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In re Grant of Charter School Application of Englewood on Palisades Charter School

March 29, 1999

IN THE MATTER OF THE GRANT OF THE CHARTER SCHOOL APPLICATION OF ENGLEWOOD ON THE PALISADES CHARTER SCHOOL. IN THE MATTER OF THE GRANT OF THE CHARTER SCHOOL APPLICATION OF THE CLASSICAL ACADEMY CHARTER SCHOOL OF CLIFTON, PASSAIC COUNTY. IN THE MATTER OF THE GRANT OF THE CHARTER SCHOOL APPLICATION OF THE FRANKLIN CHARTER SCHOOL, SOMERSET COUNTY.


Before Judges King, Wallace and Fall.

The opinion of the court was delivered by: King, P.j.a.d.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: February 3, 1999

On appeal from the State Board of Education.

I.

In this consolidated opinion we address challenges by three school districts to various aspects of the Charter School Program Act of 1995; N.J.S.A. 18A:36A-1 to -18; L. 1995, c. 426 (Act) and its application in practice. The three cases before us involve Englewood in Bergen County; Clifton in Passaic County, and Franklin Township in Somerset County. We find none of the challenges advanced by appellant districts persuasive. We affirm the State Board of Education in each case.

II.

A. The Englewood Appeal (A-4697-97T1)

In August 1997 the proposed charter school, Englewood on the Palisades (Palisades), filed an application for approval, for the 1998-99 school year, with the New Jersey Department of Education (Department). By resolution of October 9, 1997 the Englewood City Board of Education (Englewood) adopted a resolution opposing the application on the grounds that the charter school would divert scarce funds from the existing school district and the application did not meet the goals of the statute creating charter schools.

The application was evaluated by three "reviewers" for the Department, each of whom cited various deficiencies in the application. The Evaluation Tally, a summary of the reviewers' ratings, rated the financial plan as "inadequate" and the implementation plan as lacking sufficient evidence.

On October 29, 1997 the Department issued to the charter school two Review Feedback forms identifying the deficiencies and requiring Palisades to provide additional information. In response to the Department's concerns, Palisades submitted two addenda to its application, one in November 1997 and one in December 1997.

By letter of January 21, 1998 the Commissioner of Education granted contingent approval of the charter application. The Commissioner listed eleven sets of documents that Palisades had to file by stated deadlines, which documents were required by the regulations implementing the statute. When those deadlines were met, the Commissioner advised the charter would be granted unconditionally. There is no indication in the record whether the mandated documents were filed.

Englewood appealed the approval to the State Board of Education, as permitted by N.J.S.A. 18A:36A-4d. Englewood contended in part that the charter school would result in racial imbalance in the district as a whole, as Caucasian students would gravitate toward Palisades.

On April 3, 1998 the State Board upheld the Commissioner's decision, with this caveat:

"We find that the Board has not shown that the substance of the application is such that we should set aside the Commissioner's determination that the proposed charter school may continue the process which would allow it to become operative if the Commissioner grants it final approval. Moreover, the Board's arguments with regard to racial impact are speculative at this point in the absence of actual enrollment data. However, given the racial composition of Englewood's student population, the Commissioner should review the racial composition of the student population of the proposed Englewood on the Palisades Charter School before granting final approval."

There is no indication in the record that the Commissioner ever reviewed the racial consequences or issued the "final approval" contemplated by the State Board.

Englewood filed a timely notice of appeal to this court from the State Board's April 3, 1998 adverse decision. It unsuccessfully moved for a stay from both the State Board and this court but we did grant its motion for acceleration. Palisades began operating in September 1998 at the kindergarten level.

B. The Clifton Appeal (A-4825-97T1)

In August 1997 the proposed charter school, Classical Academy Charter School of Clifton (Classical Academy), filed an application for approval, for the 1998-99 school year, with the Department. The Clifton Board of Education (Clifton) sent the Commissioner of Education a letter of opposition, arguing that the proposed school would offer only programs currently offered in the existing schools and the application was defective.

The application was evaluated by three "reviewers" for the Department, each of whom cited various deficiencies in the application. The Evaluation Tally rated the implementation plan as "strong" to "adequate," and the financial plan as lacking sufficient evidence. On October 29, 1997 the Department issued to Classical Academy two Review Feedback forms identifying various deficiencies and requiring further information. On November 4, 1997 Classical Academy submitted addenda to its application which purported to answer the Department's concerns. By letter of January 21, 1998 the Commissioner granted contingent approval of the application, in language similar to that used in approving the application in the Englewood case.

On appeal by Clifton to the State Board, on April 3, 1998 the State Board upheld the Commissioner's preliminary approval:

"We find that the Board has not shown that the substance of the Classical Academy Charter School's application is such that we should set aside the Commissioner's determination that the proposed charter school may continue the process which would allow it to become operative if the Commissioner grants it final approval. We therefore decline to set aside that approval."

Clifton filed a timely notice of appeal to this court. The State Board denied Clifton's motion for a stay. We denied Clifton's attorney's motion to intervene as an individual taxpayer of the City of Clifton. The school began operating in September 1998. In its brief on appeal, the State Board represents that Clifton filed an unsuccessful complaint with the Council on Local Mandates seeking a declaration that the funds it would have to provide for the charter school were violative of the statutory prohibition against "unfunded mandates." See N.J.S.A. 52:13H-1 to -20.

C. The Franklin Township Appeal (A-4973-97T1)

In August 1997 the proposed charter school, Franklin Charter School (Franklin Charter) filed an application for approval, for the 1999-2000 school year. The Franklin Township Board of Education (Franklin Township) sent to the Commissioner of Education a letter asserting twenty-five points of opposition.

The application was evaluated by three reviewers, each of whom cited various deficiencies. The Evaluation Tally rated the implementation plan as "adequate" and the financial plan as "inadequate." On October 29, 1997 the Department issued to the proposed school two Review Feedback forms identifying deficiencies and requesting more information. On November 5, 1997 Franklin Charter submitted addenda to its application, in which it purported to answer the Department's concerns. By letter of January 21, 1998 the Commissioner granted contingent approval, which approval would be made final once Franklin Charter filed requested documentation.

On appeal to the State Board, on April 3, 1998 the State Board upheld the Commissioner's contingent approval. It reasoned as follows:

"We find that the board has not shown that the substance of the application is such that we should set aside the Commissioner's determination that the proposed charter school may continue the process which would allow it to become operative if the Commissioner grants it final approval."

Franklin Township then filed a timely notice of appeal to this court. Franklin Charter is not yet operational.

III.

All three appellants argue that the charter-school applications by the three respondents failed to meet the informational requirements of the Act or regulations. Before we address appellants' arguments, we will review the pertinent provisions of the Act and its accompanying regulations.

A. The Charter School Movement

Authorized in at least thirty states, "charter schools are among the hottest reform initiatives in public education today." Kevin S. Huffman, Note, Charter Schools, Equal Protection Litigation, and the New School Reform Movement, 73 N.Y.U. L. Rev. 1290, 1291-92 (1998). A charter is a type of contractual agreement with the state in which the charter school is freed from most state regulations in return for its commitment to heightened standards of accountability. Jennifer T. Wall, The Establishment of Charter Schools: A Guide to Legal Issues for Legislatures, 1998 B.Y.U. Educ. & L.J. 69 (1998).

The courts of at least three states have considered and rejected various constitutional challenges to charter-school legislation:

"Villanueva v. Carere, 85 F.3d 481 (10th Cir. 1996) (charter school act did not create suspect class based on ethnicity); Shelby School v. Arizona State Board of Education, 962 P.2d 230 (Ariz. App. 1998) (charter school had no due process entitlement to a charter); Council of Organizations v. Governor, 566 N.W.2d 208 (Mich. 1997) (charter school act was not violative of the Michigan constitution). In New Jersey the only reported state-court decision is Jersey City Education Association v. City of Jersey City, 316 N.J. Super. 245 (App. Div. 1998), interpreting one section of the act, N.J.S.A. 18A:36A-10, use of public funds to construct a charter school, in a context not pertinent here. In Porta v. Klagholz, 19 F. Supp. 2d 290 (D.N.J. 1998), the Federal District Court upheld the Act against an Establishment Clause challenge, an issue not presented by these three appeals."

B. The Charter School Program Act of 1995, N.J.S.A. 18A:36A-1 to -18

The desirability of a charter school law in New Jersey was the subject of three public hearings in 1995 before the Senate and Assembly Education Committees. The most frequently expressed objection was charter schools would divert tax dollars from existing districts without any corresponding decrease in their costs. Also articulated was the fear that charter schools would drain away "the best and the brightest" and ultimately lead to elitism and segregation.

In its Fiscal Estimate the Office of Legislative Services perceived "little or no additional costs to the State or to local school districts as a result of this bill":

"The charter school would receive the local levy budget per pupil (State aid plus local tax levy) for each pupil attending the charter school, plus any categorical aid or federal funds attributable to that pupil. If out of district pupils were admitted, the district of residence would pay the costs for that pupil. Further, the bill specifies that a charter school may not use public funds for the construction of facilities." [See Legislative Fiscal Estimate to S. 1796 (1995).]

The Act was adopted effective January 11, 1996. L. 1995, c. 426, § 1. In the Act the Legislature describes the aim of the charter-school concept:

"The Legislature finds and declares that the establishment of charter schools as part of this State's program of public education can assist in promoting comprehensive educational reform by providing a mechanism for the implementation of a variety of educational approaches which may not be available in the traditional public school classroom. Specifically, charter schools offer the potential to improve pupil learning; increase for students and parents the educational choices available when selecting the learning environment which they feel may be the most appropriate; encourage the use of different and innovative learning methods; establish a new form of accountability for schools; require the measurement of learning outcomes; make the school the unit for educational improvement; and establish new professional opportunities for teachers."

"The Legislature further finds that the establishment of a charter school program is in the best interest of the students of this State and it is therefore the public policy of the State to encourage and facilitate the development of charter schools." [N.J.S.A. 18A:36A-2.]

The Act empowers the Commissioner of Education to approve and grant charters; once a charter is granted the charter school operates "independently of a local board of education and is managed by a board of trustees," the members of which are "deemed to be public agents authorized by the State Board of Education to supervise and control the charter school." N.J.S.A. 18A:36A-3a. The Act limits to 135 the number of charter schools that may be approved in the first four years of the program; a minimum of three charter schools are allocated to each county. N.J.S.A. 18A:36A-3b. At oral argument, counsel advised us that about thirty charter schools are operational and about fifty total have been approved.

Charter schools may be established by combinations of parents, teaching staff members, institutions of higher education, or private entities. N.J.S.A. 18A:36A-4a. Applications must be submitted to the local board and the Commissioner of Education; the local board submits its recommended action to the Commissioner, who "shall have final authority to grant or reject a charter application." N.J.S.A. 18A:36A-4c. Either the applicant or the local board may appeal the Commissioner's decision to the State Board of Education, which must render a decision within thirty days, failing which the Commissioner's decision becomes final. N.J.S.A. 18A:36A-4d.

The section central to this issue is N.J.S.A. 18A:36A-5, which lists the information that a charter-school application "shall include":

"a. The identification of the charter applicant;"

"b. The name of the proposed charter school;"

"c. The proposed governance structure of the charter school including a list of the proposed members of the board of trustees of the charter school or a description of the qualifications and method for the appointment or election of members of the board of trustees;"

"d. The educational goals of the charter school, the curriculum to be offered, and the methods of assessing whether students are meeting educational goals. Charter school students shall be required to meet the same testing and academic performance standards as established by law and regulation for public school students. Charter school students shall also meet any additional assessment indicators which are included within the charter approved by the commissioner;"

"e. The admission policy and criteria for evaluating the admission of students which shall comply with the requirements of section 8 of this act;"

"f. The age or grade range of students to be enrolled;"

"g. The school calendar and school day schedule;"

"h. A description of the charter school staff responsibilities and the proposed qualifications of teaching staff;"

"i. A description of the procedures to be implemented to ensure significant parental involvement in the operation of the school;"

"j. A description of, and address for, the physical facility in which the charter school will be located;"

"k. Information on the manner in which community groups will be involved in the charter school planning process;"

"l. The financial plan for the charter school and the provisions which will be made for auditing the school pursuant to the provisions of N.J.S. 18A:23-1;"

"m. A description of and justification for any waivers of regulations which the charter school will request; and"

"n. Such other information as the commissioner may require."

A charter school is invested with all the powers of a "body corporate," including the powers to sue and be sued, acquire private property, make contracts and leases, incur debt, and solicit gifts and grants. N.J.S.A. 18A:36A-6. The school's board of trustees "shall have the authority to decide matters related to the operations of the school including budgeting, curriculum, and operating procedures, subject to the school's charter." N.J.S.A. 18A:36A-14a.

In its admission criteria, a charter school must give preference to students living in the public school district in which the school is located; if there are more applications than spaces available, the school must use a "random selection process." N.J.S.A. 18A:36A-8a. Non-resident students may be admitted if space is available. N.J.S.A. 18A:36A-8d. The school's admission policy, to the extent practicable, must "seek the enrollment of a cross section of the community's school age population including racial and academic factors." N.J.S.A. 18A:36A-8e. Enrollment may not exceed the lesser of 500 students or 25% of the student body of the existing district. N.J.S.A. 18A:36A-4e.

A charter school may be located in an existing public school building, in any other public building or work site, "or any other suitable location"; the facility itself is exempt from regulations governing public schools, "except those pertaining to the health or safety of the pupils." N.J.S.A. 18A:36A-10. A charter-school building may not be built with public funds. N.J.S.A. 18A:36A-10.

In its operations the charter school is bound by the laws and regulations governing public schools, unless it requests and is granted exemption. No exemption may be granted from strictures "pertaining to assessment, testing, civil rights and student health and safety." N.J.S.A. 18A:36A-11.

Funding of the charter schools comes mainly (90%) from the existing school district:

"The school district of residence shall pay directly to the charter school for each student enrolled in the charter school who resides in the district a presumptive amount equal to 90% of the local levy budget per pupil for the specific grade level in the district. At the discretion of the commissioner and at the time the charter is granted, the commissioner may require the school district of residence to pay directly to the charter school for each student enrolled in the charter school an amount equal to less than 90% percent, or an amount which shall not exceed 100% of the local levy budget per pupil for the specific grade level in the district of residence. The per pupil amount paid to the charter school shall not exceed the local levy budget per pupil for the specific grade level in the district in which the charter school is located. The district of residence shall also pay directly to the charter school any categorical aid attributable to the student, provided the student is receiving appropriate categorical services, and any federal funds attributable to the student." [N.J.S.A. 18A:36A-12.]

The existing district also must pay for the transportation of charter-school students, on the same terms as that provided to regular students. N.J.S.A. 18A:36A-13.

Any individual or group may file a complaint with the board of trustees alleging a violation of the Act; should the board fail to resolve the complaint satisfactorily, the complainant may ask the Commissioner of Education to investigate and respond. N.J.S.A. 18A:36A-15. The Commissioner is to conduct an annual assessment of each charter school, and must hold public hearings in 2001 concerning the effectiveness and continuation of the program. N.J.S.A. 18A:36A-16. Each charter has an initial duration of four years, subject to renewal for five years. The Commissioner may revoke a charter at any time or may place a school "on probationary status to allow the implementation of a remedial plan." N.J.S.A. 18A:36A-17.

C. The regulations

Under the authority of N.J.S.A. 18A:36A-18, on August 4, 1997, the State Board adopted regulations governing charter schools. N.J.A.C. 6A:11-1.1 to -7.3. As pertinent to these appeals, the regulations promulgate procedures for the application process. They add nine items to the statutory list of information which must be disclosed by the application. N.J.A.C. 6A:11-2.1(b). They also detail the evaluation process that the Department of Education must pursue. N.J.A.C. 6A:11-2.1(c),(d),(e). Applications must be submitted by August 15 of the year preceding the planned start of the school, N.J.A.C. 6A:11-2.1(b)3, and the Commissioner must approve or deny the application by the following January 15. N.J.A.C. 6A:11-2.1(f).

The regulations clearly contemplate the type of contingent approvals that the Commissioner granted in these cases:

"(g) The Commissioner may approve an application for a charter which shall be effective when all necessary documents and information are received and approved by the Commissioner. The charter school shall submit at a later date documentation not available at the time of the application submission including but not limited to:"

"1. Bylaws of the board of trustees;"

"2. Certificate of incorporation;"

"3. Identification of its facility and lease, mortgage or title to its facility;"

"4. Certificate of occupancy issued by the local municipal enforcing official;"

"5. Sanitary inspection report; and"

"6. Fire inspection certificate."

"(h) All statutorily required documentation shall be submitted to the Department of Education by May 15. The final granting of the charter by the Commissioner shall be effective when all required documentation as listed in (g) above is submitted and approved by the Department of Education." [N.J.A.C. 6A:11-2.1(g) & (h).]

D. Analysis of the parties' presentations

In this Discussion we address the merits of the three appellants' claims that the applications failed to meet the requirements of the Act.

There is an additional consideration pertinent to Englewood's and Clifton's application claims. These two applications were for the 1998-99 school year; as those two appellants were unable to obtain a stay of the charter grants, the two schools have opened. By the time we were able to decide these appeals, the schools began operating. Thus the interests of the current charter-school students, as well as the public policy favoring the charter-school movement, have bearing on whether to void the charter grants for technical deficiencies in the applications.

A more efficacious and practical remedy at this stage may be for appellants to monitor the actual, as opposed to promised, performance of the two schools, and then to invoke the tools provided by the Act to insure compliance, namely, the Commissioner's power to revoke or to impose a remedial plan. N.J.S.A. 18A:36A-17. Where the schools have established a record of performance, it will be possible to Judge whether they satisfy the Act's various mandates, rather than having to engage in the more uncertain task of assessing whether the plans were sufficient on paper. Franklin Township perhaps stands on a different footing because the charter school in that district will not open until the 1999-2000 school year.

1. Englewood board of education

The Englewood board identifies numerous ways in which Palisades' application did not meet the prerequisites of the Act. a. N.J.S.A. 18A:36A-4a

This section, relating to the kinds of persons who may establish a charter school, states in pertinent part:

"a. A charter school may be established by teaching staff members, parents with children attending the schools of the district, or a combination of teaching staff members and parents. A charter school may also be established by an institution of higher education or a private entity located within the State in conjunction with teaching staff members and parents of children attending the schools of the district."

Englewood complains, as it did in its appeal to the State Board, that the application did not list any teaching staff members among the founders of the charter school, and that it listed only one parent who had a child in the school district. Apparently Englewood construes N.J.S.A. 18A:36A-4a to require the founders to include more than one parent with a child attending school in the district.

The application listed thirteen "founders," comprising twelve individuals and one charitable foundation. Five were identified as "teaching staff members," two were from a New York district and three were from Englewood; the latter were labelled consultants and according to Englewood were not "teaching staff members." Only one of the parents had a child attending school in the Englewood district.

Palisades counters that the Act does not require that the founders include more than one parent with a child in the district. Nor does the Act require that the "teaching staff members" work in the district at the time of the application. Thus, reasons Palisades, the inclusion of two teachers from a New York district satisfied the Act's conditions; the application described a permissible combination of founders:

"teaching staff members, a parent with a child in the district, and other parents."

The State Board cites legislative history to support the view that "parents" need not have children in the district to qualify as founders. An earlier Assembly version of the bill which became the Act defined the categories of founders as follows:

"4.a. A charter school may be established by ten or more teaching staff members, ten parents with children attending the schools of the district, or a group of five teaching staff members and five parents with children attending the schools of the district. A charter school may also be established by an institution of higher education located within the State in conjunction with five teaching staff members and five parents of children attending the schools of the district." [Assembly Committee Substitute for Assembly Bill No. 592, adopted April 27, 1995.]

But the Senate Committee substitute changed the text, in pertinent part, to the following:

"4.a. A charter school may be established by teaching staff members, parents with children attending the schools of the district, or a combination of teaching staff members and parents. A charter school may also be established by an institution of higher education or a private entity located within the State in conjunction with teaching staff members and parents of children attending the schools of the district." [Senate Committee Substitute for Assembly Bill No. 592, adopted December 11, 1995.]

That is the version enacted into law.

From this history the State reasons:

"Plainly, the Legislature elected to delete the requirement that the founding parents must have children attending the schools in the district; the only legislative prerequisite is that the founders be parents. This interpretation is buttressed by the second option found in N.J.S.A. 18A:36A-4a for establishing a [charter] school, which is by an institution of higher learning or a private entity "in conjunction with teaching staff members and parents of children attending the schools of the district." It is evident from the Legislature's choice of terms that it specified the circumstances in which the founders must have children ...


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