On certification to the Superior Court, Appellate Division.
For reversal and reinstatement -- Chief Justice Wilentz, and Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For affirmance -- None. The opinion of the Court was delivered by Pollock, J.
The sole issue in this case is whether the Commissioner and State Board of Education, pursuant to the constitutional and statutory obligation to provide a thorough and efficient education, can direct a local school district to issue bonds for a capital project for a public school, after the voters of the district have rejected referenda to finance the project. We conclude that the Commissioner and the State Board have the power to direct the issuance of bonds and that their order is legal authority to constitute the bonds as valid and binding obligations of the school district.
The Upper Freehold Regional School District (district) is a Type II school district comprised of the Township of Freehold and the Borough of Allentown. The district owns Allentown High School to which Freehold and Allentown, as well as three other municipalities, send students. A Type II district differs from a Type I district with respect to the issuance of bonds. In a Type I district, bonds may be issued pursuant to an ordinance adopted by the governing body of the municipality comprised within the district. In a Type II district, where, as here, there is no board of school estimate, bonds may be issued with the approval of the voters of the district. Compare N.J.S.A. 18A:24-11 with N.J.S.A. 18A:24-12.
Appellant, Upper Freehold Regional Board of Education (Board), administers the district. Respondents include the State Board of Education (State Board), the Township of Freehold and the Borough of Allentown. The New Jersey School Boards Association and the New Jersey Institute of Municipal Attorneys have filed briefs as amici curiae. Analysis of the issues
requires a description of the conditions at Allentown High and the administrative proceedings in this matter, as well as an understanding of the system for administering public education and the procedures by which a local board obtains funds for capital projects.
The facts are essentially undisputed. Allentown High is a one-story structure constructed in 1963 and attended by approximately 1,000 students. In 1975, the Board became aware that the building was deteriorating. Among the problems were cracked corridor floors, a deflected roof and warped and distorted windows. Following an engineering study that revealed numerous deficiencies, the Board instituted a civil action, which is still pending, against the architect and others who participated in the construction and design of the school.
From 1975 to 1978, conditions worsened steadily. The roofing blistered and cracked, permitting water leakage onto the ceiling tiles. In 1978, the Monmouth County superintendent of schools and the chief safety consultant in the New Jersey Department of Education, Division of Facility Planning Services, inspected the school. Their report concluded that due to the stress on the window frames, there was danger of injury to the students and faculty from shattering glass. The report recommended immediate repairs, and an architect retained by the Board submitted plans for repairs at an estimated cost of $1,643,000.
Following the architect's report, the Board arranged for a special referendum on December 13, 1978. The referendum sought approval for a bond issue in the amount of $2,342,000 ($1,643,000 to repair the facility, plus $699,000 to build an addition) or, alternatively, in the amount of $1,643,000 for the repair only. The voters rejected both proposals.
On the day following the rejection of the bond issue, roof stress tests were conducted. The tests concluded that, although the roof was structurally adequate to bear the required load of 30 pounds per square foot, there were other serious problems. Sagging roof planks created the danger that tiles and pieces of
concrete would fall from the ceiling. Other potential safety hazards included short-circuited electrical systems, slippery flooring and shattering glass.
During the 1978-1979 school year, rain caused puddles one-quarter to one-half inch deep stretching for hundreds of feet in the halls of the school. Students going to and from class navigated around buckets. Plastic covers were installed to catch the water in 20-gallon drums; later, 55-gallon drums were required. Conditions were so intolerable in 1978-1979 that approximately 30 classes were moved to the auditorium stage or the cafeteria. Later, classes were moved to locations outside the building. Rain poured into one room as if there were no roof. A sump pump has since been installed on the roof. The chemistry room could not be used for two months in 1978 because rain had loosened floor tiles. Water damage has since caused rotting of wooden columns and framing in the library. In other rooms, acoustical tiles have fallen from the ceiling, and water dripping onto a fire sensor has activated a fire alarm. In still other rooms, shades were drawn throughout the school year to shield against the possibility of shattering glass. To minimize danger from flying glass, some glass panes have since been replaced with plexiglass. Students have been forced to move their desks to make room for buckets, and teachers try to teach above the sound of dripping water.
Nonetheless, on April 3, 1979, the voters again rejected a bond issue. That referendum sought an amount to repair the roof ($1,643,000), plus an amount necessary to conduct school in an alternate facility during the proposed construction.
Between September 1978 and May 1980, the Board spent an additional $62,530 on temporary repairs. In spite of this, the continuing dangerous conditions of the school caused the liability insurance carrier to reduce its coverage from $1,000,000 to $500,000 and to threaten cancellation of the coverage in the absence of immediate repairs.
On April 10, 1979, the Board unsuccessfully applied to the Commissioner for emergency funding to effectuate the necessary repairs. Finally, the Board petitioned the Commissioner pursuant to N.J.S.A. 18A:7A-15 for an order to issue the bonds and other relief. The Commissioner referred the matter to an administrative law judge, who found, after a hearing, that the conditions were a "clearly present danger to the health and safety of pupils within the Allentown High School." He ruled that the Commissioner had not only the authority but also "the responsibility to take corrective action to enable the Board to restore Allentown High School to a condition which comports with the thorough and efficient requirements." The Commissioner adopted the findings of fact and conclusions of law of the administrative law judge. Consequently, he directed "the issuance of school district bonds in the amount of $1,643,000 for a capital project to replace the roof of Allentown High School and necessary attendant repairs."
Allentown and Freehold appealed to the State Board, which affirmed the decision of the Commissioner. The factual findings adopted by the Commissioner are not challenged on this appeal. Rather, the dispute centers on whether the Commissioner and State Board have the power to order, over voter rejection, issuance of bonds for a capital project.
Although the municipalities took no further appeal, bond counsel informed the school district that, because of the voter rejection, they could not issue a favorable opinion on the validity of bonds issued pursuant to the order of the State Board. Notwithstanding the receipt of an unstayed order from the State Board mandating the issuance of bonds, the opinion of bond counsel precluded the sale of bonds by the local Board. Consequently, ...