The California state legislature passed the CAHSEE into law in 1999, the brainchild of then-state senator Jack O'Connell, and was first taken by volunteer freshmen from the class of 2004, in October of 2001. Initially, the test was intended as a graduation requirement for the class of 2004, but the State Board of Education later revised the deadline, focusing on the class of 2006.
As the 2006 deadline neared, political pressure against the exam built up; though O'Connell (now state Superintendent of Public Instruction) resisted such pressure, the state legislature enacted SB517, granting students with learning disabilities a one-year reprieve. Some suggestions included grading students based on a "portfolio of work," and in October of 2005, Governor Arnold Schwarzenegger vetoed legislation which would have allowed students to pass alternative assessments. Supporters of the test have claimed that the large number of failing students brings into question the value of passing grades in California high schools.
As of June 2, 2006, 41,758 members of the California class of 2006, or one of every ten students, were denied diplomas as a result of failing the CAHSEE; this did not include students who had failed to meet other graduation requirements. The passing rate of Asian and Caucasian students was higher than that of Latino and African-American students. Students learning English had the lowest passing rate, with one out of every four failing the exam. In the Los Angeles Unified School District, Superintendent Roy Romer allowed those who did not pass the CAHSEE to participate in graduation activities if the student agreed to take the CAHSEE during the summer.
In May 2006, an Alameda County Superior Court judge struck down the CAHSEE, ruling that students from disadvantaged schools, many of them ethnic and/or poor, had not been appropriately prepared for the test. The California Department of Education appealed the ruling directly to the state Supreme Court, which reinstated the exam and ordered an appeals court to rule on whether the state can legally require students to pass the CAHSEE before receiving diplomas; the appeals court began hearing arguments on July 25, 2006, and upheld the CAHSEE.