March 16, 2009
BOARD OF EDUCATION OF THE CITY OF ELIZABETH, UNION COUNTY, PETITIONER-APPELLANT,
NEW JERSEY STATE DEPARTMENT OF EDUCATION. RESPONDENT-RESPONDENT.
On appeal from a Final Decision of the Commissioner of Education, Docket No. 48-2/08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 3, 2008
Before Judges Reisner, Sapp-Peterson and Alvarez.
Plaintiff, Board of Education of the City of Elizabeth, Union County (District or Board),*fn1 is an Abbott district.*fn2 It appeals from the final decision of the Commissioner of defendant, Department of Education (DOE), denying its request for funding for additional educational programs, declining to subsidize the Board's decision to give its teachers and aides a one-hour lunch break instead of the thirty minutes provided under the collective bargaining agreement, and concluding that it had not been sufficiently thrifty in planning and paying for its technology needs. We affirm.
Under DOE regulations, school districts must submit to the DOE both a two-year preschool program plan and a one-year preschool program budget. N.J.A.C. 6A:10A-2.2(a)(9) and (11).*fn3
As part of DOE's budget guidelines, one-year "Special Requests" that "(1) do not fit within or (2) exceed the amounts in any of the line-item categories" in the budget may be submitted as well, but should be accompanied by "detailed descriptions and justifications . . . ." N.J.A.C. 6A:10A-1.2.*fn4 Plaintiff submitted its 2008-2009 proposed budget to defendant in November 2007, which included a request for funding for its extended day/extended school year program (ED/ESY), funding for 165 lunchroom assistants and $44,000 for technology infrastructure. DOE approved the budget but without the ED/ESY program, the additional lunchroom assistants or technology infrastructure. The District appealed the DOE's decision to the Commissioner, who assigned the matter to the Office of Administrative Law (OAL), to be heard as a contested case before an Administrative Law Judge (ALJ). N.J.S.A. 52:14B-9 and -10; see also N.J.A.C. 1:1-1.1 to -20.3 (providing uniform rules of procedure for conduct of contested case proceedings). Both sides presented testimony, at the conclusion of which the ALJ issued a written opinion.
The ALJ found that the District failed to meet its burden in showing a need for funding beyond the regular day/regular school year schedule required under Abbott and the resulting regulations. The ALJ specifically noted that the District's reliance upon various assessments and screening processes did not outweigh the contrary explanations offered by the DOE against the funding. The ALJ determined that funding should be provided for the 165 lunch assistants for the one-hour lunch period "[s]ince the District provides a one hour lunch for its teaching staff" as an "accommodation" to "ensure that a safe and secure environment exists during lunch." Finally, on the issue of funding for the technology infrastructure, the District contended that its yearly allotment of $132,000, based upon a total allotment of $800 per class for 165 classrooms, was annually expended on replacement items. The ALJ determined that based upon proofs the District submitted, it was evident "not all of the replacement items were recurring annually . . . ." The ALJ nonetheless concluded "it was clear that [the $132,000] allotment would likely be exhausted by the end of the school year . . . ." Additionally, the ALJ noted that the justification for the additional technology funding was the same as had been submitted for the previous year and that additional funding had been provided over the past several years, although not necessarily for the amount requested in the latest submission. While recognizing that a determination for one year was not binding for purposes of funding in succeeding years, the ALJ determined that the
Department's own treatise . . . encourages a rich learning environment through the use of technology, ". . . such as computers with age-appropriate software, to enhance the development of critical thinking skills." In this regard, the District offered compelling reasons for infrastructure funding-the need for telephone service, networking capabilities, and internet access.  "Preschool Teaching & Learning Expectations: Standards of Quality" (July 2004).*fn5
The Commissioner reviewed the record, the initial decision of the ALJ, as well as the exceptions and replies submitted. She adopted the ALJ's initial decision with respect to the additional funding sought for ED/ESY, but rejected the recommendation that the DOE fund 165 positions for the student lunch hour and the special request for $44,000 in additional funding for technology infrastructure.
In concurring with the ALJ's recommendation that the ED/ESY funding be denied, the Commissioner found that the record indisputably demonstrated that the Board is able to meet the needs of its preschool students during the regular school day and that she would not accept a "simple 'more is better' rationale without a specific factual nexus to the identified unmet needs of district students, which was not provided herein."
In her written decision, the Commissioner, like the ALJ, was "unpersuaded" by the Board's stated need for the ED/ESY program, noting that "both Department and Board witnesses attested that the district is able to meet the needs of its preschool students during the regular school day." The Commissioner found that the Board was already in compliance with regulatory year and hour requirements, and that the Board had failed to make "a compelling showing that . . . this [existing] program . . . does not enable students to enter kindergarten ready to succeed . . . ."
Turning to the ALJ's recommendation that the lunch assistants be provided for one hour, to which both parties took exception for different reasons,*fn6 the Commissioner affirmed that recommendation in part and rejected it in part, denying the Board's special request for supplemental funding. The Commissioner determined that the ALJ's recommendation that the District should be awarded a portion of the requested funds was based on an erroneous assumption concerning the length of teachers' lunch hours and, further, that the Board could satisfy its schools' lunchtime needs by making "more efficient use of available resources . . . ." On this basis, the Commissioner ruled that the Board could adequately supervise students without additional funding.
Finally, in rejecting the ALJ's recommendation that the requested $44,000 for technology funding be granted, the Commissioner found that the DOE was not required to grant the funding requested simply because it had granted an "identical request for the 2007-2008 school year . . . ." The Commissioner also stated that the Board failed to prove it had already disbursed "the entire amount of available technology funding[,]" as it was required to do, and expressed the opinion that the Board's technology infrastructure needs arose from its own inefficient use of previously-allocated money. The present appeal followed.
On appeal, the District raises the following points for our consideration: (1) the Commissioner's decision violates the Abbott mandates and legal requirements for administrative appeals of preschool funding decisions; (2) the Commissioner, in reaching her decision, ignored the standards to which she must adhere in reviewing the findings and conclusions of the ALJ, resulting in her erroneous ruling; and (3) both the ALJ and Commissioner imposed a legally unsupportable burden upon the District to justify its ED/ESY program.
We have considered the arguments in light of the record and applicable legal principles and reject the arguments in their entirety. We affirm substantially for the reasons set forth in Commissioner Lucille Davy's April 21, 2008 written decision. We add the following.
The relationship between the findings and conclusions leading to a recommendation from an ALJ and the final decision reached by the Commissioner is set forth in the Administrative Procedure Act (APA), which states in pertinent part:
A recommended report and decision which contains recommended findings of fact and conclusions of law and which shall be based upon sufficient, competent, and credible evidence shall be filed . . . with the agency in such form that it may be adopted as the decision in the case . . . and an opportunity shall be afforded each party of record to file exceptions, objections, and replies thereto, and to present argument to the head of the agency or a majority thereof, either orally or in writing, as the agency may direct. The head of the agency, upon a review of the record submitted by the administrative law judge, shall adopt, reject or modify the recommended report and decision . . . . In reviewing the decision of an administrative law judge, the agency head may reject or modify findings of fact, conclusions of law or interpretations of agency policy in the decision, but shall state clearly the reason for doing so. The agency head may not reject or modify any findings of fact as to issues of credibility of lay witness testimony unless it is first determined from a review of the record that the findings are arbitrary, capricious or unreasonable or are not supported by sufficient, competent, and credible evidence in the record. In rejecting or modifying any findings of fact, the agency head shall state with particularity the reasons for rejecting the findings and shall make new or modified findings supported by sufficient, competent, and credible evidence in the record. [N.J.S.A. 52:14B-10(c).]
Our standard of review is quite limited. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963). We accord a strong presumption of reasonableness to agency decisions and do not substitute our judgment for the wisdom of agency action if that action is statutorily authorized and not arbitrary or unreasonable. Bd. of Educ. of Englewood Cliffs v. Bd. of Educ. of Englewood, ("Englewood I"), 257 N.J. Super. 413, 456 (App. Div. 1992), aff'd, 132 N.J. 327, cert. denied, 510 U.S. 991, 114 S.Ct. 547, 126 L.Ed. 2d 449 (1993). As long as the agency decision is contemplated under its enabling legislation, the action must be accorded a presumption of validity and regularity. Ibid. Moreover, where, as in this case, special expertise is required, an even stronger presumption of reasonableness exists. IFA Ins. Co. v. New Jersey Dep't of Ins., 195 N.J. Super. 200, 207-08 (App. Div.), certif. denied, 99 N.J. 218 (1984) (citations omitted).
Under the School Funding Reform Act (SFRA), N.J.S.A. 18A:7F-43 to -63, the Commissioner "shall not authorize the disbursement of funds to any district until the commissioner is satisfied that all educational expenditures in the district will be spent effectively and efficiently in order to enable students to achieve the core curriculum content standards." N.J.S.A. 18A:7F-60. N.J.A.C. 6A:10A-9.6(c) describes the District's burden of proof with regard to supplemental funding. It provides:
[T]he Commissioner shall apply the same standards as are set forth for Department review in the operative rules for the type of application in dispute. The burden of proof shall be on the petitioning party to demonstrate that these standards were met by the applicant notwithstanding the Department's determination to the contrary. The record on appeal shall consist of those documents and information submitted to the Department in support of its application and any additional information relied upon by the Department in making the determination at issue.
Both parties cite language from Abbott v. Burke, ("Abbott V"), in averring that where, as here, a school district seeks supplemental funding, such requests are to be considered on the basis of the district's "demonstrated need." 153 N.J. 480, 518-19 (1998). The Abbott V Court variously refers to the obligation of a school district to "demonstrate particularized need for supplemental programs." Id. at 525-26.
The DOE also references the Commissioner's obligation, imposed by both Abbott v. Burke, ("Abbott IV"), and the DOE's regulations, to dispense funding "effectively" and "efficiently." 149 N.J. 145, 193 (1997) (holding "[t]he Commissioner has an essential and affirmative role to assure that all education funding is spent effectively and efficiently, especially in the special needs districts, in order to achieve a constitutional education."); see Abbott V, supra, 153 N.J. at 492, 545-56; see also N.J.A.C. 6A:10-2.1(a) (stating "[t]he Commissioner shall take affirmative action as is necessary to ensure the effective and efficient expenditure of funds for the implementation of all of the Abbott v. Burke programs.").*fn7
N.J.A.C. 6A:10-1.2 defines both "effective" and "efficient":
"Effective" means a conclusion that a practice, expenditure, program or service is achieving its intended result by contributing to improved student achievement as demonstrated through site-specific evaluation employing the standards of evidence-based research and/or comparative data analysis that takes into account the demographic and economic characteristics of the students to be compared. [N.J.A.C. 6A:10-1.2.]
"Efficient" means a conclusion that a reform, program, expenditure category or service or a component thereof, minimizes the use of time, effort, and resources, including funding, while not impairing the achievement of the objective of the reform, program, or service as demonstrated through site-specific evaluation and comparative data analyses against standards for efficiency and comparisons with the same expenditure category in other school districts.
In reaching her decision upon review of the ALJ's recommendations, the Commissioner referenced the language "efficient" and "adequate" as well as "compelling showing."*fn8 In its brief, the District alleges this language imposed upon it a "legally unsupportable burden." We do not read the Commissioner's use of this language as imposing a greater burden upon the Board in demonstrating the requisite need for additional funding. Upon closer review of the Commissioner's decision, it is apparent that she considered the record under the appropriate standard. She makes clear that the standard of review required the Board to prove its entitlement to "the funds sought by a preponderance of competent, relevant and credible evidence." We agree, as the DOE argued in its brief, the Commissioner's reference to "efficient" and "adequate" addressed her affirmative duty to ensure the effective and efficient expenditure of funds. Likewise, her reference to the term "compelling" characterized the absence of sufficient evidence to satisfy the Board's demonstrated need requirement for the ED/ESY, lunch assistant, and technology infrastructure additional funding requests.
The District also alleges that the ALJ and Commissioner exceeded the applicable scope of review in allowing the DOE to present extrinsic evidence to support its initial statement of reasons denying funding to the District. At various points in the hearing before the ALJ, the District's attorney objected that evidence offered by the DOE was an attempt to "buttress the [initial] decision with other reasons that were not stated in the [initial] decision[,]" specifically referring to the DOE's denial of funding as stated in its letter of January 15, 2008. The Board relies principally on language from N.J.A.C. 6A:10A-9.7(a)(1), which requires that the DOE respond to a district's initial budget proposal with "specific reasons for denying the program or expenditure." N.J.A.C. 10A:6A-9.7(a)(1).
The District's position is untenable and premised on a misreading of the regulations. If the DOE was irretrievably bound by its initial denial statement as presented in its N.J.A.C. 6A:10A-9.7(a)(1) response letter, so that it could not present further reasons for denying a district's request, the extensive appeals process would prove unnecessary. Moreover, testimony by DOE witnesses at administrative hearings would be limited to mere recital of the initial decision letter. Further, subsequent to the issuance of the DOE's January 15, 2008 "approval letter," testimony adduced at the administrative hearing indicated that the District was permitted to supplement its initial justification for the special requests with extrinsic documentation.
In summary, based upon our limited scope of review, we discern no arbitrary, capricious or unreasonable action, reflected in the Commissioner's decision. It violated no express or implied legislative policies, was supported by substantial credible evidence, and satisfied the Commissioner's statutory mandate to ensure that all school funds are effectively and efficiently utilized.