Court Opinion

ID: 4181688
Source: CourtListenerOpinion
Date Created: 2017-06-28 17:02:09.090876+00
Date Added: 2024-06-11T07:47:16.967395
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 MICHAEL M. SATO,                                 No. 15-56402
                Plaintiff-Appellant,
                                                    D.C. No.
                     v.                          8:15-cv-00311-
                                                    JLS-JCG
 ORANGE COUNTY DEPARTMENT OF
 EDUCATION,
             Defendant-Appellee.                    OPINION

        Appeal from the United States District Court
            for the Central District of California
        Josephine L. Staton, District Judge, Presiding

          Argued and Submitted February 16, 2017
                   Pasadena, California

                       Filed June 28, 2017

 Before: Richard C. Tallman and N. Randy Smith, Circuit
 Judges, and Stephen Joseph Murphy III, * District Judge.

                   Opinion by Judge Tallman

    *
      The Honorable Stephen Joseph Murphy III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
2           SATO V. ORANGE CTY. DEP’T OF EDUC.

                          SUMMARY **

                           Civil Rights

    The panel affirmed the district court’s dismissal of a
lawsuit brought pursuant to 42 U.S.C. § 1983 and state law
by a former employee of the Orange County Department of
Education who alleged that his termination violated his
Fourteenth Amendment substantive and procedural due
process rights and constituted a breach of contract.

    The district court found that the Orange County
Department of Education, as an arm of the state, was
immune from suit under the Eleventh Amendment. In
affirming the district court, the panel rejected plaintiff’s
contention that California Assembly Bill 97, which
streamlined public education financing and decentralized
education governance, abrogated the holding in Belanger v.
Madera Unified School District, 963 F.2d 248 (9th Cir.
1992), that California school districts are entitled to
sovereign immunity.

    Applying the factors set forth in Mitchell v. Los Angeles
Community College District, 861 F.2d 198 (9th Cir. 1988),
the panel held that California school districts and County
Offices of Education remain arms of the state and continue
to enjoy Eleventh Amendment immunity. The panel held
that AB 97 reformed the financing and governance of
California public schools in important ways, but it did not so
fundamentally alter the relationship between Offices of

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
          SATO V. ORANGE CTY. DEP’T OF EDUC.                3

Education and the state as to abrogate this court’s decision
in Belanger.

                        COUNSEL

Douglas A. Ames (argued), Ames Law Office, Fountain
Valley, California, for Plaintiff-Appellant.

Jeffrey P. Thompson (argued) and Gregory A. Wille,
Declues Burkett & Thompson APC, Huntington Beach,
California, for Defendant-Appellee.

                           OPINION

TALLMAN, Circuit Judge:

    In 2013, the California legislature enacted Assembly Bill
97 (AB 97), a massive reform package designed to
streamline public education financing and decentralize
education governance. 2013 Cal. Legis. Serv. ch. 47 (A.B.
97). This appeal asks us to consider whether AB 97
abrogated our decisions in Belanger v. Madera Unified
School District, 963 F.2d 248 (9th Cir. 1992), and
Eaglesmith v. Ward, 73 F.3d 857 (9th Cir. 1996), in which
we held that California school districts and county offices of
education (COEs) are “arms of the state” entitled to state
sovereign immunity. We hold that the passage of AB 97 had
no such effect. School districts and COEs in California
remain arms of the state and cannot face suit.
4           SATO V. ORANGE CTY. DEP’T OF EDUC.

                                    I

    Defendant Orange County Department of Education
(OCDE) hired plaintiff Michael Sato as a Systems Database
Architect in August 2014. Within a matter of weeks after
Sato started working at OCDE, Sato’s supervisors informed
him that he would be terminated immediately. OCDE
offered no explanation as to why Sato was being terminated,
and Sato insisted that he had performed his duties
satisfactorily during his brief period of probationary
employment with OCDE. Before he was fired, Sato received
no oral or written notice of his termination, and he was given
no opportunity to be heard at a pre- or post-termination
proceeding.

    Sato sued OCDE for damages in federal district court,
asserting claims under 42 U.S.C. § 1983 and state law. In
his complaint, Sato alleged that, under his employment
contract with OCDE, Sato could only be fired for cause, even
during his initial one-year probationary period. 1 Sato
claimed that his termination without prior notice or a pre- or
post-termination hearing therefore violated his Fourteenth

    1
        Sato alleged that the terms of his employment contract were
contained in OCDE’s Management Employee Guidelines. The operative
version of the Guidelines provided that “classified management
employees,” who are “employee[s] in a position not requiring
certification under the California Education Code,” may “be terminated
during the probationary period for failing to meet the expectations of the
job.” Orange Cty. Dep’t of Educ., Management Employee Guidelines 3
(May 30, 2013). We assume without deciding that the Guidelines
conferred a property interest in Sato’s continued employment with
OCDE.
            SATO V. ORANGE CTY. DEP’T OF EDUC.                          5

Amendment substantive and procedural due process rights
and constituted breach of contract.

    OCDE moved to dismiss Sato’s complaint under Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6), 2 arguing
that, pursuant to our decision in Belanger, OCDE is an arm
of the state and enjoys Eleventh Amendment immunity from
suit. 3 Sato responded that “the California Legislature’s
massive 2013 enactment of Assembly Bill 97 completely
replaces the prior statutory basis for, and upends the analysis
of, Belanger.” According to Sato, after the passage of AB
97, OCDE is no longer an arm of the state for sovereign
immunity purposes.

   The district court granted OCDE’s Rule 12(b)(6) motion
with respect to Sato’s constitutional claims, but denied
OCDE’s motion with respect to the breach of contract

    2
        A sovereign immunity defense is “quasi-jurisdictional” in nature
and may be raised in either a Rule 12(b)(1) or 12(b)(6) motion. Compare
Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015) (“Although
sovereign immunity is only quasi-jurisdictional in nature, Rule 12(b)(1)
is still a proper vehicle for invoking sovereign immunity from suit.”),
with Eason v. Clark Cty. Sch. Dist., 303 F.3d 1137, 1140 (9th Cir. 2002)
(deciding sovereign immunity question on appeal of the district court’s
grant of a Rule 12(b)(6) motion).
    3
      We extended Belanger’s holding to California COEs, like OCDE,
in Eaglesmith v. Ward, 73 F.3d 857, 860 (9th Cir. 1995). COEs are
county-level administrative units that provide operational support to
school districts within their jurisdiction and also administer alternative
schools, primarily for youth in the juvenile justice system. See Legis.
Analyst’s Office, How Are County Offices of Education (COEs) Funded
Under the Local Control Funding Formula (LCFF)? (Cal. 2014),
available at http://www.lao.ca.gov/sections/education/ed-basics/How-
Are-COEs-Funded-Under-the-LCFF.pdf.
6           SATO V. ORANGE CTY. DEP’T OF EDUC.

claim. 4 On the issue of sovereign immunity, the district
court held that while the passage of AB 97 had perhaps
decentralized state control over school funding and
governance to some extent, Sato failed to show that AB 97
undermined our reasoning in Belanger. Recognizing that
OCDE’s sovereign immunity defense applied equally to his
federal and state claims, Sato then voluntarily dismissed his
state breach of contract claim. After granting Sato’s
voluntary dismissal motion, the district court entered final
judgment in favor of OCDE. We have jurisdiction under
28 U.S.C. § 1291, and we affirm.

                                 II

                                 A

    We review the district court’s grant of OCDE’s Rule
12(b)(6) motion de novo, “accepting as true all well-pleaded
allegations of fact in the complaint and construing them in
the light most favorable to the plaintiffs.” Eason v. Clark
Cty. Sch. Dist., 303 F.3d 1137, 1140 (9th Cir. 2002) (quoting
Zimmerman v. City of Oakland, 255 F.3d 734, 737 (9th Cir.
2001)). We also review de novo whether a party is entitled
to Eleventh Amendment sovereign immunity. Id. “[A]n
entity invoking Eleventh Amendment immunity bears the
burden of asserting and proving those matters necessary to
establish its defense.” Del Campo v. Kennedy, 517 F.3d
1070, 1075 (9th Cir. 2008) (internal quotation mark omitted)
(quoting In re Lazar, 237 F.3d 967, 974 (9th Cir. 2001)).

    4
      The district court declined to dismiss Sato’s breach of contract
claim on sovereign immunity grounds because OCDE failed to raise
sovereign immunity as a defense to that claim specifically.
          SATO V. ORANGE CTY. DEP’T OF EDUC.                7

    Whether the passage of AB 97 abrogates our arm-of-the-
state analysis in Belanger presents us with an issue of first
impression. While we have applied Belanger and dismissed
suits against California school districts since AB 97 was
enacted, none of those cases considered AB 97’s potential
effects on Belanger. See, e.g., Davis v. Folsom Cordova
Unified Sch. Dist., 674 F. App’x 699, 701 (9th Cir. 2017);
Chadam v. Palo Alto Unified Sch. Dist., 666 F. App’x 615,
618 (9th Cir. 2016); Pierce v. Santa Maria Joint Union High
Sch. Dist., 612 F. App’x 897, 898 (9th Cir. 2015); C.W. v.
Capistrano Unified Sch. Dist., 784 F.3d 1237, 1247 (9th Cir.
2015); Brynjolfsson v. State Agency L.A. Unified Sch. Dist.,
576 F. App’x 697, 698 (9th Cir. 2014). Because none of
those cases raised the particular question that confronts us
today, we are not bound by them. Cf. Minority Television
Project, Inc. v. FCC, 736 F.3d 1192, 1211 (9th Cir. 2013)
(“Courts ‘are not bound by a prior exercise of jurisdiction in
a case where it was not questioned and it was passed sub
silentio.’” (quoting United States v. L.A. Tucker Truck Lines,
Inc., 344 U.S. 33, 38 (1952))).

                              B

    The Eleventh Amendment provides that “[t]he Judicial
power of the United States shall not be construed to extend
to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State,
or by Citizens or Subjects of any Foreign State.” U.S. Const.
amend. XI. “It is well established that agencies of the state
are immune under the Eleventh Amendment from private
damages or suits for injunctive relief brought in federal
court.” Savage v. Glendale Union High Sch., 343 F.3d 1036,
1040 (9th Cir. 2003). State sovereign immunity does not
extend to county and municipal governments, unless state
law treats them as arms of the state. Id. at 1040–41. The
8          SATO V. ORANGE CTY. DEP’T OF EDUC.

question before us is thus whether, after AB 97, OCDE “is
to be treated as an arm of the State partaking of the State’s
Eleventh Amendment immunity, or instead is to be treated
as a municipal corporation or other political subdivision to
which the Eleventh Amendment does not extend.” See Holz
v. Nenana City Pub. Sch. Dist., 347 F.3d 1176, 1180 (9th
Cir. 2003) (internal quotation mark omitted) (quoting Mt.
Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274,
280 (1977)).

    To determine whether a government entity is an arm of
the state, we examine the five factors set forth in Mitchell v.
Los Angeles Community College District, 861 F.2d 198 (9th
Cir. 1988):

       [1] whether a money judgment would be
       satisfied out of state funds, [2] whether the
       entity    performs      central   government
       functions, [3] whether the entity may sue or
       be sued, [4] whether the entity has the power
       to take property in its own name or only the
       name of the state, and [5] the corporate status
       of the entity.

Belanger, 963 F.2d at 250–51 (quoting Mitchell, 861 F.2d at
201). We apply these factors to the question at hand.

    AB 97 reformed education funding and governance in
California in two key respects. First, it replaced the old
mechanism by which the state funded public education,
which relied on a combination of “revenue limits” funding
and “categorical funding grants,” with the Local Control
Funding Formula (LCFF). The LCFF streamlined the
number of state funding sources and increased K-12
spending, particularly for low-income and English-
language-learner (ELL) student populations. Second, AB 97
           SATO V. ORANGE CTY. DEP’T OF EDUC.                  9

required that school districts and COEs develop Local
Control and Accountability Plans (LCAPs) to measure
progress toward state and district goals for student
achievement.

    Under the Mitchell factors, we conclude that AB 97 did
not upend Belanger and Eaglesmith, and we affirm dismissal
of Sato’s complaint.

                               1

    The first Mitchell factor—whether a money judgment
against the government entity would be satisfied out of state
funds—is the most important. Eason, 303 F.3d at 1141; see
also Savage, 343 F.3d at 1041 (“Because the impetus of the
Eleventh Amendment is the prevention of federal-court
judgments that must be paid out of a state’s treasury, ‘[t]he
vulnerability of the State’s purse [is] the most salient factor
in Eleventh Amendment determinations.’” (alterations in
original) (quoting Hess v. Port Auth. Trans-Hudson Corp.,
513 U.S. 30, 48 (1994))). In evaluating this factor, “the
relevant inquiry is whether [the state] will be legally required
to satisfy any monetary judgment obtained against the
[d]istrict,” not whether state funds will actually be used.
Eason, 303 F.3d at 1142; see also Holz, 347 F.3d at 1182
(finding the first Mitchell factor disfavored immunity for the
defendant school district, even though the district received
98% of its funding from the state, because Alaska law
disclaimed the state’s responsibility for school district
debts).

    In Belanger, we explained that California’s unique
revenue limits system resulted in the state’s legal liability for
judgments against school districts. 963 F.2d at 252. Under
10          SATO V. ORANGE CTY. DEP’T OF EDUC.

this system, state law established a maximum per-pupil 5
spending amount, equalized across school districts. Id. The
state computed the “revenue limit” for each school district
by multiplying the statutory per-pupil funding allotment by
the number of students in that district. Id. To ensure districts
and COEs were funded to the revenue limit, the state
subtracted the value of local property taxes from the revenue
limit and contributed the remaining amount. Id. (citing Cal.
Educ. Code §§ 41600–41610, 42238–42251 (1992)).
Administering this funding scheme meant that “state and
local revenue [was] commingled in a single fund under state
control.” Id. And because revenue limits established a
maximum, equalized funding level,

         local tax revenue lost to a judgment [had to]
         be supplanted by the interchangeable state
         funds already in the district budget. Any
         local funds withdrawn from the budget to pay
         a judgment [were] unavailable for
         educational purposes, and state funds in the
         budget must cover any critical educational
         expenses that the local funds would have
         covered absent the judgment.

Id. In other words, to guarantee that districts and COEs were
funded at the statutory revenue limit, the state would be
required to backfill any outlay of funds used to satisfy a
judgment against a district or COE. Revenue limits thus had

     5
      Many California statutes calculate school district and COE funding
on an “average daily attendance” basis, see, e.g., Cal. Educ. Code.
§§ 2574(a)(3), 42238.02(d), which approximates a per-pupil basis,
Serrano v. Priest (Serrano I), 487 P.2d 1241, 1246 n.4 (Cal. 1971). We
use “per pupil” or “per student” instead of “average daily attendance” for
simplicity.
           SATO V. ORANGE CTY. DEP’T OF EDUC.                 11

the effect of making the state legally liable for any judgment
against a school district.

    Outside of California, in states that set a minimum, rather
than a maximum, per-pupil funding amount, we have found
that the first Mitchell factor disfavors immunity for school
districts. See, e.g., Holz, 347 F.3d at 1184 (Alaska); Savage,
343 F.3d at 1044 (Arizona); Eason, 303 F.3d at 1143
(Nevada). In Alaska and Nevada, for example, the state
guarantees minimum funding for school districts—called the
“basic support guarantee” in Nevada and the “basic need” in
Alaska—and school districts are free to raise additional
revenue beyond that amount. Holz, 347 F.3d at 1183–84;
Eason, 303 F.3d at 1142–43. Because per-pupil spending
need not be equalized across districts, we held it was “not
necessarily true that an amount withdrawn from a school
district’s account in order to pay a judgment will be replaced
with state money.” Holz, 348 F.3d at 1184 (quoting Eason,
303 F.3d at 1143). Similarly, in Savage, we held the state of
Arizona would not be liable for judgments against school
districts, as districts’ funds “are not subject to state control,
are not subject to a Belanger-style spending-cap, and will not
be replenished with money out of the state treasury.”
343 F.3d at 1044.

   Sato argues that when AB 97 replaced revenue limits
with the LCFF, it replaced a maximum per-pupil funding
formula with a minimum per-pupil formula. According to
Sato, school districts and COEs in California, like those in
Alaska, Arizona, and Nevada, are now free to raise local
property tax revenues as much as they want to supplement
minimum state support.

    We find Sato’s arguments without merit. As we noted in
Belanger, equalization of per-pupil spending in California is
not simply a matter of policy, but of state constitutional law.
12          SATO V. ORANGE CTY. DEP’T OF EDUC.
963 F.2d at 251. In two decisions from the 1970s—Serrano
v. Priest (Serrano I), 487 P.2d 1241 (Cal. 1971), and Serrano
v. Priest (Serrano II), 557 P.2d. 929 (Cal. 1976)—the
California Supreme Court declared that disparities in per-
pupil spending, driven by differences in districts’ ability to
generate local property tax revenues, violated the equal
protection guarantees of the state constitution. Serrano II,
557 P.2d at 957–58; Serrano I, 487 P.2d at 1263. Nowhere
in AB 97 does the California legislature attempt to amend
the state constitution’s equal protection provisions, and thus
we assume that the constitutional precepts announced in
Serrano I and Serrano II remain good law. See Methodist
Hosp. of Sacramento v. Saylor, 488 P.2d 161, 164–65 (Cal.
1971) (“Unlike the federal Constitution, which is a grant of
power to Congress, the California Constitution is a limitation
or restriction on the powers of the Legislature.”).

    Even putting state constitutional issues aside, Sato’s
characterization of the LCFF as a minimum per-pupil
funding formula is at odds with the text of AB 97, which
demonstrates the legislature’s intent to maintain equalization
of per-pupil spending. Under the LCFF, districts and COEs
receive a “base grant” amount for each student, and they may
receive additional “supplemental grant” and “concentration
grant” funding depending on the number of low-income and
ELL students. 6 Cal. Educ. Code § 2574(b)–(c) (COEs); id.
§ 42238.02(b)–(f) (districts). Supplemental grants provide
school districts with additional funding equal to 20% of the
base grant for each low-income or ELL student in the

     6
      For COEs, base grants, supplemental grants, and concentration
grants support alternative public schools operated by COEs. Cal. Educ.
Code § 2574(c). COEs also receive operational grants, which fund the
services that COEs provide to school districts within their jurisdiction.
Id. § 2574(a).
            SATO V. ORANGE CTY. DEP’T OF EDUC.                    13

district; concentration grants provide an additional 50% of
the base grant amount for each low-income or ELL student,
if the proportion of low-income/ELL students exceeds 55%
of total enrollment. Id. § 42238.02(e)–(f).

    As explained by the California Legislative Analyst’s
Office, the combination of base, supplemental, and
concentration grants ensures that “[d]istricts serving the
same number of students in the same grade spans with the
same characteristics receive the same amount of funding.” 7
Moreover, the state calculates its funding share to districts
and COEs in the same manner as under the revenue limits
system: the state’s contribution is equal to the state-
determined LCFF funding target minus local property tax
revenue. Cal. Educ. Code §§ 2575, 42238.02(j). The
legislature’s use of the same state contribution equation
indicates that the LCFF funding target, like a revenue limit,
represents a maximum expenditure, not a minimum.

    Sato contends that the legislature’s use of the term “base
grant” evinces its intent to allow districts and COEs to raise
local property tax revenues above and beyond the state’s
minimum “base” support. He also alleges that OCDE
receives a significant portion of its funding from local
property tax revenues, which he claims are raised on top of
LCFF base grant funding. But Sato’s focus on semantics
ignores the strictures of the California Constitution
expressed in Serrano I and Serrano II. And there is nothing
unusual about the fact that OCDE receives some of its
funding from local tax dollars. As under the revenue limits

    7
       Legis. Analyst’s Office, Local Control Funding Formula
Implementation 1 (Cal. 2015), available at http://www.lao.ca.gov/hand
outs/education/2015/Local-Control-Funding-Formula-Implementation-
031915.pdf.
14             SATO V. ORANGE CTY. DEP’T OF EDUC.

system, school districts and COEs are funded through a
combination of local tax revenues and the state’s funding
contribution. See Cal. Educ. Code. § 42238.02; Belanger,
963 F.2d at 252.

    Examining the purposes of AB 97, we find no intent on
the part of the California legislature to replace a maximum
per-pupil funding formula with a minimum per-pupil
formula. Rather, the legislation’s objectives were twofold:
(1) increase education funding, 8 particularly for low-income
and ELL students, and (2) simplify what many considered
an “overly complex, inefficient, and outdated” education
finance system. 9 To achieve these ends, the LCFF
streamlined the numerous, piecemeal sources of state
funding under the old revenue limits system. Base grants,
supplemental grants, and concentration grants replaced
revenue limits funding and almost all of the dozens of
categorical funding grants under the old funding mechanism.
Taylor, supra note 8, at 6, 7 fig.5 (listing 32 categorical
funding programs eliminated under the LCFF). Categorical
grants were restricted funds used for dozens of school
services, such as special education, educational technology,
and principal training. Now, instead of receiving many types
of restricted funds, districts and COEs receive larger lump
sums, with more flexibility over how state dollars are spent.
See Campaign for Quality Educ. v. State, 209 Cal. Rptr. 3d
8
        The LCFF increases per-pupil funding amounts compared
to revenue limits per-pupil spending and provides for a complex
transition formula to bring per-pupil spending up to target levels
over several years. Cal. Educ. Code § 42238.03; see also Mac Taylor,
Legis. Analyst’s Office, Updated: An Overview of the Local
Control Funding Formula 2–3 (Cal. 2013), available at
http://www.lao.ca.gov/reports/2013/edu/lcff/lcff-072913.pdf.

     9
         Taylor, supra note 8, at 20.
          SATO V. ORANGE CTY. DEP’T OF EDUC.               15

888, 923 (Cal. Ct. App. 2016) (Liu, J., dissenting from denial
of petition for review) (describing the LCFF as “designed to
improve the ability of school districts to flexibly use state
education dollars to address the most pressing areas of
need”).

    While the passage of AB 97 provided districts and COEs
with additional flexibility in their budgets, we note,
however, that AB 97 did not eliminate the “centralized”
system of “strict state control” over local districts’ funding
we discussed in Belanger. See 963 F.2d at 252. In Belanger,
we noted that the enactment of Proposition 13 by statewide
ballot initiative in 1978 “ensured that the state, rather than
local school districts, would control funding for public
schools.” Id. at 251. Proposition 13 capped local property
tax rates at 1% of assessed value, and transferred the
authority to collect and redistribute local property tax
revenues to the state. Cal. Const. art. XIIIA, § 1(a). As the
California Supreme Court explained:

       [B]y capping local property tax revenue,
       [Proposition 13] greatly enhanced the
       responsibility the state would bear in funding
       government services, especially education.
       [And] by failing to specify a method of
       allocation, Proposition 13 largely transferred
       control over local government finances . . . to
       the state, converting the property tax from a
       nominally local tax to a de facto state-
       administered tax subject to a complex system
       of intergovernmental grants.

Cal. Redev. Ass’n v. Matosantos, 267 P.3d 580, 589 (Cal.
2011) (citations omitted). AB 97 did nothing to override
16        SATO V. ORANGE CTY. DEP’T OF EDUC.

Proposition 13, and Sato does not dispute that Proposition 13
remains in effect.

    In sum, we find that AB 97 left in place the fundamental
elements of Belanger: equalization of per-pupil spending
and centralized control over local education budgets.
Because the LCFF keeps in place a maximum per-pupil
funding formula, state and local funds are still “hopelessly
intertwined,” and “any change in the allocation of property
tax revenue has a direct effect on the allocation of state
funds.” Belanger, 963 F.2d at 252. The first Mitchell factor
therefore weighs in favor of Eleventh Amendment
immunity.

                             2

    The second Mitchell factor asks us to consider “whether
the [government] entity performs central government
functions.” Mitchell, 861 F.2d at 201. In Belanger, we
found that “California law treats public schooling as a
statewide or central governmental function.” 963 F.2d at
253. The California Supreme Court has said that “[s]ince its
admission to the Union, California has assumed specific
responsibility for a statewide public education system open
on equal terms to all.” Butt v. State, 842 P.2d 1240, 1247
(Cal. 1992). Examples of the state’s assumption of public
education as a state responsibility appear throughout the
California Constitution. See, e.g., Cal. Const. art. IX, § 5
(“The Legislature shall provide for a system of common
schools.”); Cal. Const. art. XVI, § 8(a) (“From all state
revenues there shall first be set apart the moneys to be
applied by the State for support of the public school system
and public institutions of higher education.”).

    Sato argues that AB 97’s requirement that school
districts and COEs adopt Local Control and Accountability
           SATO V. ORANGE CTY. DEP’T OF EDUC.                17

Plans (LCAPs) “unequivocally establish[es] that California
public schooling is now controlled and provided locally.”
We disagree.

    LCAPs are three-year plans that must describe districts’
goals for student achievement and identify actions districts
will take to meet those goals. Cal. Educ. Code § 52060;
Taylor, supra note 8, at 8. LCAPs must address eight areas
of state priority, and they may also include “additional local
priorities identified by the governing board of the school
district” or county board of education. Cal. Educ. Code
§§ 52060(c)–(d), 52066(c)–(d). Within these areas, districts
and COEs must set goals for all students and for specific
subgroups of students, including ethnic minorities, low-
income students, ELL students, and students with
disabilities. Id. §§ 52052(a), 52060(c), 52066(c). LCAPs
must be developed using a state-provided template. Id.
§§ 52060(a), 52066(a). Within five days of adopting or
updating its LCAP, a district must submit its LCAP to its
COE for review, id. § 52070(a), and the COE is then
responsible for filing the LCAP with the state, id. § 52070.5.

    Sato argues that, in empowering districts to identify local
priorities and develop strategies for achieving their goals
through the LCAP process, AB 97 effectively transferred
primary authority over public education from the state to the
local level. We are unconvinced that LCAPs represent such
a sea change. Under the state constitution, the provision of
public education in California remains a central government
function. And even through the LCAP process, the state still
exercises significant control over school districts and COEs.
Under the LCAP provisions of AB 97, districts and COEs
“shall” address eight areas of priority identified by the state,
and “may” also address local priorities. Cal. Educ. Code
§§ 52060(c), (h), 52066(c), (h). The far-reaching areas of
18        SATO V. ORANGE CTY. DEP’T OF EDUC.

state priority include such fundamental issues as
“[i]mplementation of the academic content and performance
standards adopted by the state board,” “[p]arental
involvement,” and “[p]upil achievement.” Id. § 52060(d).
For each area of state priority, districts and COEs must set
goals for state-identified subgroups of students, and they
must use state-provided templates and submit the final
LCAP to the California Department of Education.

    On the whole, AB 97 granted districts and COEs some
measure of autonomy and discretion in goal-setting, but it
did not delegate primary responsibility for providing public
education. We therefore find that the passage of AB 97 did
not disturb our longstanding precedent that “California law
treats public schooling as a statewide or central
governmental function.” See Belanger, 963 F.2d at 253. As
in Belanger, “[t]hat the state itself has decided to give its
local agents more autonomy does not change the fact that the
school districts remain state agents under state control.” Id.
The second Mitchell factor weighs in favor of Eleventh
Amendment immunity for OCDE.

                              3

    The passage of AB 97 does not impact our analysis of
the remaining three Mitchell factors. As in Belanger, the
third Mitchell factor—whether the government entity may
sue or be sued—weighs in Sato’s favor. See Belanger,
963 F.2d at 254. Under California law, COEs and school
districts can sue and be sued in their own name. Cal. Educ.
Code § 35162 (“In the name by which the district is
designated the governing board may sue and be sued, and
hold and convey property for the use and benefit of the
school district.”). Accordingly, this factor “militates against
a finding of Eleventh Amendment immunity.” Belanger,
963 F.2d at 254. But as we recognized in Belanger, “it does
           SATO V. ORANGE CTY. DEP’T OF EDUC.                 19

not necessarily follow that the school district can be sued for
money damages just because it can be sued in its own name.”
Id. We therefore adopt Belanger’s approach in finding that
this factor weighs in Sato’s favor, but we afford it less weight
than the first two factors. See id.

                               4

    The fourth Mitchell factor also weighs in Sato’s favor.
The fourth factor considers “whether the entity has the
power to take property in its own name or only the name of
the state.” Mitchell, 861 F.2d at 201. In California, the same
statute that allows COEs and school districts to sue and be
sued in their own name also conveys to COEs and school
districts the power to hold property in their own name. Cal.
Educ. Code § 35162. Critically, however, the California
Supreme Court has determined that local public school
entities hold property for the benefit of the state. Hall v. City
of Taft, 302 P.2d 574, 577 (Cal. 1956) (“The beneficial
ownership of property of the public schools is in the state.”).
We thus concluded in Belanger that this factor was a “close
question” entitled to “little weight.” 963 F.2d at 254. We
reiterate that conclusion here.

                               5

    The fifth Mitchell factor asks us to consider the corporate
status of OCDE. In California, “school districts have the
corporate status of agents of the state for purposes of school
administration.”     Eason, 303 F.3d at 1144 (quoting
Belanger, 963 F.2d at 254). The California Supreme Court
has stated that “[l]ocal districts are the State’s agents for
local operation of the common school system.” Butt,
842 P.2d at 1248.
20         SATO V. ORANGE CTY. DEP’T OF EDUC.

    Sato contends that COEs must be a distinct corporate
entity from the state, because OCDE sued the state of
California in Orange County Department of Education v.
California Department of Education, 668 F.3d 1052 (9th
Cir. 2011). As we have already determined, however,
California law previously authorized school districts and
COEs to sue in their own name before the passage of AB 97.
Cal. Educ. Code § 35162. This limited authority does not
change the status of districts and COEs as agents of the state.
This factor weighs in favor of Eleventh Amendment
immunity.

                              III

    Considering all of the Mitchell factors together, we hold
that California school districts and COEs, including
defendant OCDE, remain arms of the state and continue to
enjoy Eleventh Amendment immunity. AB 97 reformed the
financing and governance of California public schools in
important ways, but it did not so fundamentally alter the
relationship between COEs and the state as to abrogate our
decision in Belanger. Sato’s claims against OCDE were
properly dismissed.

     AFFIRMED. Each party shall bear its own costs.