The court is reviewing an appeals court ruling that said the state is barred by federal immigration law from giving illegal immigrants in-state tuition, which can be as much as $19,000 a year cheaper than fees charged to out-of-state students...A lawsuit before the court contends that the state requirement is preempted by a federal law that prohibits states from using residency requirements to give educational benefits to illegal immigrants when the benefit is not also offered to citizens.
During a special session in Fresno, some of the justices noted that the state law provided benefits to citizens as well as illegal immigrants. Out-of-state citizens who attend high school in California also are eligible for the lower in-state college tuition under the law...A ruling is expected within 90 days. If the court upholds the state law, the case is expected to be appealed to the more conservative U.S. Supreme Court.
Full report at http://latimesblogs.latimes.com/lanow/2010/10/california-supreme-court-hears-case-that-would-bar-illegal-immigrants-from-receiving-in-state-tuition-at-public-colleges.html
Note that this issue came up in the Brown-Whitman Univision/Spanish language debate when an undocumented student posed a question. See the earlier post for that excerpt.