'1ch- Santa Ana Uni?ed School District Stefanie P. Phillips, Superintendent of Schools March 8, 2019 Orange County School of the Arts Charter Steve Wagner Vice President, Chief Operations Of?cer 1010 N. Main St Santa Ana, CA 92701 RE: Contribution to District?Wide Special Education Costs Dear Mr. Wagner: Education Code section 47646, subdivision (0), requires the local educational agency that approved a charter school that is deemed a public school of that agency for purposes of special education to ensure that the charter school also contributes an equitable share of its charter school block grant funding to support districtwide special education instruction and services, including, but not limited to, Special education. instruction and services for pupils with disabilities enrolled in the charter school. This letter is to notify you of required contribution from Orange County School of the Arts (OCSA) to Santa Ana Uni?ed School District?s special education costs, and to request payment. Since charter was approved in 2000, the District has spent its locally generated funding on districtwide special education instruction and services above and beyond the amount of federal and state funding it generates for all students, including for those enrolled at OCSA. However, OCSA has not contributed its share of its funding to support districtwide special education costs as required pursuant to Ed Code Section 47646. Starting this school year, the District will annually invoice OCSA for its required contribution to ensure it is made. We will be contacting you to set up a meeting to discuss your contributions for current and prior years, as we hope to reach an agreement that ensures the required, equitable contribution to districtwide special education costs is made. Sincerely, Stefanie Phillips, Superintendent of Schools cc: Board of Education Dr. Stekol, Deputy Superintendent, Administrative Services Dr. Helguera, Assistant Superintendent, Special EducationfSELPA 1601 East Chestnut Avenue, Santa Ana, CA 92701-6322 (714) 558-5501 BOARD OF EDUCATION Valerie Amezcua, President - Rigo Rodriguez, Vice President Alfonso Alvarez, Clerk 0 John Palacio, Member "u SANTA ANA UNIFIED SCHOOL DISTRICT A CCOUNTING DEPARTMENT 1601 E. CHESTNUT ST. SANTA ANA, CA. 92701 DATE: March 25, 2019 PHONE 214?558-5825 FAX 2714-5586625 INVOICE page 1 Bill Ta: For: ORANGE COUNTY SCHOOL OF THE ARTS SELPA EXCESS COST 1010 N. MAIN ST FOR 2002 .. 2010 SANTA ANA, CA 92701 DESCRIPTION AMDUNT SELPA EXCESS COSTS FOR YEARS 2002 - 2010 DUE TO SANTA ANA UNIFIED SCHOOL DISTRICT 2002?2003 2003-2004 2004?2005 2005?2006 20060007 2007-2008 2003-2009 2009-2010 2010?201 1 201 1?201 2 2012?201 3 20132014 amounts continued on next page 213,905.00 255,261.00 333,947. 00 448,?8800 234.1791 .00 704,004.00 901,108.00 097,041 .00 1,115,580.00 1,250,411.00 TOTAL PLEASE MAKE CHECK. PAYABLE TO SANTA ANA UNIFIED SCHOOL DISTRICT ATTN: ACCOUNTING DEPARTMENT THANK YOU FOR YOUR SANTA ANA UNIFIED SCHOOL DISTRICT ACCOUNTING DEPARTMENT DATE: 1001 E. CHESTNUT ST. March 25, 2010 SANTA ANA, CA. 92701 . PHONE 714.550.5825 FAX 714-558-5625 INVOICE 11 A2257 page 2 Bill TO: For: ORANGE COUNTY SCHOOL OF THE ARTS SELPA EXCESS COST 1010 N. MAIN ST FOR 2002 ~2010 SANTA ANA. CA 02701 DESCRIPTION AMOUNT SELPA EXCESS COSTS FOR YEARS 2002 - 2010 DUE TO SANTA ANA UNIFIED SCHOOL DISTRICT 20142015 1,441,330.00 20152010 1,930,220.00 I 2010?2017 2,100,215.00 2017-2010 2.500.071.00 20102010 3,170,220.00 TOTAL 10210232000 PLEASE MAKE CHECK PAYABLE TO SANTA ANA UNIFIED SCHOOL DISTRICT ACCOUNTING DEPARTMENT THANK YOU FOR YOUR 4.. SANTA ANA UNIFIED SCHOOL DISTRICT ACCOUNTING DEPARTMENT DATE: March 25, 2019 1601 E. CHESTNUT ST. SANTA ANA, CA. 92701 PHONE 714~553~5825 FAX 714-558-5625 page 3 Bill To: For: ORANGE COUNTY SCHOOL OF THE ARTS SELPA EXCESS COST 1010 N. MAIN ST FOR 2002 2019 SANTA ANA, CA 92701 BESCRIPTION I AMOUNT The excess special education costs were billed per the formula included in the MOU and detailed below: Expenditures in excess of revenues multiplied by the ratio of charter school to SELPA ADA. Revenues Special Education Apportionment Special Education Mental Health Special Education Local Assistance Entitlements Expenditures Total Special Education Costs - Special Education Transportation Costs - Reimbursed Provider Cosm TOTAL PLEASE MAKE CHECK PAYABLE TO SANTA ANA UNIFIED SCHOOL DISTRICT ATTN: ACCOUNTING DEPARTMENT THANK YOU FOR YOUR OCSA SPECIAL ED BILLBACK SAUSD $647 SAUSD FY ADA PER ADA BILLBACK DIFF 18~19 2,085.00 1,348,995 900,000 448,995 17-18 2,060.56 1,333,182 899,358 433,824 16-17 2,071.91 1,340,526 684,328 656,138 15-16 2,006.45 1,298,173 536,605 761,568 14-15 1,846.78 1,194,867 355,655 839,212 1314 1,835.08 1,187,297 388,600 798,697 3,938,494 5/39?? 4?57 Wk 57"? Document5\Book2 . LAW OFFICES OF MARGARET A. CHIDEBTER ?732 COWAN. FIRST FLOOR IRVINE. CALIFORNIA 92814-6096 MARGARET A. TELEPHONE: {949} 474.5040 craves R. CHIDESTER KATELYN a. March 26, 2019 TELECOPIER: (menu?6540 STEPHANIE L. CRESPIN DANIELLE M. BOYD LESLIE J. KIM encasement. CORPORATION REF. ous FILE VIA ELECTRONIC CERTIFIED MAIL RETURNRECEIPT REQUESTED Santa Ana Uni?ed School District 1601 East Chestnut Avenue Santa Ana, 92701-6322 Attention: Dr. Stefanie Phillips Superintendent stefanie.phillips@sausd.us Re: Orange County School of the Arts? Response to Your Correspondence of March 8, 2019 Dear Dr. Phillips: This of?ce is counsel to the Orange County School of the Arts Since approval of its initial charter in the year 2000, OCSA and the Sana Ana Uni?ed School District have enjoyed a cordial, respectful relationship. Thus, OCSA leadership is taken aback at the utter disregard of its obligations under chatter with respect to responsibility to provide 15 months advance written notice before beginning to impose sharing of special education excess costs, particularlyin light of the fact that special education costs have been consistently less, on an annual basis, than the income that SAUSD has annually received from OCSA for providing special education servrces. Your March 8, 2019 correspondence and the invoice dated March 20, 2019 for Excess Cost for 2002-2019? are contrary to the express language of charter as granted and renewed on multiple occasions by the SAUSD. Your March 8, 2019 correspondence admits, ?Starting this schoo! year, the SAUSD will annually invoice OCSA for its required contribution to ensure it is made." The express language of existing charter at page 19 states: ?School Contribution of Equitable Share of OCSA Funding: LAW OFFICESOF MARGARET A. ASSOCIATES Dr. Phillips March 26, 2019 Page 2 Additionally, OCSA shall contribute a pro~rata share of its charter school ?mding to support the District?s unfunded special education costs (?general fund support?). The requirement that 061534 pay this general fund support, as specified in this Section of the Ch arter, shall go into e??ect upon the District providing OCSA 15 months? written notice that the District will he assessing general fund support from (Emphasis added.) OCSA understands the right to invoke payment for the period cormnencing July 1, 2020 under the charter language and considers the March 8, 2019 correspondence to be the required notice pursuant to the above section. in addition to neglecting to provide the required 15 months notice the SAUSD has also failed, until March 8, 2019, to comply with several of other obligations under the language of charter: ?At the end of each ?scal year, the District shall calculate OCSA ?s pro-rota share of the District?wide general ?nd support for that year as calculated by the total unfunded special education costs of the District (including those costs attributable to OCSA and any/all other charter schools for which the District provides LEA services in the same or similar manner) divided by the total number of District ADA (including OCSA students and students from any/all other charter schools ?ir which the District provides LEA services in the some or similar manner) and multiplied by the total number of OCSA ADA (ADA calculation from P2). OCSA ADA shall include all students, regardless ofhome district. The District shall calculate the amount of OCSA share of the general fund support upon receipt of the certified P2 reporting data. The District shall provide OCSA with documentation as to the calculation of OCSA is share of general fund support and allow OCSA an opportunity to provide input and respond to the calculation prior to invoicing OCSA for the prior year. The District shall then invoice OCSA for its share of the general fund support. The District shall provide an estimate of share of the general fund support for the following year by June 30 of each year for budgeting purposes.? (Emphasis added.) The Invoice dated March 20, 2019 purports to charge OCSA for excess costs commencing in school year 2002-2003, seeking a total payment of $19,493,329.00. Even if LAW OFFICES OF MARGARET A. CHIDESTER 65 ASSOCIATES Dr. Phillips March 26, 2019 'l?age 3 the parties had not contracted for the 15 months advance notice, invoice is time-barred by the applicable statutes of limitation from seeking payment for the time period reaching back to school year 2002-2003. Further, the SAUSD invoice .t'alsel clai ms, ?The excess special education costs were billed per the/crawler included in the MOU and detailed below. . OCSA does not have a MOU with the instead, the parties are bound by the language of the charter. CONCLUSION For the above reasons, no payment is due to the SAUSD by OCSA for the time period through school year 2018-2019. OCSA considers the March 8, 2019 correspondence as the notice pursuant to the terms of the charter that OCSA will contribute to unfunded special education costs For the period commencing July 1 l? the 2020-2021 school year. We request that the SAUSD immediately withdraw the March 8, 2019 correspondence and its unfounded March 20, 2019 invoice. He advised that if the SAUSD attempts to offset any of the amounts set forth in SAUSD's March 20, 2019 invoice against the next succeeding in-licu property tax apportionment payable to OCSA, OCSA will have no alternative but to file a Petition for Writ of Mandate and seek an injunction to enforce its legal rights under its charter. Very truly yours, ?me (25 era-ta Margaret A. Chidester MAC :tg cc: Orange County School of the Arts Board of Directors Dr. Ralph Opacic OCSA President and Executive Director Mr. Steven Wagner OCSA Chief Operations Officer and Vice President of Business Attorneys at Law LW. SUTHERLAND Attorney at Law ssutherland@DWKe5q.com San Diego April 15,2019 VIA FACSIMILE AND u.s. MAIL Margaret A. Chidester Margaret A. Chidester Associates 17762 Cowan, First Floor Irvine, CA 92614 Re: Orange County School of the Arts Special Education Contribution Our file 7105.10319 Dear Ms. Chidester: Our office represents the Santa Ana Unified School District (?District?) with respect to matters regarding the above-referenced charter school. Please direct all future correspondence to my attention. This is in response to your letter dated March 26, 2019 and Steven Wagner?s April 8, 2019 letter, both to Dr. Phillips, regarding the Orange County School of the Arts? statutory obligation to contribute an equitable share of its general fund to district?wide Special education costs pursuant to Education Code section 47646, subdivision (?Equitable Share?). The District maintains OCSA is responsible to contribute the amount identi?ed in the March 20, 2019 invoice provided to OCSA, and nothing in either letter provides authority to the contrary. The District also remains willing to meet and hopes to reach resolution of this issue, as it does not believe either party will ultimately benefit from litigation. The District?s letter of March 8, 2019 referencing obligation under Education Code section 47646 is not inconsistent with charter. The charter explicitly acknowledges statutory duty: ?In accordance with Education Code section 47646, as a charter school that is deemed a public school of the District for purposes of special education, OCSA is required to contribute ?an equitable share of its charter school block grant funding to support district?wide special education instruction and services?.? (Charter, p. 17.) Conditions not consistent with law are not enforceable, and position is contrary to public policy. OCSA also seeks to enforce some provisions of its charter while avoiding others, such as the provision allowing for withholding of the contribution if not paid following an invoice. Further, OCSA was able to determine its Equitable Share without any DWK DMS 3379732V4 SAN FRANCISCO 275 Battery Street Suite 1150 San Francisco, CA 94111 TEL 415.543.4111 FAX 415.543.4384 LONG BEACH 115 Pine Avenue Suite 500 Long Beach, CA 90802 TEL 562.366.8500 FAX 562.366.8505 SAN 750 Street Suite 2310 San Diego, CA 92101 TEL 619.595.0202 FAX 619.702.6202 SAN RAFAEL 4040 Civic Center Drive Suite 200 San Rafael, CA 94903 TEL 415.543.4111 FAX 415.543.4384 CHICO 2485 Noire Dame Boulevard Suite 370-14 Chico. CA 95928 TEL 530.343.3334 FAX 530.924 .4784 SACRAMENTO 555 Capitol Mall Suite 645 Sacramento, CA 95814 TEL 916.978.4040 FAX 916.978.4039 SAN LUIS 1065 Higuera Street Suite 301 San Luis Obispo, CA 93401 TEL 805.980.7900 FAX 916.978.4039 Kesq.com Margaret A. Chidester Margaret A. Chidester Associates April 15, 2019 Page 2 District assessment or invoice based on inclusion of the Equitable Share formula within its charter petition, coupled with publicly available information regarding the District's total ADA and special education contribution from its general fund. OCSA was, and is, aware of its statutory obligation to contribute to District wide special education cost and it cannot do so through special education funding withheld in compliance with law and the charter. Absent an agreement to the contrary, the District otherwise intends to offset the amounts owed by withholding in lieu property tax transfers as of 30 days after the invoice per charter. The next transfer of in lieu property taxes is on May 15, 2019. The District proposes to arrange a meeting with OCSA before then to discuss OCSA's Equitable Share contribution for the current 2018?2019 school year and resolving the parties? dispute in a way that meets both parties? obligations and interests. The District is available to meet with you and your client. Please contact us to schedule a mutually agreeable date. Sincerely, DANNIS WOLIVER KELLEY Wham DWK DMS 3379732V4 MARGAR ET A. CHIDE STE STEVEN R. CHIDESTER KATELYN a. oasaaow' L. caesew DANIELLE M. sore LESLJE J. KIM LAW OFFICES OF MARGARET A. CHIDESTER 65 ASSOCIATES 17762 COWAN. FIRST FLOOR IRVINE. 92614-5096 April 16, 2019 TELEPHONE: (949} 474-5040 TELECOPIER: (949) 474-3540 not PROFESSIONAL CORPORATION REF. OUR FILE OCSA 80.13 VIA U.S. MAIL ELECTRONIC MAIL Dannis Woliver Kelley 750 Street, Suite 2310 San Diego, CA 92101 ssutherland@DWKeso.com Attention: Ms. Sarah L.W. Sutherland Re: SAUSD Demand For ?Equitable Share? of Excess Special Education Costs From Orange County School of the Arts Dear Ms. Sutherland: Thank you for your correspondence of April 15, 2019 concerning the above referenced matter. Be advised that Orange County School of the Arts vigorously disputes your representations concerning any present or past obligations to pay Santa Ana Uni?ed School District an ?equitable share? of special education excess costs. Contrary to your representation, it is SAUSD, not OCSA, which seeks to selectively enforce certain provisions of the charter. or example, SAUSD ignores the express language of the charter concerning when the obligation arises to pay an equitable share of the District?s unfunded special education costs: ?The requirement that pay this general firm! support. as specified in this section of the Charter, shalt go into effect upon the District providing OCSA fi?een {15) months written notice that the District will be assessing generaifunds support ?'om . Further, had it satis?ed the 15 month notice requirement, the District has repeatedly breached its obligations under the charter. It has failed to calculate pro-rate share of District-wide special education excess costs annually. It has failed to invoice OCSA annually. The District has failed to provide an estimate share of the excess costs ?for budgeting purposes" annually. The District has further failed to annually provide OCSA with documentation as to the calculation of amount claimed to he owed and has never allowed OCSA LAW OFFICES OF MARGARET A. CHIDESTER 8s ASSOCIATES Ms. Sarah LW. Sutherland April 16, 2019 Page 2 ?an opportunity to provide input and respond to the calculation prior to invoicing OCSA for the prior year.? Exacerbating such conduct, the District ignores the effect of applicable statutes of limitation. Finally, you offer no authority for the claim that the Board approved charter language is somehow contrary to public policy. On the contrary, the Board?s approval of the 15 month notice provision is plainly authorized by Education Code sections 35160 35160.2. Should SAUSD withhold in lieu property tax transfers, OCSA will have no alternative but to litigate to enforce its rights under the charter. Notwithstanding the signi?cant difference in positions of our respective clients, we concur that a meeting pursuant to Evidence Code 152 may be beneficial towards resolving this issue. We propose to meet at our of?ce on the morning of Tuesday, April 23, 2019 or at any mutually convenient time on Wednesday, April 24, 2019. We look forward to your response. Very truly yours, ?zawwf 5i. fwe?v?i Margaret A. Chidester cc: Dr. Ralph Opacic Executive Director Mr. Steven Wagner Chief Operations Officer