Goldmann, Kilkenny and Carton. The opinion of the court was delivered by Goldmann, S.j.a.d.
This is an appeal from a determination of the State Board of Education (State Board) unanimously affirming the decision of the Commissioner of Education (Commissioner) denying the request of the Bayonne School District (Bayonne) that it be permitted to raise its "local share" under the School Building Aid Law, N.J.S. 18A:58-20 et seq., formerly N.J.S.A. 18:10-29.49 et seq., by the issuance of bonds. The sole issue presented is whether Bayonne may raise its local share in the manner it proposes rather than by a tax levy. We hold it may not.
Acting upon the statutorily prescribed formula, N.J.S. 18A-58-23 (formerly N.J.S.A. 18:10-29.52, as amended), the New Jersey Department of Education computed the capital foundation program for Bayonne for the 1968-69 school year to be $398,655. Of this amount Bayonne was required, under N.J.S. 18A:58-24(a) (formerly N.J.S.A. 18:10-29.53(a), as amended) to raise the sum of $258,957 as its local share. The State, in turn, would then contribute the balance of $139,698 as the maximum state building aid
available. In January 1968 Bayonne informed Assistant Commissioner of Education Kilpatrick that it intended to raise its local share by issuing bonds in lieu of taxation.
Bayonne had a year earlier requested permission to utilize this alternative procedure for the 1967-68 school year. At that time Assistant Commissioner Kilpatrick twice informed the attorney for the Bayonne Board of Education that Bayonne's local share had to be raised by taxation; a proposed bond issue would not qualify Bayonne for state building aid under the capital foundation program. The City of Bayonne thereafter raised its local share for the 1967-68 school year by taxation.
When Bayonne renewed its bond issue proposal in January 1968, Assistant Commissioner Kilpatrick again advised that the school district would not qualify for receipt of the $139, 698 in state aid unless it raised its local share of $258,957 by taxation. His letter gave a more detailed explanation of the Department's view of the unsoundness of Bayonne's request:
"Since 1956, when the State School Building Aid Act was enacted, the Division of Business and Finance has uniformly required school districts to raise their annual local fair share only by means of an annual tax levy. The Division has never considered the Act as permitting any alternative method. Indeed, to my knowledge, no school district has ever sought eligibility for building aid on any other basis, nor objected to the Division's interpretation.
In my opinion, the plain meaning and intent of the State School Building Aid Act required the annual local fair share to be raised by a tax levy, As you know, school districts, under the Act, must annually establish a capital foundation program. This procedure, based as it is upon an annual budget concept, does not reasonably permit inclusion of non-revenue receipt items such as bonds or notes. These non-revenue items, of course, would not be compatible with the annual budget concept of the capital foundation program. If such items could be included then, at the time of the payment of the debt, itself, there would be created a further eligibility for state building aid even though the total amount of the debt would already have provided an eligibility in a previous year. In my opinion the legislature intended no such anomaly.
In essence, it has been, and continues to be my belief that the legislation establishing the state school building aid procedure contemplates a yearly partnership between the state and local school districts, each of which are called upon to annually provide, through tax sources, for the ensuing school year capital foundation program. This procedure for an equal, annual tax effort does not envision the introduction of nonrevenue receipt items such as bonds or notes to establish eligibility. While I appreciate that municipalities may prefer to maintain a stable tax rate, I do not believe that the alternative which is apparently contemplated is permissible under existing law."
Bayonne then requested the Commissioner to review that determination, and its officials were accorded the opportunity of presenting their contentions to him. On February 2, 1968 he wrote the local school board stating that he concurred in the Assistant Commissioner's determination. He, too, noted that non-revenue receipt items, such as bonds or notes, did not accord with the concept projected in the School Building Aid Law. He said that:
"If the device here proposed [a school bond issue] were permissible, the net result would be that the State would pay State building aid twice on the same amount of local fair share: first, on a local fair share raised by a bond issue, and second, on the annual payments of interest and principal on the same bonds. The Commissioner can find no justification in the ...