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Attorneys for the state Department of Education have filed a motion for a new trial to overturn a $7.6 million judgment in a whistle-blower case, despite unanswered questions from a state assemblyman who wants to know where the department is getting the money for its six-year legal battle.
Documents obtained previously by The Associated Press show the department has set aside nearly $4 million to pay private attorneys in a series of cases related to misappropriation of federal money and the related whistle-blower case against former Superintendent of Public Instruction Delaine Eastin.

The ballooning legal costs prompted Assemblyman Michael Duvall, R-Yorba Linda, to request information from the department about who is authorizing the case to continue and from what budget the money is being drawn.

The one-page memo he received in response stated the lawsuit is being paid out of "state general funds appropriated by the Legislature for support of the department." Duvall said it did not address any of his questions and has asked for more details from the Department of Finance and the state controller.

Documents given to Duvall in response this week show hundreds of thousands of dollars in legal payments but do not provide all the answers he was seeking. The AP obtained the documents separately from the controller's office.

They show the Department of Education used hundreds of thousands of dollars from other budgets under its authority, such as specialized after-school programs for at-risk youth.

Hilary McLean, a spokeswoman for schools superintendent Jack O'Connell, said the department spent about $1 million from July 1, 2002, to April 30, 2007, on the case against former department staffer James Lindberg.

The former compliance monitor sued the department, Eastin and department manager Joan Polster in 2001. He claimed to have discovered that millions of dollars in federal money had gone to nonexistent or fraudulent community groups from 1995 to 2000.

He claimed Eastin ignored him when he brought the wrongdoing to her attention and that he was demoted when he persisted. His lawsuit claims he later suffered two heart attacks from the job-related stress, leaving him in a wheelchair.

Federal criminal charges were later brought against operators of adult education programs in Sacramento and Los Angeles. In addition, the department under Eastin agreed to repay more than $3 million to the U.S. Department of Education.

In the Lindberg case, a Sacramento jury in 2002 found the department and both defendants personally liable for his health problems and awarded him $4.5 million in damages. The department appealed the decision, and a new jury awarded the whistle-blower $7.6 million in April.

In the state's latest motion, filed late last month, lead attorney David Cheit argues that the retrial judge unfairly prejudiced the jury and disallowed some evidence that would have helped the state's case.

"The court infected the entire trial with a measure of prejudice that was beyond cure," Cheit wrote in the brief. "The result was an award that can only be explained as the result of passion and prejudice, and which, even more so than the first award, is excessive as a matter of law."

McLean said the department still believes the case is winnable and that it is in taxpayers' best interests to pursue it.

"It's unfortunate that it's taking us so many steps through the legal system to get there," she said.

Lindberg's attorney, Gaspar Garcia, has appealed the state's motion for a new trial.

Duvall said he is frustrated after making repeated requests and receiving what he describes as only vague answers in return. He said he is concerned about how much the latest appeal will cost the state.

"I want to know how much money has been spent, I want to know where it came from, and I want to know why it's not budgeted," Duvall said Wednesday.

Duvall noted that about $2 million was included in last year's budget to pay for legal challenges to the state's high school exit exam, yet none of the money for the Lindberg lawsuit is identified in the state budget.

McLean said such line-item spending is only required when the Legislature or governor set aside money to fight a specific case.

"There are many cases that departments throughout state government deal with that are not specifically addressed in line items in the budget," she said.

Documents previously obtained by the AP show the department authorized the transfer of more than $750,000 starting in 2001 from adult education and special education programs for deaf, blind and other special-needs children to pay for the Lindberg and related cases.

McLean said they were incorrectly coded. The money actually came from the department's general fund, she said.

The new documents released by the controller's office, however, show that the education department moved more money from specific programs to pay private attorneys. That includes:

— $100,000 from the "hate violence/tolerance fund." It was not immediately clear what this program does.

— $65,000 from the High-Risk Youth Education and Public Safety Program, which provides after-school programs for students who have been incarcerated or are first-time offenders.

— $35,000 from the community day schools fund, which serves high-risk youth.

— The source of another $100,000 transferred in the 2005-06 budget year was not specified.

All those funds list an accounting code that corresponds to the state superintendent's office. The department could not immediately respond to questions about those funds, McLean said.

Meanwhile, Garcia, the whistle-blower's lawyer, said he was preparing a motion seeking the court-ordered compensation for Lindberg's mounting legal fees, which he said are likely to total about $600,000.

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