that the District is entitled to retain the hardship funding.

We will affirm the trial court judgment.

BACKGROUND

Chapter 12.5 of the Education Code is the Leroy F. Greene School Facilities Act 

of 1998 (Greene Act). (Stats. 1998, ch. 407, § 4; § 17070.10.) It encompasses 

sections 17070.10 through 17078.43 and provides a framework for state and local

funding to build local school facilities. (See, e.g., §§ 17071.75 [eligibility for funding];

17072.30 [requirement of local participation]; 17079.10 [state funding to relieve 

overcrowding].) A comprehensive description of the Greene Act is not necessary to this 

opinion, and we will focus on the provisions and applications relevant to the contentions 

on appeal.

1 Undesignated statutory references are to the Education Code.
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The General Provisions of the Greene Act are set forth in Article 1. Under that 

Article, the Board is granted authority to adopt regulations for administering the Greene 

Act, to determine local districts’ eligibility for funds under the Greene Act, and to 

apportion those funds. (§§ 17070.30; 17070.35, subd. (a).) Article 1 also allows a local 

school district to retain excess state funding if the district spends less than is allocated for 

the project. Section 17070.63, subdivision (c) provides: “Any savings achieved by the 

district’s efficient and prudent expenditure of these funds shall be retained by the district 

in the county fund for expenditure by the district for other high priority capital outlay 

purposes.” We will refer to this provision as the general savings statute.

Article 5, “New Construction Funding Process,” provides for state assistance in 

funding new construction of school facilities. Generally, the school district must provide 

50 percent of the funding from local sources before the Board releases state funds to 

cover the other 50 percent of the funding. (§ 17072.30; see Sanchez v. State of California

(2009) 179 Cal.App.4th 467, 479 (Sanchez) [applying the Greene Act with respect to a 

regulation not at issue here].)

Article 8 of the Greene Act provides for hardship funding assistance. “A school 

district may apply for hardship assistance in cases of extraordinary circumstances.” 

(§ 17075.10, subd. (a).) If the school district qualifies for hardship funding, the Board

“may adjust or defer the local financial participation . . . .” (§ 17075.15, subd. (a).) In 

other words, the Board may decrease the funding percentage from local sources and 

increase the funding percentage from the state. The Board must “adopt regulations” to 

implement Article 8 concerning hardship funding assistance. (§ 17075.15, subd. (b).)

Under its authority to promulgate regulations to implement the Greene Act, the 

Board promulgated section 1859.103 of title 2 of the California Code of Regulations, 

which we will refer to as regulation 1859.103. This rule relates to savings achieved by a 

district that has received hardship funding assistance. The rule provides, as pertinent 

here: “[T]he State’s portion of any savings declared by the district or determined . . . by 
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audit must be used to reduce the [School Facility Program] financial hardship grant of 

that project or other financial hardship projects within the district for a period of three 

years from the date the savings were declared by the district or determined by . . . audit.” 

(Cal. Code Regs., tit. 2, § 1859.103.) The effect of this regulation is that a district must 

return to the state any unused hardship funding in order to reduce (retroactively) the 

state’s hardship funding of the project unless the district uses the savings on other 

hardship projects within three years. The question presented in this case is whether this 

regulation is inconsistent with the general savings statute, section 17070.63, 

subdivision (c), which allows districts to retain savings, with no time limitations on when 

the funds must be used.

The pertinent facts are largely undisputed and straightforward. The District built a 

high school using state and local funding. The state contributed $17,880,758 in new 

construction funding and $17,683,996 in hardship funding. The District contributed 

$196,762. In other words, the state deviated from the usual 50/50 split between state and 

local funding by reducing the local participation to less than one percent based on the 

District’s hardship application.

The interest earned on the money for the project was $442,042.20. Therefore, 

total funding for the project, including the interest earned, was $36,203,558.20. But the 

District spent only a total of $33,222,704.99 on the project.

The parties dispute the total amount of savings for the project. The Board claims 

the savings amounted to $3,256,486.78 because of considerations we need not discuss, 

and the District claims the savings amounted to $2,980,853.21. As will be seen, this 

dispute is inconsequential because the District is entitled to retain the entire project 

savings, whatever the amount.

After completion of the project, the state Office of Public School Construction

determined by audit that the District was required to return to the state $3,376,502.88, “to 

reduce the financial hardship apportionment of this project,” under regulation 1859.103. 
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The District appealed the determination, but the Board ruled the District could not retain 

the project savings.

The District filed this administrative mandamus action to overturn the Board’s

decision. The trial court agreed with the District’s position and entered judgment against 

the Board, allowing the District to retain the project savings.

DISCUSSION

The Board contends the Legislature did not intend to allow districts to keep 

unneeded and unused hardship funds and, therefore, regulation 1859.103, providing for 

return of unused hardship funds from a district to the state, is a valid regulation 

implementing the Legislature’s intent.2

When we interpret statutory language, our goal is to determine what the 

Legislature intended. We first examine the language of the statute in its legislative 

context to determine the Legislature’s intent. (Esberg v. Union Oil Co. (2002) 28 Cal.4th 

262, 268, superseded by statute in Alch v. Superior Court (2004) 122 Cal.App.4th 339, 

396.) We review de novo the determinations of the Board and the trial court on matters 

of statutory interpretation. (Pulaski v. Occupational Safety & Health Stds. Bd. (1999) 

75 Cal.App.4th 1315, 1332 (Pulaski).)

A regulation is invalid and unenforceable if it conflicts with the Legislature’s 

intent as manifested in the statute. “Government Code section 11342.2 provides: 

‘Whenever by the express or implied terms of any statute a state agency has authority to 

adopt regulations to implement, interpret, make specific or otherwise carry out the 

2 The Board also argues that requiring a district to return unused hardship funds under

regulation 1859.103 does not violate the district’s equal protection rights. The trial court 

found it unnecessary to address this issue because it determined the regulation is

inconsistent with the general savings statute, and, therefore, the regulation is 

unenforceable. We also find it unnecessary to address the equal protection issue because 

we agree the regulation is unenforceable.
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provisions of the statute, no regulation adopted is valid or effective unless consistent and 

not in conflict with the statute and reasonably necessary to effectuate the purpose of the 

statute.’ (Italics added.) ‘Administrative regulations that alter or amend the statute or 

enlarge or impair its scope are void and courts not only may, but it is their obligation 

to strike down such regulations.’ (Morris v. Williams (1967) 67 Cal.2d 733.)” (Pulaski, 

supra, 75 Cal.App.4th at p. 1341.) Thus, regulation 1859.103 is valid and enforceable 

only if it does not conflict with the Greene Act.

The general savings statute (§ 17070.63, subd. (c)) appears in the “General 

Provisions” of the Greene Act in article 1 of Chapter 12.5 of the Education Code. 

Consequently, the general savings statute is generally applicable to the entire Greene Act, 

including the hardship funding provisions, unless there is some indication the Legislature 

intended some exception to that general application. If the general savings statute 

applies, the District is entitled to retain the savings on the project built with hardship 

funding and use the savings “for other high priority capital outlay purposes.” 

(§ 17070.63, subd. (c).) Regulation 1859.103, requiring return to the state of the savings, 

would be invalid under such circumstances because the regulation would conflict with the 

general savings statute. Unless the Board can establish the Legislature intended a 

different result, we would be required to affirm the trial court’s judgment in favor of the 

District.

The Board argues the Legislature did not intend for districts to retain savings from 

hardship funding because (A) the Legislature authorized the Board to promulgate 

regulations, (B) the purpose of hardship funding is to provide extraordinary additional 

funds, and (C) the specific statutes and regulation concerning hardship funding control 

over the general savings statute. We address each of these arguments in turn.

A

The Board begins by asserting its authority to promulgate regulations to 

implement the Greene Act. We agree the Board has authority to promulgate such 
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regulations. Section 17070.35, subdivision (a) of the Greene Act expressly delegates 

to the Board authority to promulgate regulations. Likewise, section 17075.15, 

subdivision (b), found in the hardship funding provisions of the Greene Act, requires the 

Board to promulgate regulations concerning hardship funding. But whether the Board

has authority to promulgate regulations is not the question we must resolve. Instead, we 

must determine whether the regulation promulgated by the Board, specifically regulation 

1859.103, conflicts with the Greene Act and, as a result, cannot be enforced. To be clear, 

this case is not about the Board’s authority to promulgate regulations. It can, as long as

those regulations do not conflict with the Greene Act. (Gov. Code, § 11342.2.)

B

The Board argues the trial court’s interpretation of the Greene Act and regulation 

1859.103 is inconsistent with the Legislature’s intent to provide extraordinary additional 

funds for construction when a hardship is established. The Board cites section 17075.10, 

subdivision (a), which provides that “[a] school district may apply for hardship assistance 

in cases of extraordinary circumstances.” (§ 17075.10, subd. (a).) 

The Board reasons: “[T]he Legislature intended for hardship funds to be used for 

a specific purpose -- to assist school districts with extremely limited financial resources 

in completing their project. Given the limited availability of hardship funds, this purpose 

would be undermined if school districts could retain unneeded and unused hardship 

funds.” Although this is an appropriate public policy argument, the statutory language 

and the appellate record do not support the Board’s version of legislative intent.

We understand hardship funding is limited and sought-after, and that if it is not 

completely used by a district for a specified project, another district could benefit from 

those unused funds. Redirecting the unused funds could be good public policy, but that is 

a matter for the Legislature. Here, we are required to follow the existing language of the 

Greene Act. The existing language indicates the Legislature adopted a different publicpolicy approach, one that rewards a district for its efficiency and prudence by allowing it 
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to retain savings, thereby freeing up hardship funding that might otherwise be requested 

by the district in the future. But a district is limited in how it can use the savings. 

Counsel for the District agreed at oral argument that the funds must be used for “other 

high priority capital outlay purposes.” (§ 17070.63, subd. (c).)

The language of the general savings statute (§ 17070.63, subd. (c)) is 

unambiguous and speaks for itself. Although the Board posits that a literal interpretation 

of the general savings statute would contradict the intent and purpose of the hardship 

funds program, as we have noted, the plain meaning of a statute is the best indicator of 

the Legislature’s intent, and the Board has made no persuasive argument to ignore the 

plain meaning of the Greene Act with respect to the general savings statute and its 

application to hardship funding.

This holds true even though the hardship funding statute gives the Board authority 

to “adjust or defer the local financial participation” of a district, depending on the 

hardship established by the district. (§ 17075.15, subd. (a).) The Board argues this 

provision gives it authority to make adjustments even after the allocation has been made 

and the project finished. But there is no express language in the Greene Act saying the 

Board can adjust hardship funding after the funds have been given to a district. Rather, 

the context of the words “adjust and defer the local financial participation” establishes 

that such authority to “adjust” hardship funding refers to the Board’s initial 

determinations about how to adjust the 50/50 formula in light of the district’s hardship 

application. This is the only reasonable interpretation of the provision given the express 

statutory language. “The total funding provided under this chapter [the Greene Act, 

which includes hardship funding] shall constitute the state’s full and final contribution to 

the project . . . .” (§ 17070.63, subd. (a).) “Any savings achieved by the district’s 

efficient and prudent expenditure of these funds [i.e. “the total funding provided under 

this chapter”] shall be retained by the district . . . .” (§ 17070.63, subd. (c).)
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The statutory language may authorize the Board to recover unused hardship funds 

if there is evidence savings was not achieved by the district’s efficient and prudent 

expenditure of funds. Counsel for the Board noted in oral argument, however, that there 

is no such evidence in this case.

The Board relies on Sanchez, supra, 179 Cal.App.4th at pages 474 and 475 for the 

proposition that the Board may adjust a district’s participation in hardship funding after 

the project has been completed. This is a misreading of Sanchez. In that case, the court 

determined that funds held by the district were available for future projects, which had 

the effect of reducing the state’s contribution of hardship funding for future projects. 

Sanchez did not approve a demand by the Board for the district to return to the state any 

savings from a project for which the district received hardship funding. (Sanchez, at 

p. 482.) In addition, Sanchez is inapposite because it did not interpret, or even mention, 

regulation 1859.103.

C

Finally, the Board argues the specific hardship funding statutes control over the 

general school facilities funding statutes. According to the Board, there was never any 

intent for a school district to receive a windfall when it does not need all of its allocated 

hardship funds. Again, however, the language of the general savings statute (§ 17070.63, 

subd. (c)) indicates otherwise. It expressly allows a district to retain savings without 

differentiating between regular and hardship funding, and nothing in the hardship funding 

provisions, which are part of the Greene Act, conflicts with application of the general 

savings statute. Certainly, when two statutes are in conflict, the specific controls over the 

general (Code Civ. Proc., § 1859 [particular intent controls over general intent]), but 

when there is no conflict, there is no need to resort to this rule. Because there is no 

conflict in the general savings statute and the hardship funding statutes, both must be 

given full effect. (In re Application of Goddard (1937) 24 Cal.App.2d 132, 138.)
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We conclude the Greene Act allows a district to retain savings of hardship funding 

“achieved by the district’s efficient and prudent expenditure of these funds . . . .” 

(§ 17070.63, subd. (c).) To the extent regulation 1859.103 requires a district to return

hardship funds to the state, it conflicts with the Greene Act, specifically with 

section 17070.63, subdivision (c), and is unenforceable.

DISPOSITION

The judgment is affirmed. The District is awarded its costs on appeal. (Cal. Rules 

of Court, rule 8.278(a).)

 /S/

MAURO, J.

We concur:

 /S/

RAYE, P. J.

 /S/

HULL, J.