Decided: March 8, 1971.
ALFRED VAIL MUTUAL ASSOCIATION AND THE TOWNSHIP OF SHREWSBURY, PLAINTIFFS-RESPONDENTS,
BOROUGH OF NEW SHREWSBURY, DEFENDANT-APPELLANT
For affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall and Schettino. For reversal -- None. The opinion of the Court was delivered by Schettino, J.
[58 NJ Page 42]
We are here concerned with the validity of the current method of apportioning regional school costs between the constituent municipalities of the Tinton Falls Regional Elementary School District, the Township of Shrewsbury [hereinafter the Township] and the Borough of New Shrewsbury [hereinafter the Borough].
Due to the fact that the Borough of Eatontown School District and the Tinton Falls Regional Elementary School District together comprise the Monmouth Regional High School District, these municipalities divide the latter's proportionate share of the regional high school costs as well as the operating costs for the regional elementary school district.
Prior to the passage of L. 1965, c. 175, the operating expenses for the common school district were historically apportionable between these two municipalities on the basis of their respective assessed valuations. Under the assessed valuation formula, the Borough, since the ratio of enrolled
[58 NJ Page 43]
pupils to assessed valuations was substantially lower in the Borough than in the Township, apparently bore a disproportionately high share of these regional school costs when viewed with respect to the allocable cost per pupil.*fn1
Pursuant to the provisions of L. 1965, c. 175, which mandated that school costs be apportioned in certain school districts "upon the basis of the number of pupils enrolled therefrom on the last day of September of the current school year in the same manner as would apply if said municipalities comprised separate constituent school districts," these municipalities now apportion regional school costs by a per pupil formula. Although L. 1965, c. 175 does not appear in the recent revision of the education statutes, the apportionment scheme it prescribed continues to be binding on the Tinton Falls Regional Elementary School District by virtue of the enactment of N.J.S.A. 18A:13-23.*fn2
On December 18, 1967, plaintiffs, the Township and the Alfred Vail Mutual Association (the Township's largest taxpayer),
[58 NJ Page 44]
instituted this action seeking a declaratory judgment that regional school costs for the Tinton Falls Regional Elementary School District should be apportioned on the basis of assessed valuations rather than under the per pupil formula prescribed by L. 1965, c. 175. Since the Township's school support obligation under the assessed valuation formula would have been substantially lower than under the per pupil formula which has been used for all apportionments of regional school costs made since January 1, 1966, plaintiffs also sought readjustment in favor of the Township for payments already made under the per pupil formula.
In challenging the validity of the per pupil method for apportioning regional school costs prescribed by L. 1965, c. 175, plaintiffs admitted that the statute was applicable to the Tinton Falls Regional Elementary School District.*fn3 Plaintiffs, however, argued that the statute was violative of state constitutional provisions prohibiting special legislation
[58 NJ Page 45]
on the ground that it was impermissibly designed solely for the purpose of benefiting the Borough.
The trial court found for the Borough. On appeal, the Appellate Division reversed, holding that L. 1965, c. 175 constituted special legislation providing for the management and control of free public schools and regulating the internal affairs of municipalities prohibited by N.J. Const., Art. IV, § VII, para. 9(7) and (13). Vail Mut. Assoc. v. Halpin, Speaker of House, 107 N.J. Super. 517 (App. Div. 1969). The Appellate Division, however, allowed the Township to recapture only those excess amounts contributed from the date the action was commenced, beginning with the school year 1968-69, declining to allow any recoupment for the interim school years 1966-67 and 1967-68. Vail Mut. Assoc. v. Halpin, Speaker of House, supra. Since the case presented a substantial State constitutional question, the Borough appealed to this Court as of right. R. 2:2-1(a).
[58 NJ Page 46]
We perceive the issue to be whether L. 1965, c. 175 constitutes special legislation.
In enacting a statute of ostensible general application, the Legislature stated that the per pupil formula specified by L. 1965, c. 175 must be used:
[w]henever any school district which was comprised of [two] municipalities has, since January 1, 1957, joined in the formation of a regional district for high school purposes and thereafter joined in the formation of another regional district for all other school purposes * * *. L. 1965, c. 175.
Although L. 1965, c. 175 thus purports to be general in character encompassing all school districts meeting the stated criteria, it was actually tailored to meet the exigencies of the Tinton Falls Regional Elementary School District, that being the only school district which precisely meets all of the criteria of the statutory classification.*fn4 [58 NJ Page 47] After reviewing the background materials describing the statute's inception, we have no doubt that it was enacted solely to relieve the Borough from what apparently was a disproportionate burden of the school costs vis-a-vis the Township in the Tinton Falls Regional Elementary School District when viewed with respect to the actual per pupil cost. In this respect, L. 1965, c. 175 represented the apparently successful culmination of a long campaign by the Borough to correct a situation which from its viewpoint was obviously inequitable.*fn5 [58 NJ Page 48] We emphasize, however, that these findings are not determinative of the question whether L. 1965, c. 175 constitutes special legislation. The Legislature is necessarily accorded broad discretion in the area of permissible classification. Passaic v. Consolidated Police, etc. Pension Fund Commission, 18 N.J. 137 (1955); State v. Guida, 119 N.J.L. 464 (E. & A. 1938). We have no doubt that that school districts having characteristics so nearly alike as to require similar treatment in legislation may be grouped together in classes. The classification, however, must be germane to the purpose of the enactment, resting on characteristics
[58 NJ Page 49]
that substantially differentiate the school district included from those school districts excluded from the coverage of the statute. See, e.g., Roe v. Kervick, 42 N.J. 191 (1964); Cooper v. Springer, 65 N.J.L. 594 (E. & A. 1901); State ex rel. Richards v. Hammer, 42 N.J.L. 435 (Sup. Ct. 1880), aff'd, 44 N.J.L. 667 (E. & A. 1882).
In Harvey v. Essex County Board of Freeholders, 30 N.J. 381, 389 (1959), we stated the reviewing standard as follows:
In deciding whether an act is general or special, it is what is excluded that is the determining factor and not what is included. If no one is excluded who should be encompassed, the law is general. Another requirement of a general law is that it must affect equally all of a group who, bearing in mind the purposes of the legislation, are distinguished by characteristics sufficiently marked and important to make them a class by themselves.
Thus, the issue is ultimately whether the classification imposed by the statute is reasonable, embracing all school districts which should properly be included within its scope when viewed with respect to the legislative objective. Roe v. Kervick, supra; In re Loch Arbour, 25 N.J. 258 (1957); In re Freygang, 46 N.J. Super. 14 (App. Div.), aff'd per curiam, 25 N.J. 357 (1957); Koons v. Atlantic City, 134 N.J.L. 329 (Sup. Ct. 1946), aff'd o.b., 135 N.J.L. 204 (E. & A. 1947); Budd v. Hancock, 66 N.J.L. 133 (Sup. Ct. 1901).
Defendant claims that L. 1965, c. 175 was obviously intended to rectify the apparent inequity of apportioning regional school costs on the basis of assessed valuations where one municipality has a disproportionately low ratio of pupils to assessed valuations by substituting the cost per pupil formula. The classification criteria, therefore, should be geared to include within the cost per pupil mandate all those school districts in which the per pupil formula for apportioning school costs would be more appropriate than the assessed valuation basis.
In dealing with certain legislative subjects the classification criteria of L. 1965, c. 175, a school district comprised
[58 NJ Page 50]
of exactly two municipalities forming first a regional high school district and next a regional elementary school district, might be appropriate. These criteria, however, simply do not indicate why the mandatory cost per pupil formula would promote an equitable sharing of regional school costs only in the class of school districts defined by the act. Noting this point, the Appellate Division perceptively stated:
[There is no] reason why mandated employment of the cost-perpupil basis is not as appropriate to regional districts formed prior to January 1, 1957 as to those formed subsequently * * *; or as appropriate to districts comprised of more than two municipalities as to those consisting of only two; or as appropriate in cases where the high school district was formed subsequent to the formation of the regional district for all other purposes as where the high school district was formed first; or, indeed, as appropriate where the school district has not entered into a regional high school district but only a regional elementary school district, or vice versa.
Vail Mut. Assoc. v. Halpin, Speaker of House, supra, 107 N.J. Super. at 532-533. Clearly, a classification based merely on the historical temporal order of regionalization and the chance that the school district is comprised of exactly two municipalities rather than two or more governmental units has no rational relationship to the purpose of the statute which is to equalize the financial burden on constituent members of regional school districts. Cf. Riccio v. Hoboken, 69 N.J.L. 649 (E. & A. 1903); Howe v. Board of Education, 72 N.J.L. 158 (Sup. Ct. 1905). The act in question thus arbitrarily excludes from the per pupil apportionment mandate comparable regional school districts which may have the same qualities and situation, namely, a disproportionate sharing of regional school expenses between the constituent municipalities when viewed with respect to the actual per pupil cost of education.
Thus, finding the criteria which exclude every school district but the Tinton Falls Regional Elementary School District from the scope of L. 1965, c. 175 arbitrary, lacking a reasonable nexus to the objects of the statute, we hold that
[58 NJ Page 51]
L. 1965, c. 175 constitutes special legislation rather than a general enactment.
Pursuant to the provisions of our Constitution, all special, local or private legislation must be preceded by public notice, N.J. Const., Art. IV, § VII, para. 8, in accordance with procedures established by the implementing statutes, N.J.S.A. 1:6-1 et seq.
Since L. 1965, c. 175 was concededly not adopted as a special law following public notice of intention to apply for the enactment thereof as required by the Constitution, the act contravenes N.J. Const., Art. IV, § VII, para. 8 and is void for that reason. In re Loch Arbour, supra; Sherwood v. Bergen-Hackensack, etc., Authority, 24 N.J. Misc. 48 (Sup. Ct. 1946), aff'd, 135 N.J.L. 304 (E. & A. 1947); In re Miller, 122 N.J.L. 176 (Sup. Ct. 1939).
Since we take the view that the absence of public notice preceding the statute's enactment of itself renders the act invalid, we affirm the decision of the Appellate Division solely on this basis, finding it unnecessary to express any opinion concerning the appellate court's separate finding that L. 1965, c. 175 pertained to two enumerated subjects with respect to which special legislation is restrained, the management and control of free public schools, N.J. Const., Art. IV, § VII, para. 9(7), and the regulation of the internal affairs of municipalities, N.J. Const., Art. IV, § VII, para. 9(13).*fn6
[58 NJ Page 52]
We also need not here decide the comparable question whether L. 1965, c. 175 may constitute a species of special legislation within N.J. Const., Art. IV, § VII, para. 9, even though hypothetically the public notice provisions of N.J. Const., Art. IV, § VII, para. 8 were met and the statute does not fit any of the enumerated categories of interdicted special legislation set forth in N.J. Const., Art. IV, § VII, para. 9(1) to (13).
In addition to absolutely prohibiting special legislation which deals with any of the 13 enumerated subjects, N.J. Const., Art. IV, § VII, para. 9 concludes by stating that general laws rather than special, local or private acts must be passed by the Legislature " for all other cases which, in its judgment, may be provided for by general laws." [The "mandatory clause."]
Since the main thrust of the opinion below, the parties' briefs, and oral argument were directed to the scope of these enumerated constitutional prohibitions against special legislation rather than to a searching inquiry concerning the possible effect of the "mandatory clause" above quoted as an independent restriction on legislative power in this area, we expressly reserve decision concerning whether this "mandatory clause" may interdict a species of special, local or private legislation which does not fit any of the enumerated categories set forth in N.J. Const., Art. IV, § VII, para. 9 but nonetheless results in unfounded discrimination by unreasonably excluding members of a class similarly situated to those embraced in the act until the issue is properly presented in a formal argument.
[58 NJ Page 53]
We note, however, that our own limited research concerning the "mandatory clause" has revealed a suggestion in a few New Jersey cases that this language may constitute an independent check on legislative arbitrariness in the passage of special, local or private laws in matters not specifically prohibited by N.J. Const., Art. IV, § VII, para. 9, though the operative effect of this constitutional restriction is by no means made clear. State v. Guida, supra; State v. Price, 71 N.J.L. 249 (Sup. Ct. 1904); Van Cleve v. Passaic Valley Sewerage Com'rs, 71 N.J.L. 183 (Sup. Ct. 1904), rev'd on other grounds, 71 N.J.L. 574 (E. & A. 1905).*fn7
Since the apportionment of regional school expenses on a per pupil basis was improperly done under an unconstitutional statute, it is clear that because of this action the Township has been assessed more than its share of moneys for the support of the school system and, correspondingly, the Borough has been assessed less than its proportionate
[58 NJ Page 54]
share for the school years commencing 1966-67 to date.*fn8 The issue thus becomes what portion, if any, of the excess assessment the Township may recoup by way of a readjustment credit under N.J.S.A. 54:4-49.
Arguing that the allowance of a readjustment credit to plaintiffs for taxes improperly assessed will impose an enormous financial burden on the residents of the Borough, the Borough urges that the Township not be allowed to recoup excess taxes in the instant case. We cannot accept this suggestion. The Borough's residents obviously have no vested right to a lighter tax burden bestowed by an unconstitutional statute. The Township, however, does not have a right to a readjustment credit for all taxes improperly assessed under the per pupil formula. We agree with the Appellate Division that the Township may only recoup illegally assessed taxes for the period commencing with the 1968-69 school year. Vail Mut. Assoc. v. Halpin, Speaker of House, supra, 107 N.J. Super. at 533-534.
For the foregoing reasons, the judgment is affirmed.