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Board of Education of the Borough of Ramsey, Bergen County v. the Ramsey Teachers Association


November 21, 2012


On appeal from the Department of Education, Docket No. 48-2/11.

Per curiam.


Submitted October 29, 2012

Before Judges Parrillo, Fasciale and Maven.

This is an appeal by the Ramsey Teachers Association (Association) from the final agency decision of the Commissioner of Education (Commissioner) finding that by adopting a resolution which established salary guides for 2007-2008, 2008-2009, 2009-2010, and 2010-2011, respondent Ramsey Board of Education (Board) exceeded its authority by binding itself and future boards for a total of four years in violation of N.J.S.A. 18A:29-4.1, and therefore declaring the fourth year of the salary policy null and void. The sole issue presented in this appeal is whether a collective bargaining agreement (CBA) that provides for a lump sum retroactive payment covering a two-year period and prospectively establishes the pay scale for the next two years is consistent with N.J.S.A. 18A:29-4.1. We affirm the Commissioner's determination.

The Association is the duly certified majority collective bargaining representative for all non-supervisory certificated employees of the Board. In early 2007, the parties commenced negotiations over the terms of a successor CBA to replace the agreement set to expire on June 30, 2007. After an impasse was declared and an unsuccessful mediation was conducted, the Public Employment Relations Commission appointed a factfinder under N.J.A.C. 19:12-4.2, who issued a report and recommendations on February 2, 2009, nearly two years after bargaining began and the prior CBA expired. The factfinder recommended adding a fourth year to the agreement, as proposed by the Association, reasoning that "some additional time away from the bargaining table may be in the interest of all concerned."

The parties reached an agreement, memorialized in a memorandum executed by the parties on March 19, 2009, along with an addendum prepared by the Association, which contained salary guides for school years 2007-2008, 2008-2009, 2009-2010, and 2010-2011. The memorandum provided for retroactive salary payments for the two previous years (i.e., the period between the expiration of the old CBA and ratification of the new one) and salary increases for the two following years. The retroactive payments were to be made within ninety days of ratification of the agreement. On April 28, 2009, the Board adopted a resolution approving the memorandum of agreement for the period July 1, 2007 through June 30, 2009, and for the period July 1, 2009 through June 30, 2011. On July 1, 2009, the Board executed two separate CBA documents corresponding with each of these time periods. Each CBA contained a two-year salary schedule. As agreed, the salary guides for 2007-2008 and 2008-2009 were distributed in a lump sum payment.

Beginning in 2009-2010, the Board began to face financial constraints that resulted in reductions in staffing and programming. Consequently, on February 23, 2011, the Board filed a petition for a declaratory ruling before the Commissioner, pursuant to N.J.A.C. 6A:3-2.1(a) seeking a determination that the Board's adoption of the fourth year of the salary guide (2010-2011) violated N.J.S.A. 18A:29-4.1 and was therefore void, as ultra vires, because it set a salary policy for four years, beyond the three-year limit imposed by the statute. Following the Association's answer, the Commissioner transferred the contested matter to the Office of Administrative Law (OAL).

On August 25, 2011, the administrative law judge (ALJ) issued an initial decision concluding that the Board was required to honor the salary guides adopted in 2009. The ALJ reasoned that because the Board only bound successor boards for two years through the adoption of salary guides for 2009-2010 and 2010-2011, its action did not violate N.J.S.A. 18A:29-4.1.*fn1

The Commissioner rejected the ALJ's decision, stating that it creates "an exception allowing for retroactive payments as a means to circumvent the three year limit" and declaring the fourth year of the salary policy null and void.

This appeal by the Association follows.

It is well-settled that an agency decision should not be disturbed in the absence of a showing that the decision is arbitrary or capricious, that it lacks support in the record or that it violates legislative policies expressed or fairly to be implied in the statutory scheme administered by that agency. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963). Although we are in no way bound by the agency's interpretation of a statute it is charged with administering, Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973), we nevertheless respect the agency's expertise in such matters, Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992).

N.J.S.A. 18A:29-4.1 provides:

A board of education of any district may adopt a one, two or three year salary policy, including salary schedules for all full-time teaching staff members which shall not be less than those required by law. Such policy and schedules shall be binding upon the adopting board and upon all future boards in the same district for a period of one, two or three years from the effective date of such policy but shall not prohibit the payment of salaries higher than those required by such policy or schedules nor the subsequent adoption of policies or schedules providing for higher salaries, increments or adjustments. Every school budget adopted, certified or approved by the board, the voters of the district, the board of school estimate, the governing body of the municipality or municipalities, or the commissioner, as the case may be, shall contain such amounts as may be necessary to fully implement such policy and schedules for that budget year. [(Emphasis added).]

The legislative history of this statute was considered in Bd. of Educ. v. Neptune Twp. Educ. Ass'n, 144 N.J. 16 (1996). As related by the Court, the statute was enacted in 1965 to prevent local school boards from using the annual budget process to avoid salary policies and salary schedules contained in collective bargaining agreements. Id. at 27; see also Probst v. Bd. of Educ., 127 N.J. 518, 526 (1992). While providing security to personnel affected by the collective bargaining agreement, Probst, supra, 127 N.J. at 526, the Legislature also conferred on boards of education limited power to bind future boards, Neptune, supra, 144 N.J. at 27.

The Association argues that the Board's April 28, 2009 resolution established a salary policy consistent with the statute because the prospective salary policy covers only two years from the date of its adoption. According to the Association, retroactive pay for the period between the expiration of the old agreement and ratification of the new agreement cannot be considered in determining the length of the Board's salary policy because such payments are "effective" only from the date the agreement is ratified. In essence, the Association contends that the term "effective date" in the statute means date of adoption, and therefore the Board was free to establish salary policy through 2011, two years from the ratification of the agreement in April 2009. We disagree.

Salary policy binds the Board from the effective date of the salary policy rather than the date of its adoption. Newark Teachers Ass'n v. Bd. of Educ., 108 N.J. Super. 34, 46 (Law Div. 1969), aff'd, 57 N.J. 100 (1970). In Newark, albeit in an altogether different context, the court held:

The . . . use of the word "adoption" cannot, therefore, be considered as an intentional and authoritative equation . . . with the words "effective date."

The statute does not require that a new salary schedule shall go into effect on the date of its adoption. It says that the salary policy shall be binding on the board of education for two years from the effective date of the policy - not from the date of its adoption. Had the Legislature intended the latter, it could easily have so expressed itself. [108 N.J. Super. at 46.]

In the present matter, since the retroactive payments were intended to effectuate the salary guides for 2007-2008 and 2008-2009, the "effective date" of the policy was 2007. That the retroactive payments were made over a period of only three months following the adoption of the resolution does not change the fact that, by the terms of the resolution, they covered a period of two prior years.

Under the plain language of N.J.S.A. 18A:29-4.1, "the binding nature of the contract cannot extend into the fourth year." Neptune, supra, 144 N.J. at 26. In Neptune, the specific issue was whether a board of education was prohibited from awarding salary increments to teachers in accordance with the terms of an expired three year contract in the year following the expiration of the contract. Ibid. The teachers argued that there was no evidence to suggest the statute was intended to be applied as a limitation on otherwise prevailing laws governing collective bargaining. Ibid. The Court, however, observed that the plain language of N.J.S.A. 18A:29-4.1 indicated "that the Legislature intended to provide that no contract will be binding beyond the third year." Ibid. The Court further noted that to accept the teachers' position would effectively extend the salary provisions of the expired contract for a fourth year, which was contrary to the plain meaning of the statute. Ibid. Such an interpretation, the Court held, was also contrary to the legislative principle of "limited board power," and would offend public policy by limiting future boards' "ability to respond to ever-changing economic conditions of the district. Schools that need to cut budget growth will face serious problems." Id. at 27-28.*fn2

Finally, the fact that the Board bargained for the agreement in good faith is irrelevant. The board in Neptune, supra, 144 N.J. at 20, was prohibited from continuing to pay salary increments pursuant to an expired three-year contract even though it had initially agreed to do so. The Court made clear that the provisions of a contract entered into under N.J.S.A. 18A:29-4.1 simply cannot bind the parties beyond a third year. Neptune, supra, 144 N.J. at 26.

As its plain language directs, and as applied by the Court, N.J.S.A. 18A:29-4.1 operates to limit salary schedules to no more than three years and bars the implementation of any salary schedule beyond the third year. In this case, the contract expired on June 30, 2007, and although new ones were adopted in April 2009, the Board's resolution included a salary schedule governing four school years: 2007-2008, 2008-2009, 2009-2010 and 2010-2011. Because the salary policy binds the Board from its "effective date" rather than the date of its adoption, we conclude that N.J.S.A. 18A:29-4.1 precludes implementation of the fourth year of the salary schedule. Accordingly, we affirm the final agency decision of the Commissioner.


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