The state Supreme Court issued its ruling a day after hearing arguments in Mr. Sanford's legal fight to reject the money. The governor had refused to take the cash even after legislators passed a budget requiring him to do so.
The arguments involved lawsuits filed by students and school administrators. Mr. Sanford had tried to get those cases merged in federal court with his own lawsuit to block the money, but he lost that fight Monday.
On Monday Mr. Sanford said he would not appeal such a decision and, if he lost, would drop his federal case.