For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None.
[55 NJ Page 502] The prime question on this appeal is whether the State Commissioner of Education has the authority with respect to type I (N.J.S.A. 18A:9-2) school districts to direct an increase in the annual school appropriation, i.e., the amount to be raised by local taxation, over the amount fixed by local officials. Board of Education of Township of East Brunswick v. Township Council of Township of East
Brunswick, 48 N.J. 94 (1966) held that he did with respect to type II (N.J.S.A. 18A:9-3) districts.
In type II districts (formerly known as chapter 7 districts), the members of the board of education are elected by the voters at the annual school election. N.J.S.A. 18A:12-11. The board prepares the annual budget. N.J.S.A. 18A:22-7. In districts of this type not having a board of school estimate, the amount to be raised by local taxation is submitted to the electorate at the annual school election for approval. If approved, such amount is certified to the county board of taxation for inclusion in the taxes to be assessed, levied and collected in the municipality comprising the district. N.J.S.A. 18A:22-33. If rejected, the governing body of the municipality is directed to fix and certify the amount to be raised by taxation which it determines "to be necessary to be appropriated for each item appearing in such budget to provide a thorough and efficient system of schools in the district." N.J.S.A. 18A:22-37, as amended L. 1969, c. 303.
In type I districts (formerly known as chapter 6 districts), the members of the board of education are appointed by the chief executive officer of the municipality. N.J.S.A. 18A:12-7. The board prepares the annual budget as in the case of type II districts. N.J.S.A. 18A:22-7. But the budget is submitted to the board of school estimate (composed of two members of the board of education, two members of the municipal governing body and the chief executive officer of the municipality, N.J.S.A. 18A:22-1). This body determines "the amount of money necessary to be appropriated for the use of the public schools in the district for the ensuing school year, exclusive of the amount which shall have been apportioned to it" by the state Commissioner of Education, and certifies such amount to the municipal governing body and the board of education. N.J.S.A. 18A:22-14. The governing body is directed to appropriate automatically the amount so certified and include it in the tax ordinance, except that "the governing body shall not be required so to
appropriate any amount in excess of 1 1/2% of the assessed valuation of the ratables of the municipality, but may do so if it so determines by resolution." N.J.S.A. 18A:22-15, -17.
Elizabeth is a type I school district. This controversy involves the appropriation for the school year commencing July 1, 1969. The board of education submitted to the board of school estimate a budget which called for a local tax appropriation of $10,967,401.23, about one and one-half million dollars more than the appropriation for the preceding year. The board of school estimate, by a 3-2 vote, determined and certified to the governing body a figure of $9,539,333.23, which was only about $50,000 more than the preceding year's appropriation. After public hearings and consultation with the board of education, the city governing body finally fixed the sum to be raised by local taxation for school purposes at $9,967,339.23, the amount which is included in the current tax levy. This was approximately $428,000 more than the board of school estimate had certified, but still about $1,000,000 less than the requested figure in the board of education's budget. This difference represents for the most part salary increases for instructional personnel negotiated by the board of education pursuant to L. 1968, c. 303 and commensurate increases for non-instructional employees. All figures involved are more than twice the amount of 1 1/2% of assessed valuations for the year, a situation which has existed for at least the last decade.
The board of education filed a petition of appeal with the Commissioner of Education, pursuant to East Brunswick, seeking relief from the governing body's reduction. After a plenary hearing, which entailed a testimonial review of all budgetary items, the Commissioner determined that an additional appropriation of $866,702, (substantially referable to salary increases and to compensation for substitute teachers, an item which had been stricken in its entirety by the local authorities) "is necessary for the maintenance and operation of a thorough and efficient system of public schools in the City of Elizabeth for the 1969-70 school year" and
directed the governing body to take such steps as are required to make an additional appropriation of that amount for the board of education. This has not been done, although the board of education has been administering the school system, including the payment of salaries, as if it had.
The governing body appealed to the State Board of Education. N.J.S.A. 18A:6-27. Before the appeal was heard, both the Elizabeth board of education and the governing body petitioned us under R. 1:1-2 to relax our rules and allow a direct appeal from the Commissioner's decision without the exhaustion of administrative remedies. Because of the urgency and importance of the matter, we granted the petition and advanced the matter for argument.
The governing body's principal contention is that the legislative schemes for the fixing of annual school appropriations are so different between type I and type II districts as to evidence the intent that the governing body's determination in type I districts shall be final. This result is claimed to be particularly dictated where the appropriation exceeds 1 1/2% of assessed valuations. Therefore, it is urged, there is no controversy or dispute arising under the school laws (N.J.S.A. 18A:6-9) and ...