May 30, 2012
NORTHERN HIGHLANDS REGIONAL HIGH SCHOOL BOARD OF EDUCATION, PETITIONER-APPELLANT,
SADDLE RIVER BOARD OF EDUCATION, RESPONDENT-RESPONDENT.
On appeal from the New Jersey Department of Education, Docket No. 118-6/10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued Telephonically May 17, 2012
Before Judges Payne and Reisner.
Petitioner Northern Highlands Board of Education (Highlands) appeals from a final decision of the Commissioner of Education (Commissioner) dismissing two claims against respondent Saddle River Board of Education (Saddle River). We affirm in part and reverse in part.
This is a dispute between two school districts over reimbursement for the cost of a one-to-one school aide for a special needs student and a one-to-one English teacher for another student. Saddle River sends its students to Highlands for grades nine through twelve under a series of ten-year sending-receiving agreements that started in 1998. See N.J.S.A. 18A:38-8. In 2010, Highlands tried to back-bill Saddle River $98,000 for the cost of providing a special education student named T.F. with a one-to-one aide during the 2003-04, 2004-05, and 2005-06 school years. T.F. had graduated in 2006. Highlands also tried to back-bill Saddle River for the 2008-09 and 2009-10 school years with respect to another student, G.L., who required a one-to-one English teacher. The case was transmitted to the OAL, where it was decided on Saddle River's motion for summary disposition.
We begin by addressing the T.F. matter. In opposing the summary disposition motion, Highlands contended that Saddle River had reimbursed it for T.F.'s aide for the 2002-03 school year, but had then stopped making payment. Highlands contended that it did not discover the underpayment, or billing error, until 2009, and then promptly brought the situation to Saddle River's attention. Construing N.J.A.C. 6A:23A-17.1(f)(6), and N.J.A.C. 6A:3-1.3(i), the Administrative Law Judge (ALJ) found that Highlands had until ninety days after the end of the second year of the sending-receiving contract to file its claim, and therefore the 2010 claim for T.F. was untimely. On September 26, 2011, the Commissioner affirmed the ALJ's decision citing, N.J.A.C. 6A:3-1.3(i), which requires that any appeal to the Commissioner be filed within ninety days after receiving a final decision denying the petitioner's claim. In an October 31, 2011 decision denying reconsideration, the Commissioner confirmed that his decision was also based on N.J.A.C. 6A:23A-17.1(f)(6).*fn1
We first consider the two regulations on which the ALJ and the Commissioner relied. N.J.A.C. 6A:23A-17.1 addresses the method for determining the tuition rates to be charged by a receiving district to a sending district.
(f) The receiving district board of education and the sending district board of education shall establish by written contractual agreement a tentative tuition charge for budgetary purposes. Such tentative charge shall equal an amount not in excess of the receiving district board of education's "estimated cost per student" for the ensuing school year for the purpose or purposes for which tuition is being charged, multiplied by the "estimated average daily enrollment of students" expected to be received during the ensuing school year. Such written contract shall be on a form prepared by the Commissioner. [N.J.A.C. 6A:23A-17.1(f).]
Subsection (f)(7) governs the proper procedure to be followed where the Commissioner determines that the sending district has set a rate that was too low:
If the Commissioner later determines that the tentative charge established by written contractual agreement, except for a contractual agreement for a student enrolled in a special education class, was less than the actual cost per student during the school year multiplied by the actual average daily enrollment received, the receiving district board of education may charge the sending district board of education all or part of the amount owed by the sending district board of education, to be paid during the second school year following the school year for which the tentative charge was paid. Such adjustment for a contractual agreement for a student enrolled in a special education class shall be made no later than the end of the second school year following the contract year. The executive county superintendent of schools of the county in which the sending district board of education is located may approve the payment of the additional charge over another period, if the sending district board of education can demonstrate that payment during the second school year following the school year for which the tentative charge was paid would cause a hardship. [N.J.A.C. 6A:23A-17.1(f)(7).]
At oral argument of this appeal, Highlands' counsel clarified that, if Highlands' claim concerned an under-calculation of the tuition rate, its claim would be untimely under subsection (f)(7), because it was not asserted within two years after the school year in which the services were rendered. However, Highlands asserts that its claim does not concern the calculation of the tuition rate but rather concerns a billing error. It contends that either Highlands inadvertently failed to bill for, or Saddle River inadvertently failed to remit payment for, a portion of the tuition charge on which the two districts had already agreed. In support of that argument, it contends that Saddle River paid for the student's one-on-one aide in 2002-03, thus establishing that the payment was part of the existing tuition rate for this student.
Saddle River, on the other hand, argues either that it did not make the 2002 payment, or that Highlands agreed that, in future years, it would not have to pay for this service. It also contends that Highlands' claim is time-barred under 17.1(f).*fn2
Additionally, Highlands contends that the Commissioner erred in applying N.J.A.C. 6A:3-1.3(i), because the ninety-day time limit that section sets is not triggered until there is a decision from which to appeal. This section provides:
The petitioner shall file a petition no later than the 90th day from the date of receipt of the notice of a final order, ruling or other action by the district board of education, individual party, or agency, which is the subject of the requested contested case hearing. This rule shall not apply in instances where a specific statute, regulation or court order provides for a period of limitation shorter than 90 days for the filing of a particular type of appeal. [N.J.A.C. 6A:3-1.3(i).]
While this section, on its face, requires a "decision" to trigger the 90 day time limit, the Commissioner has previously applied N.J.A.C. 6A:3-1.3(i) to tuition billing disputes, in a manner consistent with the decision in this case. In Lord Sterling Schools, Inc. v Board of Education of the Morris School District, Morris County, Docket No. 129-4/02, the Commissioner construed N.J.A.C. 6:20-4.1, which "allowed private schools for the handicapped to charge a tentative tuition rate set by the Commissioner, and to recoup the tuition owed should the actual certified tuition rate determined after the school year be higher than that charged." Id. at 1. This rule was later repealed when the Commissioner adopted Chapter 23 of Title 6A in 2001. Ibid. n.1. However, N.J.A.C. 6A:23A-17.1(f) is similar in concept, and the Commissioner's Lord Sterling decision, which the ALJ cited in this case, appears on point here.
In that case, the Lord Sterling Schools (Lord Sterling) sought in 2001 to back-bill the Morris School District for tuition payments for the 1991-92 and 1992-93 school years. Lord Sterling claimed that it had sent out tuition bills in 1993 and 1994 for the rates the Commissioner had approved, but the Morris District never paid the bills. Morris claimed it never received the invoices for the tuition. Thus, as here, the billing district alleged that there was no dispute over the tuition rate, only a dispute over billing and payment or what it characterized as "a simple collections action."
The Commissioner determined that the limitations period for filing the claim was the 90 days set forth in N.J.A.C. 6A:3- 1.3(i), and that "the limitation period was triggered, at the latest, upon the expiration of the period for collecting amounts due upon certification of tuition by the Department . . . the end of the second school year following the year for which the actual cost per pupil is certified." In that case, the limitations period began running in 1995 and 1996 and hence the 2001 claim was years out of time.
In support of his decision in Lord Sterling, the Commissioner relied in part on Kaprow v. Board of Education of Berkeley Township, 131 N.J. 572, 582 (1993), in which the Supreme Court recognized the importance of the 90-day limitation period to the ability of school districts to set their budgets. The Court noted that "because local school boards operate on a cash basis, claims must be filed promptly." Id. at 582. In Lord Sterling, the Commissioner rejected the argument that a creditor district could wait years to pursue a billing claim, and then assert that it had 90 days from the date on which the debtor district refused to pay the late-asserted claim.
Lord Sterling appears closely on point here, because Highlands waited until 2010 to assert a claim for services rendered, at the latest, in 2006. And Highlands claimed it was merely attempting to rectify a billing error rather than recalculating the underlying tuition rate. That is the same type of claim the Commissioner rejected in Lord Sterling. The clear import of Lord Sterling is that receiving districts must calculate their costs and bill the sending districts promptly -- at the latest, by no later than ninety days after the date on which a sending district would ordinarily be required to pay any additional tuition. That is how the ALJ and the Commissioner construed the current version of the tuition regulation, N.J.A.C. 6A:23-17.1(f), read in pari materia with N.J.A.C. 6A:3-1.3(i).
We acknowledge that, even read together with N.J.A.C. 6A:3-1.3, N.J.A.C. 6A:23-17.1(f) is not a model of clarity. On its face, subsection 17.1(f) appears to set time limits triggered by the Commissioner's decision on tuition rates, rather than by a receiving district's decision to send out a bill or a sending district's decision to seek a refund. However, at the oral argument of this appeal, both sides agreed that the regulation precludes requests to re-calculate the tuition rates after ninety days following the second year of a sending-receiving contract. Highlands, however, argues that the regulation does not apply to inadvertent failures to send out bills, as opposed to disputes over tuition rates; Saddle River argues that the time limit applies to all claims for additional tuition payments or refunds.
The ALJ and Commissioner sided with Saddle River, a result which seems consistent with the Commissioner's longstanding construction of the agency's regulations.*fn3 Lord Sterling, supra; see also Board of Educ. of Middle Twp., 1989 S.L.D. 1532, aff'd 1989 S.L.D. 1544 (Comm'r), aff'd 1989 S.L.D. 1548 (St. Bd.); Bd. of Educ. of Little Ferry v. Bd. of Educ. of Ridgefield, 1988 S.L.D. 1207, 1213 aff'd 1988 S.L.D. 1216 (Comm'r) aff'd 1989 S.L.D. 1219 (St. Bd.). "An administrative agency's interpretation of statutes and regulations within its implementing and enforcing responsibility is ordinarily entitled to our deference." In re Appeal by Progressive Cas. Ins. Co., 307 N.J. Super. 93, 102 (App. Div. 1997). In light of the budgetary implications of late-asserted claims, as explained in Kaprow, we find the Commissioner's interpretation to be reasonable.
We also conclude that this result is consistent with the terms of the parties' sending-receiving agreement. The agreement provides that Saddle River will pay "an additional expense" for "any special education services," beyond the basic student tuition. However, the parties also agreed that "[t]his additional cost per student shall be the actual additional cost to Highlands, and will be calculated each year by Highlands and billed to the Saddle River Board." (emphasis added). The contract does not contemplate that Highlands could wait years to calculate and bill the extra costs.
Since the Commissioner's interpretation of the agency's regulations is reasonable and the application of the regulations to the facts of this case is not arbitrary or capricious, we affirm the Commissioner's decision in the T.F. dispute. See Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001).
We turn next to the dispute over G.L.'s tuition. With respect to G.L., the ALJ construed the sending-receiving agreement as prohibiting the charges for the English instruction, because they concerned services provided by one of Highlands' teachers. The ALJ concluded that the agreement precluded separate charges for services provided by Highlands' own employees, except for "related services" which were non-instructional supportive services. See N.J.A.C. 6A:14-1.3; 20 U.S.C. § 1401(26)(A). English teaching was an instructional service. The Commissioner adopted that decision. However, on this appeal Highlands argues that neither the ALJ nor the Commissioner addressed the following claim, which we now determine requires a remand.
The issue arose in this context. G.L. was a learning disabled student whose parents insisted that his individual education program (IEP) should include one-to-one English instruction. Highlands disagreed, and a meeting was convened to discuss the issue. The meeting was attended by representatives of Highlands, the child's parents, and the Saddle River Superintendent of Schools. According to Highlands, it finally agreed to provide the one-to-one English instructor for G.L. because, at that meeting, Saddle River's Superintendent of Schools specifically agreed to pay for it. That contention is supported by two certifications in the record. Before the OAL, Saddle River denied that it agreed to pay for the instruction. We agree with Highlands' contention that these proofs created a material dispute of fact that warranted an evidentiary hearing.
On this appeal, Saddle River contends that the English instruction was legally required and not a "related" service, and therefore not reimbursable under the sending-receiving agreement, a contention the ALJ and Commissioner adopted. However, that argument misses the point.
Highlands contends that it did not agree that one-to-one English instruction was needed for this student as part of his IEP, and it only resolved the IEP dispute in G.L.'s favor because Saddle River agreed to pay for the extra instruction. If Saddle River had not agreed to pay, Highlands might have litigated the issue of whether this student's IEP should include the individual instruction. We conclude that whether Highlands' claim is characterized as an enforceable settlement of litigation, or as enforceable under the doctrine of promissory estoppel, Highlands may be able to enforce Saddle River's promise to pay for the English instruction. See Peck v. Imedia, Inc., 293 N.J. Super. 151, 165 (App. Div.), certif. denied, 147 N.J. 262 (1996)(explaining the elements of promissory estoppel).
Resolution of that claim depends in turn on the resolution of the parties' factual dispute over whether the Saddle River superintendent actually agreed to the payment. There may be other relevant factual and legal issues as well. However, because the ALJ and the Commissioner ignored this aspect of Highlands' claim, even in response to a motion for reconsideration, there is an insufficient record for our review.
We can only conclude that the ALJ and Commissioner must address Highlands' claim after an evidentiary hearing. Accordingly we remand the G.L. dispute to the Commissioner, who shall resubmit it to the OAL for a plenary hearing.
Affirmed in part, reversed and remanded in part.