BOARD OF EDUCATION OF THE TOWNSHIP OF LAKEWOOD, ETC. VS. NEW JERSEY DEPARTMENT OF EDUCATION (NEW JERSEY COMMISSIONER OF EDUCATION) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5687-18
BOARD OF EDUCATION OF
THE TOWNSHIP OF
LAKEWOOD, OCEAN
COUNTY,
Petitioner-Appellant,
v.
NEW JERSEY DEPARTMENT
OF EDUCATION,
Respondent-Respondent.
___________________________
Submitted March 22, 2021 – Decided May 21, 2021
Before Judges Messano and Suter.
On appeal from the New Jersey Commissioner of
Education, Docket No. 142-6/19.
Michael I. Inzelbuch, attorney for appellant.
Gurbir S. Grewal, Attorney General, attorney for
respondent (Sookie Bae-Park, Assistant Attorney
General, of counsel; Aimee Blenner, Deputy Attorney
General, on the brief).
PER CURIAM
Petitioner Board of Education of the Township of Lakewood, Ocean
County (the BOE) appeals the August 6, 2019 Final Decision of the
Commissioner of the New Jersey Department of Education (Commissioner).
This Final Decision denied the BOE's request for emergent relief and dismissed
the BOE's other claims as moot. We affirm the Final Decision.
I.
On March 5, 2019, the Governor's budget for fiscal year (FY) 2020
recommended thirty million dollars in school funding for the BOE that included
additional transportation aid, additional special education categorical aid and
provisional stabilization aid. Office of Mgmt. & Budget, The Governor's
FY2020 Budget (March 2019). The Annual Appropriations Act for FY2020 was
passed by the Legislature on June 20, 2019, without the categories of school aid
proposed by the Governor. L. 2019, c. 150. It was signed by the Governor,
effective July 1, 2019.
In March 2019, two days after the Governor's budget message, the
Commissioner issued State Aid Notices to each school district informing them
of the amount of aid payable to the district for the next year. N.J.S.A. 18A:7F-
5(a). The State Aid Notice to the BOE included the categories of aid set forth
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in the Governor's budget message. Pursuant to N.J.S.A.18A:7A-5(c), the BOE
was required to adopt and submit a budget to the Commissioner for approval by
March 20, 2019. N.J.S.A. 18A:7F-5(c). The BOE did not meet this deadline.
On June 19, 2019, the BOE filed an "Emergent Relief Request and
Petition" with the Commissioner. The BOE claimed the Department of
Education (Department) had given "assurances and promises" that it would be
provided "[thirty million] dollars and additional funds and relief . . . ."
(Emphasis removed). However, neither the Senate nor Assembly budget
committees included this amount in the appropriations legislation. The BOE
requested the Department to provide "all requested records/documents" about
the budget and budget proceedings. It sought an order for the Department to
"take any and all steps to provide necessary and definitive and secure funding"
to the BOE. It requested the Department "take whatever action is required to
allow the [BOE] to complete its [b]udget" and to advise the BOE about the
sources of funding to provide for a thorough and efficient education for public
school children. The Department was asked to forgo collecting any loans or
state aid advances and reimburse the BOE for any costs and fees related to its
filing.
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The Commissioner transmitted the BOE's request to the Office of
Administrative Law (OAL) as "emergent." The Administrative Law Judge
(ALJ) treated the BOE's filing both as "a petition seeking final relief" and as a
"motion for emergent relief," even though the BOE had not filed a formal motion
or petition as required by N.J.A.C. 6A:3-1.6(a).
The BOE approved a budget on June 24, 2019. That budget included the
categories of aid that were not included in the Appropriations Act.
The Department filed a motion on June 25, 2019, to dismiss the BOE's
emergent relief request, claiming there was no risk of immediate harm and that
the BOE's claims failed to state a claim upon which relief could be granted. The
ALJ conducted oral argument, providing the parties the ability to respond to
supplemental exhibits and arguments and closing the record on July 3, 2019.
The BOE advised the ALJ that its budget was "null and void" without the
additional thirty million, and that it would be shutting down the district on July
1, 2019.
On July 1, 2019, the Commissioner wrote to the State Treasurer requesting
an advance of $36,033,862 in state aid from the School District Deficit Relief
Account (the Deficit Relief Account) because this was "necessary to ensure the
provision of a thorough and efficient education" for the BOE. The Treasurer
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approved the request the same day, noting the BOE was "eligible for funding
pursuant to . . . N.J.S.A. 18A:7A-55 . . . to be repaid with a term of repayment
not to exceed [ten] years."
The July 3, 2019 Initial Decision denied the BOE's request for emergent
relief. The ALJ found the BOE did not show it would suffer irreparable harm.
The BOE acknowledged it had funds to meet its obligations through March
2020. The ALJ concluded the BOE's failure to provide a budget by the required
deadline did not create an emergency "when it represent[ed] it [had] the funds
to operate." The ALJ found the BOE did not assert a well settled legal right
because it failed to support its position with legal authority. The ALJ found the
BOE was not likely to be successful on the merits of its claims. By the date the
Initial Decision was completed, the Commissioner already sent a letter to the
Treasurer asking for an advance payment for the BOE.
In balancing harms, the ALJ expressed concern the relief requested by the
BOE could encourage other districts not to comply with applicable budget
regulations when facing a budget shortfall, and then try to compel the
Commissioner to provide funding. The ALJ concluded this "could cause chaos
in the school funding and budget procedures." The ALJ also granted the
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Department's motion to dismiss the BOE's claims, finding they were moot
because the BOE had approved a budget and the Treasurer had advanced funds.
The BOE filed exceptions. The August 6, 2019 Final Decision by the
Commissioner adopted the Initial Decision as final and dismissed the BOE's
claims. To the extent the BOE was seeking money to cover a shortfall in the
FY2020 operating budget, the Commissioner determined the request was
"moot." The Treasurer already had advanced funds to the BOE. The
Commissioner noted he did not have the ability to provide the BOE with the
direct aid it requested because this was not included in the State budget by the
Legislature.
The Commissioner agreed with the ALJ that the BOE did not show the
need for emergent relief. The BOE admitted it had the funds through March
2020. The Commissioner did not find the BOE met any of the other standards
for emergent relief, citing to Crowe v. DeGoia, 90 N.J. 126 (1982). The
Commissioner noted if the BOE were "seeking a political remedy — i.e.,
recourse for the disparity between the Governor's recommended budget and the
budget passed by the Legislature — this forum [did] not have any authority to
rule on that request."
The BOE appealed the Final Decision raising the following arguments:
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A. THE COMMISSIONER'S FINDING THAT THE
BOARD DID NOT ESTABLISH A NEED FOR
EMERGENT RELIEF WAS REVERSIBLE ERROR.
1. The Board Will Continue to Suffer
Irreparable Harm if Relief is Not Granted.
2. The Underlying Legal Right is Well-
Settled.
3. The Board is Likely to Succeed on the
Merits.
4. The Comparative Harm of the Board
will be Greater than that of the Department
of Education if Relief is Not Granted.
B. THE COMMISSIONER'S FINDING THAT THE
BOARD'S CASE IS MOOT WAS REVERSIBLE
ERROR.
C. THE COMMISSIONER'S FRAMING OF THE
ISSUE AS A POLITICAL ONE WAS REVERSIBLE
ERROR.
II.
The scope of our review in an appeal from a final decision of an
administrative agency is limited. Russo v. Bd. of Trs., 206 N.J. 14, 27 (2011)
(citing In re Herrmann, 192 N.J. 19, 27 (2007)). The agency's decision should
be upheld unless there is a "clear showing that it is arbitrary, capricious, or
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unreasonable, or that it lacks fair support in the record." Ibid. (quoting
Herrmann, 192 N.J. at 27-28). This analysis focusses on three issues:
(1) whether the agency's action violates express or
implied legislative policies, that is, did the agency
follow the law; (2) whether the record contains
substantial evidence to support the findings on which
the agency based its action; and (3) whether in applying
the legislative policies to the facts, the agency clearly
erred in reaching a conclusion that could not reasonably
have been made on a showing of the relevant factors.
[Mazza v. Bd. of Trs., 143 N.J. 22, 25 (1995).]
We are not bound by the "agency's interpretation of a statute or its determination
of a strictly legal issue." Ibid. (quoting Mayflower Sec. Co. v. Bureau of Sec.,
64 N.J. 85, 93 (1973)).
A.
To receive emergent relief, the BOE was required to show by clear and
convincing evidence: (1) a substantial and imminent irreparable injury will be
suffered in the absence of emergent relief; (2) the legal right underlying the
claim is well-settled; (3) the party seeking relief has a likelihood of prevailing
on the merits of the underlying claim; and (4) a balancing of the equities and
hardships favors emergent relief. N.J.A.C. 6A:3-1.6(b)(1) to (4); see Crowe, 90
N.J. at 132-34.
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There was no imminent irreparable harm shown on this record. The BOE
acknowledged it had funds to operate until March 2020. By July 1, 2019, the
BOE was approved to receive an advance of $36,033,862. This included the
thirty million that was requested and nearly six million more which could be
used for prior advances. The BOE's complaint was that this money was provided
as a loan rather than as direct aid. However, the Legislature did not include this
direct aid in the Appropriations Act. With the advance, the BOE could continue
operations based on what it had requested.
The BOE did not have a well-settled legal right to direct aid. The parties
did not dispute that New Jersey's Constitution provided for a "thorough and
efficient" education, N.J. Const. art. VIII, § 4, ¶ 1, and that the School Finance
Reform Act of 2008 (SFRA), N.J.S.A. 18A:7F-43 to-63, included the formula
to achieve this, and had been found to be constitutional. See Abbott ex rel.
Abbott v. Burke (Abbott XX), 199 N.J. 140, 154 (2009).
The Commissioner did not have the power to appropriate direct funds for
any school district. The New Jersey Constitution provides that "[n]o money
shall be drawn from the State treasury but for appropriations made by law." N.J.
Const. art. VIII, § 2, ¶ 2. There is one appropriation law annually. "All moneys
for the support of the State government and for all other State purposes as far as
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can be ascertained or reasonably foreseen, shall be provided for in one general
appropriation law covering one and the same fiscal year . . . ." Ibid. This has
been described as the "center beam of the State's fiscal structure." City of
Camden v. Byrne, 82 N.J. 133, 146 (1980). The purpose of this was "to
centralize and simplify state financial operations." Ibid. Only the Legislature
has the "power and authority to appropriate funds . . . ." Id. at 148.
Appropriating direct funding is the prerogative of the legislative branch of the
government, not the executive branch. See N.J. Const. art. VIII, § 2, ¶ 2.
The BOE did not show it would succeed on the merits. The BOE simply
could not demand direct aid of the Commissioner when this was not appropriated
in the budget. City of Camden, 82 N.J. at 148.
The equities did not balance in the BOE's favor. The BOE complains it
will have to pay back the monies it was advanced. However, no one can know
the contents of future budgets or what appropriations may become available to
the BOE in future years. Moreover, the Commissioner's concern about chaos in
the budgeting process cannot be discounted should another district decline to
approve a budget and then declare an emergency because of its absence. There
was nothing arbitrary, capricious or unreasonable about the Commissioner's
decision to deny the BOE's application for emergent relief.
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B.
The BOE argues the Commissioner incorrectly concluded this matter was
moot. "Mootness is a threshold justiciability determination rooted in the notion
that judicial power is to be exercised only when a party is immediately
threatened with harm." Betancourt v. Trinitas Hosp., 415 N.J. Super. 301, 311
(App. Div. 2010). "An issue is 'moot when our decision sought in a matter,
when rendered, can have no practical effect on the existing controversy.'" Redd
v. Bowman, 223 N.J. 87, 104 (2015) (quoting Deutsche Bank Nat'l Tr. Co. v.
Mitchell, 422 N.J Super. 214, 221-22 (App. Div. 2011)). Nonetheless, we may
rule on cases where the issues "are of substantial importance and are capable of
repetition while evading review . . . ." Advance Elec. Co., Inc. v. Montgomery
Twp. Bd. of Educ., 351 N.J. Super. 160, 166 (App. Div. 2002).
During oral argument before the ALJ, counsel for the BOE clarified the
BOE was requesting the Department to "[p]ut in writing, '[w]e are still
recommending the [thirty] million and we are still recommending the five.'" The
ALJ clarified:
THE COURT: So what you're saying is what you're
really looking for is another letter, like the four
previous letters that have been sent from the
Commissioner to the Treasurer saying "Lakewood
needs X dollars because it needs to get a T&E?"
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COUNSEL: Exactly.
The BOE requested and received the letter from the Commissioner and an
advance that exceeded $36 million. Arguably, that rendered this matter moot
because the BOE received what it requested, and our decision could have no
practical effect for FY2020. The BOE argues the issue here may be capable of
repetition. However, as we have stated, the Constitution reserved for the
Legislature the power to appropriate money from the State Treasury. Commc'ns
Workers of Am. v. Florio, 130 N.J. 439, 451 (1992); see N.J. Const. art. VIII, §
2, ¶ 2 (providing "[n]o money shall be drawn from the State treasury but for
appropriations made by law"). The Legislature did not provide an appropriation
for the thirty million sought by the BOE. The Commissioner requested aid from
the Deficit Relief Account for provision of a thorough and efficient education.
We discern nothing arbitrary, capricious or unreasonable about the Final
Decision's dismissal of this petition in light of these facts.
Affirmed.
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