Cynthia Martinek Vs. Belmond-klemme Community School District ( 2009 )


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  •                IN THE SUPREME COURT OF IOWA
    No. 08–0565
    Filed August 21, 2009
    CYNTHIA MARTINEK,
    Appellant,
    vs.
    BELMOND-KLEMME COMMUNITY
    SCHOOL DISTRICT,
    Appellee.
    Appeal      from   the    Iowa   District   Court   for   Wright   County,
    Kurt L. Wilke, Judge.
    The plaintiff appeals from the district court’s ruling affirming the
    defendant’s termination of her employment as a principal for just cause
    under Iowa Code section 279.24 (2007). AFFIRMED.
    Charles Gribble of Parrish Kruidenier Dunn Boles Gribble Cook
    Parrish Gentry & Fisher, L.L.P., Des Moines, for appellant.
    Brian L. Gruhn of Gruhn Law Firm, Cedar Rapids, for appellee.
    2
    BAKER, Justice.
    The plaintiff, Cynthia Martinek, appeals from the district court’s
    ruling affirming the termination of her employment as a principal under
    Iowa Code section 279.24 (2007) by the defendant, Belmond-Klemme
    Community School District. Martinek claims that the district court erred
    in failing to reverse the school board’s decision to terminate her contract
    because the school district failed to establish just cause for her
    termination as required under Iowa Code section 279.24. We find that
    the district court did not err in determining a preponderance of
    competent evidence in the record supported the Belmond-Klemme
    Community School District’s termination of Martinek due to declining
    enrollment, budget concerns, and essential staff reductions.
    I. Background Facts and Proceedings.
    In 1993, Dr. Cynthia Martinek was hired as the elementary school
    principal for the Belmond-Klemme Community School District (District).
    She held that position for thirteen years.             Martinek has a bachelor’s
    degree, a master’s degree, and a doctorate degree in educational
    leadership. She also holds teaching and administrative licenses which
    certify her to serve as a superintendent, high school principal, and
    elementary school principal.
    On July 21, 2005, Martinek entered into the contract at issue with
    the District.     This contract stated that Martinek “agrees to serve as
    Elementary School (PK–6) Principal in the Belmond-Klemme Community
    School District for a two (2) year period commencing with the 2005–2006
    school year . . . .” 1
    1In May of 2006, before the end of the first year of the two-year contract, the
    District notified Martinek that it intended to terminate her contract at the end of the
    2005–2006 school year. The notice listed four reasons for the termination: (1) declining
    3
    On April 25, 2007, the District sent Martinek a notification, stating
    that it intended to terminate her employment at the end of the 2006–
    2007 school year, on June 30, 2007. As grounds for the termination, the
    District listed:    (1) declining enrollment, (2) budgetary restrictions and
    problems, (3) reduction of position(s), and (4) realignment of school
    organization.
    Pursuant to the realignment, Larry Frakes, the former 7–12
    principal, became the superintendent and part-time elementary school
    principal, and David Sextro, the former superintendant, served as
    assistant superintendent, part-time elementary school principal, and
    construction supervisor for the new elementary school. Five days after
    terminating Martinek, the District hired administrator Roy Frakes to
    serve as 7–12 principal and activities director. Roy Frakes is the brother
    of Larry Frakes. The District claimed that the hiring of Roy Frakes was
    part of a plan to gradually reduce administrators, and that a portion of
    Sextro’s salary was paid out of the construction fund and had no effect
    on the school’s yearly budget.                 At the hearing in front of the
    administrative law judge (ALJ), Sextro testified that at the end of the
    2007–2008 school year he would retire, leaving the district with only two
    administrators.
    enrollment, (2) budgetary restrictions, (3) reduction of position, and (4) realignment of
    school district.
    On May 5, 2006, Martinek contested her proposed termination, claiming that
    under Iowa Code section 279.24, the District could only terminate her contract for
    professional incompetence or faults attributable to her prior to the end of her contract.
    After being heard by an administrative law judge, the Belmond-Klemme School District
    Board of Directors, the Wright County District Court, and the Iowa Court of Appeals,
    Martinek’s case made its way to the Iowa Supreme Court. On February 6, 2009, the
    Iowa Supreme Court ruled that the District did not have the authority under Iowa Code
    section 279.24 or under Martinek’s contract to terminate her before she completed her
    two-year term under the contract. Martinek v. Belmond-Klemme Cmty. Sch. Dist., 
    760 N.W.2d 454
    , 459 (Iowa 2009).
    4
    Martinek sent a letter to the Belmond-Klemme School District
    Board of Directors (Board) contesting the reasons for her termination and
    requested a hearing before an ALJ pursuant to Iowa Code section
    279.24(5)(c).   A hearing was conducted, after which the ALJ issued a
    proposed decision finding the District had shown by a preponderance of
    the evidence that “just cause” existed to terminate the continuing
    contract of Martinek. Martinek appealed the ALJ’s decision to the Board,
    which adopted the ALJ’s proposed decision as its own.
    Thereafter, Martinek filed a notice of appeal with the district court.
    The district court concluded the District’s decision to terminate
    Martinek’s contract for just cause was supported by a preponderance of
    the evidence.    In ruling in favor of the District, the trial court only
    addressed three of the reasons argued in support of Martinek’s
    termination:    (1) declining enrollment, (2) budgetary problems, and
    (3) reduction of staff. Martinek appealed the district court’s judgment.
    II. Discussion and Analysis.
    A.    Scope of Review.        Both parties agree that Martinek’s
    termination is governed by Iowa Code section 279.24.        Section 279.24
    governs terminations that occur at the conclusion of an administrator’s
    contract term, while section 279.25 governs terminations that occur
    during the contract term. See 
    Iowa Code §§ 279.24
    , .25.
    As this court has explained, the court must follow the guidelines in
    Iowa Code section 279.24(6) when reviewing a school board’s decision to
    terminate an administrator’s contract.      Martinek v. Belmond-Klemme
    Cmty. Sch. Dist., 
    760 N.W.2d 454
    , 456 (Iowa 2009) (hereinafter Martinek
    I). This Code section states:
    The court shall reverse, modify, or grant any other
    appropriate relief from the school board’s action . . . if
    substantial rights of the administrator have been prejudiced
    5
    because the school board’s action is . . . [u]nsupported by a
    preponderance of the evidence in the record made before the
    school board when that record is reviewed as a whole.
    
    Iowa Code § 279.24
    (6)(f). In discussing what is meant by reviewing the
    record as a whole, we said:
    This does not mean each [reason] must be considered
    separately and must itself amount to just cause. It means,
    rather, that when the record is considered as a whole the
    proof must show by a preponderance of the evidence that
    there is just cause for termination on the basis of the
    reasons stated.
    Bd. of Educ. v. Youel, 
    282 N.W.2d 677
    , 682 (Iowa 1979).
    Martinek claims that none of the District’s asserted grounds for
    her termination constitute a legitimate reason as contemplated by the
    Iowa Supreme Court and that these stated grounds are not supported by
    a preponderance of the evidence. She also asserts that the reasons given
    are not sufficient because the District’s actions have not saved it any
    money.    Five days after firing Martinek the District hired another
    administrator at a salary $16,000 higher than Martinek’s.
    We must therefore determine whether the District’s stated grounds
    are legitimate under the statute and whether the Board’s decision to
    uphold the termination of Martinek was supported by a preponderance of
    competent evidence in the record. Bd. of Dirs. v. Banke, 
    498 N.W.2d 697
    ,
    701 (Iowa 1993). The court is limited on review to the record that was
    before the Board. 
    Id.
     While a preponderance of competent evidence is a
    higher standard than substantial evidence, this is not de novo review.
    Id.; Walhart v. Bd. of Dirs., 
    694 N.W.2d 740
    , 744 (Iowa 2005).          A
    preponderance of the evidence is the evidence “that is more convincing
    than opposing evidence” or “more likely true than not true.” Holliday v.
    Rain & Hail L.L.C., 
    690 N.W.2d 59
    , 63–64 (Iowa 2004).       It is evidence
    superior in weight, influence, or force. Walhart, 
    694 N.W.2d at 744
    .
    6
    B.      Preponderance of Competent Evidence.                  Martinek was
    terminated on June 30, 2007. Her two-year contract expired at the end
    of the 2006–2007 school year. Iowa Code section 279.24 governs this
    controversy.       This section reads:         “The notice shall state the specific
    reasons to be used by the school board for considering termination which
    for all administrators except superintendents shall be for just cause.”
    
    Iowa Code § 279.24
    (5)(b).
    In Martinek I, this court reiterated that, for the purposes of the
    nonrenewal provision of Iowa Code section 279.24, 2 just cause
    “ ‘include[s] legitimate reasons relating to the district’s personnel and
    budgetary requirements.’ ”            Martinek I, 
    760 N.W.2d at 457
     (quoting
    Briggs v. Bd. of Dirs., 
    282 N.W.2d 740
    , 742 (Iowa 1979)). The District
    claims Martinek was terminated because of:                (1) declining enrollment,
    (2) budgetary restrictions and problems, (3) reduction of position(s), and
    (4) realignment of school organization.                These alleged grounds for
    termination are clearly related to the District’s personnel and budget
    needs.      Thus, the only issue remaining is to determine whether the
    Board’s decision to terminate Martinek for these stated reasons is
    supported by a preponderance of competent evidence in the record.
    Banke, 
    498 N.W.2d at 701
    .
    In its ruling in favor of the District, the district court explicitly
    addressed only three of the reasons argued in support of Martinek’s
    termination:         (1) declining enrollment, (2) budgetary problems, and
    2This   section states in part that contracts
    shall be automatically continued in force and effect for additional one-
    year periods beyond the end of its original term, except and until the
    contract is modified or terminated by mutual agreement of the board of
    directors and the administrator, or until terminated as provided by this
    section.
    
    Iowa Code § 279.24
    (1).
    7
    (3) reduction of staff.   The District did not seek an enlargement under
    Iowa Rule of Civil Procedure 1.904(2) of the trial court’s decision
    requesting that the court address its fourth rationale; however, the
    district court discussed the realignment of school organization as part of
    its discussion about the District’s reduction of staff. We will uphold a
    district court ruling on a ground other than the one upon which the
    district court relied provided the ground was urged in that court. Jasper
    v. H. Nizam, Inc., 
    764 N.W.2d 751
    , 774–75 (Iowa 2009); see also Ritz v.
    Wapello County Bd. of Sup’rs, 
    595 N.W.2d 786
    , 789 (Iowa 1999) (“Rule
    [1.904(2)] is directed at unsuccessful parties who intend to challenge the
    district court's ruling on issues it did not resolve.   A successful party
    would have no motivation to raise a rule [1.904(2)] motion to challenge
    the basis upon which the district court made its decision. Consequently,
    the requirements of rule [1.904(2)] are only applied to unsuccessful
    parties challenging the district court decision.”).
    1.    Declining enrollment.      The District asserts that it has
    experienced a dramatic decline in enrollment since 1999. In upholding
    Martinek’s termination, the Board adopted the ALJ’s findings of fact and
    conclusions of law. In his proposed decision, the ALJ stated:
    The Belmond-Klemme School District, like most
    districts in rural Iowa, has experienced significant declines
    in student enrollment over the last several decades.
    Specifically in this district, reductions have exceeded twenty-
    five percent over the past eight school years. . . .
    . . . The projections for the 2007–2008 school year
    indicate a district-wide reduction of fifteen more
    students. . . . Should the enrollment projections for 2007–
    2008 be substantially correct, this would reflect a loss of
    slightly over six percent in the past 3 years.       Clearly
    enrollment decline, though slowing, continues to be a reality
    in the Belmond-Klemme School District.
    8
    A preponderance of competent evidence in the record supports these
    findings.       The evidence shows that the Belmond-Klemme Community
    School District lost over 200 students since the 1999–2000 school year.
    The evidence also establishes that the District receives approximately
    $5,338 per enrolled student in state aid.         Thus, in the ten-year span
    covered by these figures, the District lost approximately $1 million
    dollars in yearly income, a significant reduction for a small school
    district.
    Martinek counters that the District’s figures are flawed because
    they are calculated by data beyond the time period at issue in this case.
    She claims the District must establish declining enrollment during the
    term of her contract, namely the 2005–2006 and 2006–2007 school
    years.        Courts are not constrained to the term of the administrator’s
    contract when deciding whether there has been a decline in enrollment.
    See, e.g., In re Waterloo Cmty. Sch. Dist., 
    338 N.W.2d 153
    , 154 (Iowa
    1983) (court relied upon data establishing a decline from 1967 to 1980);
    Pocahontas Cmty. Sch. Dist. v. Levene, 
    409 N.W.2d 698
    , 700 (Iowa Ct.
    App. 1987) (court considered an enrollment decline of 33.1% from 1975
    to 1985).        We find the District showed a preponderance of competent
    evidence demonstrating enrollment has significantly declined from 1999
    through 2007.
    2.     Budgetary problems.      The District also alleges that it is
    experiencing        significant   budgetary   problems.   According   to   the
    Independent Auditor’s Reports for the Belmond-Klemme Community
    School District from 2003 to 2006, the District’s unreserved fund
    balance declined from $1,131,919.00 to $229,161.00.              The District
    projected that by the end of 2007 this balance will have further declined
    to $71,750.00. The District’s auditor testified that the unreserved fund
    9
    balance is the amount of money the District would have if it were
    liquidated.
    In addition, the record indicates the District’s solvency ratio has
    shrunk from 25% in 2003 to 3.5% in 2006. The solvency ratio is a figure
    used by the Iowa Schools Cash Anticipation Program to determine a
    district’s financial health. The District projected that at the end of 2007,
    this ratio would be 1.1%. This solvency ratio would put the District into
    the solvency alert category. The evidence shows that the State requires
    districts with weak solvency ratios to be “more conservative budgeting
    revenues in the next budget year and [have] more stringent cost
    controls.”
    Other evidence provided by the District further shows that in the
    2005–2006 school year the District outspent its incoming revenue by
    $310,000. Both the AEA Director of Finance and the District’s auditor
    testified that the District must reduce its expenditures if it hopes to have
    a balanced budget in the future, as it is only expected to receive $7,831
    in new money from the state for the 2007–2008 school year.
    The court finds the District has demonstrated by a preponderance
    of competent evidence that it is experiencing budgetary problems.
    3. Reduction and realignment of staff. Finally, the District claims
    Martinek was terminated because of the need for a reduction in
    administrative staff.    The District states that due to the drop in
    enrollment from the 1999–2000 school year to the 2007–2008 school
    year it needed to reduce staff. Since 1999–2000, it has reduced teaching
    staff from approximately 70 teachers to around 55 teachers today. In
    that same time period, the District did not reduce any administrative
    staff positions.
    10
    In response to the declining enrollment and budgetary concerns,
    the District decided to reduce the number of administrative staff. The
    Board determined the best way to reduce school administrators was to
    eliminate the elementary school principal and divide that position’s
    duties between the superintendent and the high school principal.
    Martinek was the District’s only elementary school principal, and,
    therefore, she was the administrator chosen for termination.
    Martinek argues that the District’s own actions undermine its claim
    that it needed to reduce administrative staff.        Five days after firing
    Martinek the District hired administrator Roy Frakes to serve as 7–12
    principal and activities director. The District counters that Frakes’ hiring
    was part of its plan to restructure its administrators. Thus, even though
    the District hired a new administrator to serve as 7–12 principal and
    activities director, it cut back to 2.5 administrative staff. According to
    the District’s plan, once Sextro (the former superintendent) retired, the
    district would employ Larry Frakes as district superintendent and
    elementary school principal and Roy Frakes as 7–12 principal and
    activities director, leaving the district with just two administrators.
    A preponderance of competent evidence substantiates the District’s
    strategy to gradually reduce administrative staff.        If the termination
    decision is based on some set policy or criteria it cannot be challenged in
    court, unless the policy or criteria used are illegal or irrational such as
    race, religious preference, sex, or political persuasion or based on “some
    petty vendetta.” In re Waterloo Cmty. Sch. Dist., 
    338 N.W.2d at 156
    . The
    District’s decision to terminate Martinek was based upon objective
    criteria. The District needed to reorganize its administrative staff. Of the
    three administrative positions in the District, the Board determined that
    the elementary school principal duties could be best divided between the
    11
    two   remaining    administrators,     and,   therefore,   that   position   was
    eliminated.   Martinek was the only elementary school principal in the
    District. Roy Frakes was hired for a different position—7–12 principal
    and activities director. The qualifications and duties of this position are
    different than those of an elementary school principal.           Therefore, his
    hiring does not disprove the District’s claim that it needed to reduce and
    reorganize its administrative staff.
    The burden is on Martinek to prove her termination was for an
    improper purpose, and the District’s stated grounds are a pretext. See
    Hagarty v. Dysart-Geneseo Cmty. Sch. Dist., 
    282 N.W.2d 92
    , 98 (Iowa
    1979). Before Martinek’s initial termination notice in 2006, there is no
    evidence or allegation of any discord between Martinek and the District.
    Her employment file was not entered into the record, and the District has
    not listed any fault reasons for her termination. There is no allegation or
    evidence that the termination was for any improper purpose. In short,
    there is no evidence in the record that suggests Martinek’s termination
    was because of illegal or irrational reasons or due to a petty vendetta.
    Martinek points to the District’s contemporaneous hiring of Roy
    Frakes as proof that the District is not experiencing financial problems or
    enrollment decline.     While the timing of his hiring certainly raises
    suspicions, given the evidence, this court cannot say that the District did
    not use objective criteria in deciding to terminate Martinek and hire Roy
    Frakes.
    “The board is an elective body free to exercise its own discretion in
    deciding which . . . positions to terminate.” In re Waterloo Cmty. Sch.
    Dist., 
    338 N.W.2d at 156
    . Accordingly, we find the District presented a
    preponderance of competent evidence demonstrating the need to reduce
    12
    administrative staff positions and has shown an objective basis for its
    decision to eliminate Martinek’s position.
    The District met its burden to establish just cause existed to
    terminate Martinek.
    III. Disposition.
    We hold the district court did not err in finding the Belmond-
    Klemme Community School District provided a preponderance of
    competent evidence demonstrating Martinek’s termination was necessary
    due to declining enrollment, budgetary concerns, and essential staff
    reductions. The district court decision is affirmed.
    AFFIRMED.
    All justices concur except Cady, J., who takes no part.