## Facts

- In 1980 and 1982, California amended its workers’ compensation laws to increase certain benefit payments.
- The increased benefits applied generally to all employers subject to the workers’ compensation system, including counties and cities.
- Several local agencies sought state reimbursement for the added costs under article XIII B, section 6 of the California Constitution, which requires the State to reimburse local governments for costs of a state-mandated “new program or higher level of service.”
- The local agencies filed reimbursement claims with the State Board of Control before paying the increased benefits; the Board denied the claims.
- The Court of Appeal upheld the denial on the ground that benefit increases not exceeding cost-of-living rises were not reimbursable.
- The California Supreme Court granted review to determine whether the workers’ compensation increases were reimbursable “costs mandated by the state.”

## Issues

1. Whether statutory increases in workers’ compensation benefits, imposed on public employers as part of a generally applicable statewide regulatory scheme, mandate a “new program or higher level of service” requiring reimbursement under article XIII B, section 6.
2. Whether costs that arise from local agencies’ compliance with laws of general application qualify as reimbursable state-mandated costs.

## Decision

- The court held that the workers’ compensation benefit increases were not a reimbursable state mandate under article XIII B, section 6.
- The court concluded the State Board of Control properly denied the reimbursement claims.
- The court reversed the Court of Appeal’s judgment because it relied on an incorrect rationale (a cost-of-living limitation) and remanded for further proceedings consistent with the Supreme Court’s interpretation.

## Legal Principles

- Article XIII B, section 6 does not require reimbursement whenever state legislation incidentally increases local agency costs.
- Reimbursement is triggered when the State mandates (1) a local “program” in the commonly understood sense—activities administered by local agencies that provide governmental services to the public—or (2) unique requirements imposed on local governments that do not apply generally to others.
- Generally applicable regulatory schemes that affect local agencies in the same manner as private entities (such as employer obligations under workers’ compensation laws) do not constitute a reimbursable “new program or higher level of service.”

## Conclusion

The California Supreme Court limited article XIII B, section 6 to mandates requiring local administration of public-service programs or uniquely local-government obligations, and held that statewide workers’ compensation benefit increases applicable to public and private employers do not require state reimbursement.


County of Los Angeles v. State, 729 P.2d 202 (Cal. 1987)