An Orange County Superior Court judge Thursday granted a temporary restraining order blocking the Santa Ana Unified School District from withholding $500,000 monthly to the Orange County School of the Arts to collect on what district officials say is $19 million in back payments for special education services.

Orange County Superior Court Judge David Hoffer did not rule on the dispute itself, but noted that even though the school could withstand losing one payment of $500,000 it would have to “scramble” to plan for future withholdings.

“It would throw their planning into chaos,” Hoffer said.

Attorney Sarah Sutherland, who represents the school district, blamed the school for the legal conflict. She said school officials met the district’s issues about funding for special education services with “outright refusal to make any contribution whatsoever.”

School officials, however, accuse the district of springing a huge bill on them suddenly — and when they said the district needed to give them a 15-month heads up, as required in the school’s charter, they were told the $500,000 in state funds would be withheld to satisfy the $19 million bill.

Now the district’s four other charter schools are threatening to seek restraining orders prohibiting the district from withholding monthly payments to pay off about $20 million total from the schools. The other schools are Nova Academy, El Sol Science and Arts Academy of Santa Ana, Edward B. Cole Sr. Academy and Orange County Educational Arts Academy.

Sutherland said the costs of special education has been rising while federal and state funding for it has waned. The charter schools are required to step up and shoulder the burden, she argued

Orange County School of the Arts attorney Arthur Friedman argued the school has been so efficient at providing special education services that it has only billed the district for what it has needed over the years and left the district to continue to keep a surplus in funding from state and federal sources. He said it has resulted in an $11 million “windfall” for the district.

Sutherland disputed that, saying the school only has 5 percent student population requiring special education services.

When the issue of requiring the school to pay more for special education came up in the renewal of the school’s charter in 2015, school officials negotiated the 15-month notice and said paying what the district required would bankrupt it. Hoffer noted the 15-month notice would give the charter school time to just leave the district to get out of its obligation, prompting Friedman to say that’s why the school negotiated it.

Sutherland argued that the charter’s terms do not comply with state law, but Friedman disagreed.

“We reserve the right to say this isn’t working out,” Friedman said.

Sutherland argued the school has $25 million in reserves, but Friedman said $22 million of that figure in its budget reflects the value of depreciation of property, so the actual amount of cash reserves is $3 million.

Sutherland also accused the school of “hiding and moving” assets since the district has tried to collect on the special education costs.

Steven Wagner, the chief operating officer of the Santa Ana charter school, said district officials in March sprang a $19.5 million bill on the school, prompting the filing of a lawsuit seeking the restraining order on Tuesday.

“We received a letter back in early March that the district would be collecting from us and four other charter schools,” Wagner said.

On March 20, the director of the special education program at the school was handed an invoice for $19.5 million from the district, Wagner said.

“They had calculated an invoice of 17 years of money owed by the school for special education services,” Wagner said. “So, obviously, we were shocked and dismayed and surprised.”

According to a statement issued Wednesday night by the Santa Ana Unified School District, the district discovered earlier this year that several charters under its authorization, including the Orange County School for the Arts, had not been making required contributions from their general fund revenue to support special education services for students with disabilities residing in Santa Ana, including those attending schools operated by the district and charter schools.

California law and each of the charter school’s charters requires them to contribute a fair share of their general fund revenue to provide special education and related services needed by Santa Ana residents in excess of funding provided for those services from the state and federal government, according to the district.

The district expressed its goal to work collaboratively with its charter schools to ensure the needs of all of our special education students are being met in accordance with existing laws and authorized charters.

The district claims it has not “threatened” its charters with withholding property tax payments.

The school took the position that it should be able to make its contribution from special education funds instead of the general education revenue that must, by law and charter, be used to contribute, according to the district.

“OCSA has deliberately and systematically sought to avoid its legal obligation as a public charter school to contribute to excess costs all public schools bear in meeting the educational needs of special needs students,” the statement said.

“When approached in good faith to work out a fair settlement, they chose instead to expend their funds on court battles and not the needs of special education students. We believe that the children of Santa Ana deserve better.”

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