On appeal from State Board of Education.
Bischoff, J. H. Coleman and Gaulkin. The opinion of the court was delivered by Bischoff, P.J.A.D.
The chief issue presented by this appeal is whether a township committee, in its review of the proposed budget of a board of education after rejection of the budget by the electorate, may reach and consider items of income anticipated by the board. We hold that it may.
On April 7, 1981 the electorate of the Township of Branchburg rejected the school budget proposed by the township board of education (board). Pursuant to N.J.S.A. 18A:22-37, the township committee (committee) consulted with the board and (1) reduced line items in the budget, (2) increased the estimate of anticipated income and (3) increased the estimate of the unappropriated balance on hand, thus reducing the amount to be raised by taxation.
The board filed a petition of appeal to the State Commissioner of Education (Commissioner). The matter was referred to an administrative law judge (ALJ) for hearing and decision. Evidence presented at the hearing disclosed that the disputed reduction in line items related to the board's library program.
The committee contended that the board had understated its anticipated interest income by $32,000, and it increased that item in the proposed budget. Evidence presented at the hearing indicated that the probable interest income for the years 1981-82 would be at least $76,000. Only $20,000 was reflected in the board's proposed budget. At the hearing the board took the position that this additional revenue would be needed since it was aware that the budget underestimated expenses to be incurred for heat and pupil transportation.
The committee also contended at the hearing that the board had understated the unappropriated balance on hand (surplus)
by $30,000, and it therefore increased that item in the budget by that amount. Evidence presented at the hearing indicated that $25,000 was being carried as a contingent fund to defray costs of a possible residential placement and a consequent transfer of liability from Division of Youth and Family Services to the board.
The ALJ found and recommended that (1) cuts in the line items relating to the library be restored in full; (2) the board did understate its anticipated interest income by $32,000 and that sum should be added to the budget, thus increasing the miscellaneous revenues to $52,000, and (3) the additional amount of $30,000 should be added to the unappropriated expense balance, and that course of action would not harm the standard of education to be delivered by the board.
The Commissioner adopted the recommendations of the ALJ respecting the restoration of cuts in line items but rejected his recommendations respecting the items of anticipated income and the invasion of surplus because (1) fluctuation in economic conditions made anticipation of costs difficult and (2) the Commissioner found no authority for the committee to reach into the board's source of revenues and unappropriated free balances so as to offset anticipated regular expenses.
The State Board of Education affirmed. This appeal by the committee followed.
The committee first argues that since there was testimony that the committee's cuts in the line items "would not prevent the Board from providing the State-mandated thorough and efficient ...