Opinion ID: 1205046
Heading Depth: 1
Heading Rank: 8

Heading: Source of loan funds.

Text: In order to obtain the necessary $19 million in emergency loan funds, the trial court authorized the Controller to disburse (1) $9 million of unspent funds from a special contingency appropriation to the Department of Education for the GAIN program, and (2) the unused $10 million appropriated as an emergency loan to the OUSD. (9) The State and amicus curiae Pacific argue that because the Legislature had not earmarked either of these sums for purposes reasonably related to resolving the District's financial crisis, the court improperly invaded the nonjudicial power of appropriation. We agree. In a valid exercise of its constitutional powers, the Legislature had directed each of these sums to specific agencies and narrow purposes which did not include the District and its financial emergency. Hence, the Legislature had not made these funds reasonably available for disbursement to the District. By diverting the funds from their earmarked destinations and purposes, the court invaded the Legislature's constitutional authority. Article III, section 3 of the Califonia Constitution provides that [t]he powers of state government are legislative, executive, and judicial. Persons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution. Article XVI, section 7 provides that [m]oney may be drawn from the Treasury only through an appropriation made by law and upon a Controller's duly drawn warrant. Article IV, sections 10 and 12 set forth the respective powers of the Legislature and Governor over the enactment of appropriations. It has long been clear that these separation-of-powers principles limit judicial authority over appropriations. ( Myers v. English (1858) 9 Cal. 341, 349; see Westinghouse Electric Co. v. Chambers (1915) 169 Cal. 131, 135 [145 P. 1025]; California State Employees' Assn. v. Flournoy (1973) 32 Cal. App.3d 219, 234 [108 Cal. Rptr. 251]; see also Payne v. Superior Court (1976) 17 Cal.3d 908, 920, fn. 6 [132 Cal. Rptr. 405, 553 P.2d 565].) In certain narrow circumstances, California courts have concluded that judicial orders for the disbursement of appropriated funds do not invade valid legislative functions. Mandel v. Myers, supra, 29 Cal.3d 531, is the only decision by this court which found judicial power to commandeer appropriated funds. The facts and analysis of that case demonstrate the strict limits on the judicial authority it recognized. The plaintiff in Mandel, a Department of Health Services (DHS) worker, had prevailed in litigation challenging DHS's practice of allowing paid employee leave on Good Friday. The judgment against the State included an award of attorney fees. However, the Legislature removed appropriations for payment from successive claims and budget bills, including the 1978-1979 Budget Act (Act). The Act included the usual appropriation to DHS for general operating expenses and equipment, which expressly included expenses for services and all other proper purposes. Such catchall budget categories for State agencies had traditionally been used to pay agency legal expenses. However, the Act expressly precluded use of any appropriation therein to achieve any purpose which has been denied by any formal action of the Legislature. We upheld the trial court's order that the Controller pay the fee award from the general operating budget of DHS. We noted first that the catchall appropriation was reasonably or generally available for payment of legal expenses incurred by DHS, because the broad terms of the appropriation, as well as its historical uses, indicated such a legislative intent. In effect, we concluded that the Legislature had voluntarily made an appropriation for payments of this general kind. ( Mandel v. Myers, supra, 29 Cal.3d at pp. 539-545.) We further explained that, once having made an appropriation generally available, the Legislature may not impose specific restrictions which are unconstitutionally discriminatory, or which constitute an impermissible legislative attempt to readjudicate the merits of a final court judgment. Hence, we reasoned, the Legislature's attempt to avoid payment of the Mandel award in particular must be struck down. The DHS catchall appropriation thus remained available under its general terms for payment of the judgment. ( Mandel v. Myers, supra, 29 Cal.3d at pp. 545-551.) Subsequent Court of Appeal decisions adhered to these principles of Mandel. In Serrano v. Priest (1982) 131 Cal. App.3d 188 [182 Cal. Rptr. 387], attorneys who had won the school-finance class action sought judicial help after the State rebuffed their informal efforts to collect a court-ordered fee award. After Mandel was decided, the State conceded that the trial court had properly ordered payment from a catchall appropriation to the Department of Education, the SPI, and the State Board of Education for operating expenses and equipment. (Pp. 197-198.) In Committee to Defend Reproductive Rights v. Cory (1982) 132 Cal. App.3d 852 [183 Cal. Rptr. 475], the court concluded, after disregarding an unconstitutional budget act provision against use of Medi-Cal funds for abortions (see Committee to Defend Reproductive Rights v. Myers (1981) 29 Cal.3d 252 [172 Cal. Rptr. 866, 625 P.2d 779, 20 A.L.R.4th 1118]), that abortion funding could be ordered from monies appropriated for other Medi-Cal pregnancy services. (132 Cal. App.3d at pp. 857-858.) Plaintiffs and the SPI suggest that two more recent Court of Appeal decisions, Long Beach Unified Sch. Dist. v. State of California (1990) 225 Cal. App.3d 155 [275 Cal. Rptr. 449] and Carmel Valley Fire Protection Dist. v. State of California (1987) 190 Cal. App.3d 521 [234 Cal. Rptr. 795], have expanded Mandel 's concept of reasonable [or] general availability. The trial court in the instant case apparently relied on these decisions to conclude that it could divert the GAIN and OUSD appropriations to the District because they were generally related to education. Long Beach and Carmel Valley do make occasional use of the term generally related to describe Mandel 's principle of reasonable or general availability. (See Long Beach, supra, 225 Cal. App.3d at p. 181; Carmel Valley, supra, 190 Cal. App.3d at p. 541.) But nothing in those cases supports the trial court's apparent view that funds appropriated for one specific educational purpose may be judicially diverted to another. So far as the face of the opinions discloses, the stated intent of the target appropriation in each case, or its historical uses, indicated that the court's application of the funds was plausibly within purposes the Legislature might have contemplated. [25] No court has suggested that Mandel principles permit court-ordered diversion of an appropriation away from a clear, narrow, and valid purpose specified by the Legislature. We affirm that the words generally related, as used in Long Beach and Carmel Valley, do not countenance such judicial incursions into the legislative power over appropriations. [26] The instant trial court misapplied Mandel when it authorized the diversion of appropriated funds from the specific purposes and programs for which the Legislature had validly earmarked them. Nine million dollars was taken from an appropriation in the 1989-1990 Budget Act for the GAIN program. (Stats. 1989, ch. 93, ง 22.00.) GAIN's purpose is to provide employment, adult education, and job training to recipients of public assistance. (Welf. & Inst. Code, ง 11320 et seq.) Local school districts can receive GAIN funds for adult education and training classes ( id., งง 11320.8, 11322, 11323), and the Legislature intended that the 1989-1990 GAIN appropriation might include such funding subject to strict conditions (see Stats. 1989, ch. 93, ง 22.00, subd. (b)). However, this appropriation was expressly designated for that program alone and was not intended to fund the needs of non-GAIN students. Nothing in the trial court's order restricted use of the GAIN-derived funds to uses contemplated by the appropriation. Similar considerations govern the remaining $10 million of the emergency loan, which was derived from the 1989 Legislature's special appropriation for the OUSD. This appropriation, by its express terms, was for the purpose of an emergency loan to [ that ] [ d ] istrict in compliance with Article 2 (commencing with Section 41320) of Chapter 3 of Part 24 of the Education Code. (Stats. 1989, ch. 1438, ง 1, italics added.) Section 41310 expresses the intent that emergency loans to distressed districts under section 41320 et seq. not occur unless funds have been specifically appropriated therefor by the Legislature. (Italics added.) The statutory scheme imposes detailed conditions on emergency loans granted under its auspices (งง 41320.1-41323), and the Legislature further refined the conditions on the OUSD appropriation to address the particular circumstances of that case (Stats. 1989, ch. 1438, งง 2-9). When it makes an appropriation to a specific district, under specific conditions addressed to the problems of that district, the Legislature clearly intends and contemplates that the appropriation will only be used for that purpose, and under those conditions. Hence, the appropriation is not reasonably available for court-ordered diversion to another district under different conditions. The trial court, understandably anxious to resolve the crisis, concluded that it could fund its order from any monies previously appropriated for a purpose that is reasonably related to educational purposes. The court found that the GAIN and OUSD appropriations were reasonably related to the State's obligation to keep the Richmond schools open through June 14, 1991.... As we have seen, however, the test of reasonable availability under Mandel does not extend to uses clearly outside the particular purpose for which an appropriation was reserved. The GAIN and OUSD appropriations were earmarked for purposes entirely distinct from the subject matter of this lawsuit. [27] They were not reasonably available for court diversion to finance the remainder of the District's school term. In her concurring and dissenting opinion, Justice Kennard claims that by flatly disclaiming judicial power to divert appropriations from the purposes specified by the Legislature, we adopt a formalistic and outmoded view of the separation of powers. Citing language from two United States Supreme Court decisions ( Mistretta v. United States (1989) 488 U.S. 361 [102 L.Ed.2d 714, 109 S.Ct. 647]; Nixon v. Administrator of General Services (1977) 433 U.S. 425 [53 L.Ed.2d 867, 97 S.Ct. 2777]), she proposes that interbranch conflicts of this kind be resolved under a pragmatic and flexible case-by-case balancing test, in which the derogation of one branch's powers by another may be warranted to promote overriding objectives within the constitutional authority of the latter. Because both the OUSD and GAIN appropriations were generally related to elementary and secondary education, she reasons, diversion of these funds to the District was not a great or extreme intrusion upon the appropriations power, and the court's action was justified by its constitutional responsibility to District students. We cannot accept these contentions. Our adherence to Mandel can hardly be deemed rigid or formalistic; our decision in that case strained to find a practical, sensitive, and principled balance between legislative and judicial power over appropriations. In effect, Justice Kennard urges abandonment of Mandel 's careful analysis in favor of a rule giving the judiciary unchecked power to override the valid budgetary acts of coequal branches. However, nothing in the California or federal cases on which Justice Kennard relies even hints that a court may nullify a specific and valid exercise by the Legislature and the Executive of fundamental budgetary powers explicitly entrusted to those branches, simply for the purpose of satisfying a judgment or order that is unrelated to the appropriation. (Compare, e.g., Mistretta v. United States, supra, 488 U.S. 361, 380-384 [102 L.Ed.2d 714, 735-738] [Congress's creation of United States Sentencing Commission, a judicial-branch agency charged with establishing mandatory federal sentencing guidelines, did not usurp authority of individual judicial officers or grant forbidden legislative power to judicial branch]; Nixon v. Administrator of General Services, supra, 433 U.S. 425, 441-446 [53 L.Ed.2d 867, 889-893] [legislation vesting Administrator of General Services with limited control over presidential papers of resigned chief executive did not undermine authority of executive branch]; Wilson v. Eu (1991) 54 Cal.3d 471, 473 [286 Cal. Rptr. 280, 816 P.2d 1306] [Legislature's failure to reapportion justifies judicial adoption of reapportionment plan]; Davis v. Municipal Court (1988) 46 Cal.3d 64, 72-87 [249 Cal. Rptr. 300, 757 P.2d 11] [District attorney's statutory power to disapprove local misdemeanor-diversion program was not improper delegation of legislative authority; prosecutor's absolute discretion to prevent diversion by charging wobbler as felony did not constitute forbidden judicial power]; Younger v. Superior Court (1978) 21 Cal.3d 102, 115-118 [145 Cal. Rptr. 674, 577 P.2d 1014] [statute requiring Department of Justice to destroy individual's marijuana arrest and conviction records upon application after sentence is complete did not create impermissible conflict with executive clemency powers].) The balance proposed by Justice Kennard in this case would elevate the judiciary above its coequal brethren, upset the delicate system of checks and balances, and stand the separation of powers clause on its head. Applying Mandel 's well-settled principles, we remain satisfied that the trial court acted in excess of its authority when it funded the District's loan with appropriations specifically earmarked by the Legislature for other purposes. [28]