The Santa Ana Unified School District and Orange County School of the Arts announced Wednesday, Aug. 6, they have reached an $8.55 million settlement, officially ending a nearly six-year legal battle over special education funding.
The dispute, which began in 2019, centered on whether OCSA, then a charter school under SAUSD, owed for districtwide special education costs under state law. The settlement “provides a solution to refocus resources back to students and avoids the costs and delays of continued litigation,” according to a joint statement from the district and the school.
The charter school left SAUSD in 2020 and is now under the umbrella of the Orange County Board of Education.
“This settlement allows Santa Ana Unified to move forward,” SAUSD Superintendent Lorraine Perez said in a statement. “with our focus remaining on expanding educational opportunities for the children of Santa Ana and ensuring they receive the support and services they need to thrive.”
OCSA President and CEO Teren Shaffer said the agreement marks a turning point after years of legal wrangling that he previously warned could push the school toward bankruptcy.
“We are grateful that the mediation process created a pathway to ending this legal dispute, prioritizing what matters most — students,” Shaffer said in a statement. “This resolution reflects the strength and unity of our community. We deeply appreciate the unwavering support of our students, parents, staff, and the broader OCSA family, who have been steadfast advocates for the arts and for OCSA throughout this process.”
The conflict dates back to SAUSD’s 2019 invoice to OCSA and three other district-authorized charter schools, billing them nearly $20 million in special education costs. OCSA officials argued that SAUSD had been reimbursed about $8.8 million for services provided by the charter school’s own staff, and that the district retained more than $11 million in additional revenue.
“They collected an excess of $11.5 million on our behalf that we didn’t utilize for serving the needs of special education students,” Shaffer said earlier this year. “That’s money that they got to keep for their own use, as they desired.”
SAUSD maintained it was following state law requiring charter schools to contribute to districtwide special education costs.
“We are just following state law and asking for these funds to be provided by the charter school to offset the cost of special education,” district spokesperson Fermin Leal said previously.
The agreement fully resolves all outstanding claims related to the legal dispute, according to the joint statement from the district and the school.
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