BOARD OF EDUCATION OF THE TOWNSHIP OF PISCATAWAY, MIDDLESEX COUNTY VS. NEW JERSEY DEPARTMENT OF EDUCATION (NEW JERSEY DEPARTMENT OF EDUCATION) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-5427-16T2
BOARD OF EDUCATION OF THE
TOWNSHIP OF PISCATAWAY,
MIDDLESEX COUNTY,
Petitioner-Appellant,
v.
NEW JERSEY DEPARTMENT OF
EDUCATION, OFFICE OF SCHOOL
FINANCE,
Respondent-Respondent,
and
HATIKVAH INTERNATIONAL
ACADEMY CHARTER SCHOOL, INC.,
and COLLEGE ACHIEVE CENTRAL
CHARTER SCHOOL,
Intervenors-Respondents.
__________________________________
Argued May 30, 2019 – Decided June 7, 2019
Before Judges Haas, Sumners and Mitterhoff.
On appeal from the New Jersey Department of
Education.
David B. Rubin argued the cause for appellant.
Thomas O. Johnston argued the cause for respondents
Hatikvah International Academy Charter School, Inc.
and College Achieve Central Charter School (Johnston
Law Firm, LLC, attorneys; Thomas O. Johnston, of
counsel and on the brief; Rula Alzadon Moor, on the
brief).
Geoffrey N. Stark, Deputy Attorney General, argued
the cause for respondents Commission of Education
and the State Board of Education (Gurbir S. Grewal,
Attorney General, attorney; Melissa Dutton Schaffer,
Assistant Attorney General, of counsel; Geoffrey N.
Stark, on the brief).
Turp, Coates, Driggers & White, PC, attorneys for
amicus curiae East Windsor Regional School District
(David H. Coates, on the brief).
PER CURIAM
Appellant Board of Education of the Township of Piscataway, Middlesex
County (Piscataway) appeals from the July 27, 2017 declaratory ruling of the
Commissioner of Education (Commissioner), determining that pursuant to the
Charter School Program Act of 1995, N.J.S.A. 18A:36A-1 to -18 (the Charter
School Act or CSPA), Piscataway was obligated to provide funding for its
students enrolled in charter schools located in other school districts. Piscataway
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argues1 that the regulations implementing the funding requirements of the
Charter School Act, N.J.A.C. 6A:23A-15.2, and -15.3, are ultra vires to the
extent that they impose financial obligations on school districts not in the district
where the charter school is located ("district of residence") or in a contiguous
district to the charter school ("region of residence"). 2 We affirm.
I.
The Piscataway Township Public School District is located in Middlesex
County. Although there are no charter schools located in Piscataway, a number
of its resident students attend charter schools located in other school districts,
including attendance at intervenors Hatikvah International Academy Charter
School (Hatikvah) in East Brunswick Township, Middlesex County, and College
Achieve Central Charter School (College Achieve) in Union County.
1
Amicus, East Windsor Regional School District (East Windsor), supports
Piscataway's arguments.
2
This issue has also been raised in Highland Park Board of Education v.
Harrington (Highland Park II), No. A-3455-16, and in North Brunswick
Township Board of Education v. Harrington (North Brunswick), No. A-3415-
16, which together with In the Matter of the Approval of the Charter Amendment
of Central Jersey College Prep. (Central Jersey), No. A-3074-16, have been
calendared back-to-back, and heard together with this appeal. Because of this
overlap, the reader is encouraged to review all four of our opinions in these
cases, which are being released simultaneously.
A-5427-16T2
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In December 2015, counsel for Piscataway wrote to then-Commissioner
David Hespe, seeking a determination that the term "school district of
residence," as used in N.J.S.A. 18A:36A-12(b) (the funding provision of the
CSPA), was limited to the charter school's "district of residence," or at most, its
"region of residence."3 Under that interpretation, Piscataway would not be
required to bear the costs for its students to attend any charter schools because
none of the charter schools attended by its students include Piscataway in its
approved "district of residence."
On January 20, 2016, the New Jersey Department of Education
(Department or DOE) responded that the Commissioner could not grant the
requested relief absent a formal petition for a declaratory ruling, and moreover,
that any determination as to whether to entertain such a petition was "within the
sole discretion of the Commissioner." Piscataway filed an appeal challenging
3
The term "district of residence" is defined as "the school district in which a
charter school facility is physically located; if a charter school is approved with
a region of residence comprised of contiguous school districts, that region is the
charter school's district of residence." N.J.A.C. 6A:11-1.2. The term "region of
residence" is defined as "contiguous school districts in which a charter school
operates and is the charter school's district of residence." N.J.A.C. 6A:11 -1.2.
See In re Charter Sch. Appeal of Greater Brunswick Charter Sch., 332 N.J.
Super. 409, 424 (App. Div. 1999) ("the regulations allowing regional charter
schools are a legitimate means of effectuating the Act's purpose of encouraging
the establishment of charter schools.")
A-5427-16T2
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the regulations as applied, but subsequently withdrew it based on the
Department's representation that it would entertain its petition for a declaratory
ruling.
On June 24, 2016, Piscataway filed a verified petition seeking a
declaratory ruling from the Commissioner regarding its funding obligations
under N.J.S.A. 18A:36A-12(b) and the implementing regulations. The Attorney
General filed an answer on behalf of the Department.
In July 2016, the matter was transmitted to the Office of Administrative
Law (OAL) for disposition as a contested case. The OAL granted Hatikvah's
and College Achieve's motions to intervene.
In December 2016, Piscataway filed a motion for summary decision
seeking a determination from the Commissioner that under N.J.S.A. 18A:36A-
12(b), "financial responsibility for charter school attendance is limited to school
districts formally designated as the 'district of residence,' or within a 'region of
residence,' in a charter school's approved charter." Piscataway sought relief
from any obligation to fund out-of-district placements and sought restoration of
State aid previously directed to the charter schools. In a certification submitted
in support of the motion, Piscataway's Board Secretary and Business
Administrator stated that for the 2016-2017 school year, its projected payment
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to out-of-district charter schools totaled $247,030.
The Department cross-moved for summary decision, seeking a
determination that "the language and history of the [CSPA], and its
implementing regulations, clearly demonstrate that resident districts are
responsible for paying for their students to attend charter schools regardless of
the charter school's location." Hatikvah and College Achieve also filed briefs
in opposition to Piscataway's motion for summary decision.
On June 14, 2017, the ALJ issued an initial decision denying Piscataway's
motion and granting the Department's motion for summary decision. Bd. of
Educ. of Twp. of Piscataway v. N.J. Dep't of Educ., EDU 10995-16, initial
decision (June 14, 2017). In her comprehensive written decision, the ALJ
reviewed the statutory text, legislative history, and implementing regulations,
and determined that Piscataway was "obligated to provide funding in accordance
with N.J.S.A. 18A:36A-12(b) for each of its residents who enrolled in a charter
school no matter where the charter school is located."
The ALJ found that the meaning of the term "district of residence" as used
in N.J.S.A. 18A:36A-12(b) was "clearly ambiguous." For example, if the
regulatory definition of "district of residence," N.J.A.C. 6A:11-1.2, was
"inserted into N.J.S.A. 18A:36A-12(b), that provision would read '[the school
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district in which a charter school facility is physically located] shall pay directly
to the charter school for each student enrolled in the charter school who resides
in the district.'" "Under such a reading, as urged by Piscataway, a school district
would be obligated to pay for its residents to attend [the] charter school only if
the school district is included in the charter school's district of residence or
region of residence."
However, the ALJ found that the implementing regulations, as challenged
here, "imbue the term 'district of residence' as found in N.J.S.A. 18A:36A-12(b)
with meaning beyond the literal regulatory definition" because the challenged
regulations require both a "district of residence" and a "non-resident district" to
make payments to charter schools. N.J.A.C. 6A:23A-15.2, -15.3. The
Department argued that this interpretation made sense because the term "district
of residence" in N.J.S.A. 18A:36A-12(b), referred to the student's district of
residence and thus had a different meaning from the regulatory definition of
"district of residence."
The ALJ found that despite the confusion caused by the regulatory
definition of "district of residence," a review of the Act as a whole and the
legislative history revealed that the regulations properly implemented the
funding requirements of the CSPA. The legislative history of the Charter School
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Act "supports the conclusion that a school district must pay for its residents to
attend charter schools regardless of the location." Notably, in its fiscal estimate
for S. 1796 (1995), which, combined with A. 592 (1995), became CSPA, the
Office of Legislative Services (OLS) stated that:
In regard to the funding of charter schools, the bill
provides that the school district of residence would pay
directly to the charter school for each student enrolled
who resides in the district an amount equal to the local
levy budget per pupil in the district for the specific
grade level. . . . The cost for out of district pupils would
be paid by the district of residence of the pupil. . . .
The Office of Legislative Services (OLS) estimates
that there will be little or no additional costs to the State
or local school districts as a result of this bill. The
charter school would receive the local levy budget per
pupil (State aid plus local tax levy) for each pupil
attending the charter school, plus any categorical aid or
federal funds attributable to that pupil. If out of district
pupils were admitted, the district of residence would
pay the costs for that pupil. . . .
[Legislative Fiscal Estimate to S. 1796 1 (Sept. 14,
1995) (emphasis added).]
The ALJ stated that the fiscal estimate, which was apparently not available
to the Senate Budget and Appropriations Committee prior to its Statement , was
"not the perfect extrinsic aid for discerning legislative intent with respect to
N.J.S.A. 18A:36A-12(b)." S. Budget & Approps. Comm. Statement to A. 592
& S. 1796 2 (Dec. 11, 1995). Nonetheless, the fiscal estimate was useful in
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determining legislative intent because there was no indication that the sponsor
of the bill "objected to the OLS's statements regarding a district-of-residence's
funding obligations for all of its residents who are enrolled in charter schools ."
The ALJ also found that "as originally enacted," the third sentence of
N.J.S.A. 18A:36A-12(b) (subsequently amended), provided, "[t]he per pupil
amount paid to the charter school shall not exceed the [program] budget per
pupil for the specific grade level in the district in which the charter school is
located." (quoting L. 1995, c. 426). The ALJ reasoned that "[t]his suggests that
the Legislature could have written '[t]he school district in which the charter
school is located' instead of '[t]he school district of residence' in the first
sentence of N.J.S.A. 18A:36A-12(b) if that is what the Legislature truly meant
by 'district of residence.'"
The ALJ concluded that the interpretation that all school districts must
fund their students' attendance at charter schools irrespective of location was
consistent with the "overall purpose of the CSPA, which declares that '[a] charter
school shall be open to all students on a space available basis.'" (quoting
N.J.S.A. 18A:36A-7). Although preference for enrollment in a charter school is
given to "students who reside in the school district in which the charte r school
is located," N.J.S.A. 18A:36A-8(a), if space is available, charter schools may
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enroll non-resident students. N.J.S.A. 18A:36A-8(d). The ALJ reasoned that
"[i]f a school district did not have to pay for all of its residents to attend charter
schools, then charter schools would not truly be 'open to all students.' Instead,
non-resident students presumably would only be able to attend charter schools
if they could afford it themselves."
The ALJ further explained that:
This might threaten the financial viability of a charter
school that is unable to fill its rolls with students who
reside in the district in which the charter school is
located. While charter schools may "[s]olicit and
accept any gifts or grants for school purposes," N.J.S.A.
18A:36A-6(g), there is no guarantee that a charter
school that could not attract sufficient numbers of
resident students could make up the shortfall with gifts
and grants. And, while the CSPA prohibits a charter
school from charging tuition to a resident student,
N.J.S.A. 18A:36A-8(a), but does not specifically
prohibit a charter school from charging tuition to a non-
resident student, it is highly unlikely that a charter
school could fill a sufficient number of available spaces
with non-resident students whose parents could afford
to pay tuition.
By implementing N.J.S.A. 18A:36A-12(b) to
require both "districts of residence" and "non-resident
districts" to pay for their children to attend charter
schools, the State Board of Education met its
responsibility under N.J.S.A. 18A:36A-18 to effectuate
the purpose of the CSPA, which is meant to establish a
charter-school program as an alternative to traditional
public schools for "all students on a space available
basis." As the State Board of Education has explained,
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[t]he premise of the [CSPA] is that all
students in New Jersey are entitled to free
education provided by the school district in
which they reside in accordance with
N.J.S.A. 18A:38-1. This entitlement can be
accomplished whether they choose to
attend a public school of the district or a
charter school as an independent public
school.
[29 N.J.R. 3492(a) (Aug. 4, 1997).]
Which district or region a charter school chooses for its
residence is immaterial for determining a school
district's funding obligation under N.J.S.A. 18A:36A-
12(b); what triggers a school district's funding
obligation is the mere fact that one of its residents is
enrolled in a charter school, irrespective of location.
Thus, the Department persuasively argues that the term
"district of residence" as used in N.J.S.A. 18A:36A-
12(b) is reasonably interpreted as the student's district
of residence and not the charter school's district of
residence.
Lastly, the ALJ found that "the fact that a school district's transportation -
funding obligations are different for resident and non-resident students under
N.J.S.A. 18A:36A-13 and N.J.A.C. 6A:27-3.1 to -3.7, does not alter the way in
which N.J.S.A. 18A:36A-12(b) should be read." The ALJ reasoned:
The CSPA provides that "[t]he students who reside in
the school district in which the charter school is located
shall be provided transportation to the charter school on
the same terms and conditions as transportation is
provided to students attending the schools of the
district," but that "[n]on-resident students shall receive
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transportation services pursuant to regulations
established by the State board." N.J.S.A. 18A:36A-13.
Under those regulations, "[t]he expenditure for the
transportation of charter . . . school students who reside
outside of the school district or region of residence in
which the charter . . . school is located is limited to the
annual nonpublic school maximum statutorily
established expenditure per student in accordance with
N.J.S.A. 18A:39-1," and "[i]f the cost of transportation
exceeds the maximum allowable expenditure, the
student's parents or legal guardians may pay the amount
in excess of the annual maximum or they shall be
entitled to the maximum allowable expenditure as aid
in lieu of transportation." N.J.A.C. 6A:27-3.1(e), -3.4.
Thus, non-resident students of charter schools receive
less favorable transportation treatment than resident
students of charter schools, but this arrangement should
be viewed as a reasonable tradeoff for a free education
at a charter school of one's choice and not as having any
bearing on a logical interpretation of a school district's
tuition obligations under N.J.S.A. 18A:36A-12(b).
[(Footnote omitted).]
Thus, the ALJ held that Piscataway was "obligated to provide funding in
accordance with N.J.S.A. 18A:36A-12(b) for each of its residents who is
enrolled in a charter school no matter where the charter school is located ." The
ALJ stated:
Ultimately, the Legislature directed the State Board of
Education to implement the provisions of the CSPA.
Through its adoption of N.J.A.C. 6A:23A-15.2 and
-15.3, the State Board of Education has implemented
N.J.S.A. 18A:36A-12(b) by requiring both "districts of
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residence" and "non-resident districts" to pay for their
children to attend charter schools. Here, Piscataway
has asked for a declaratory ruling regarding the scope
of its funding obligations under N.J.S.A. 18A:36A-
12(b). The State Board of Education has made clear
that Piscataway must, in accordance with N.J.S.A.
18A:36A-12(b), pay a charter school for each
Piscataway resident who is enrolled in the charter
school no matter where the charter school is located. If
Piscataway wishes to challenge the validity of any of
the State Board of Education's regulations, the proper
venue for such a challenge would be the Appellate
Division in accordance with R. 2:2-3(2).
In her final decision, then-Commissioner Kimberley Harrington adopted
the initial decision of the ALJ, and stated:
Upon consideration and review, the
Commissioner is in accord with the ALJ's
determination that, pursuant to the Act and the
provisions set forth in N.J.A.C. 6A:23A-15.1-15.4, the
petitioner is obligated to provide funding for its
students enrolled in charter schools located in other
school districts.[] Furthermore, while petitioner
[Piscataway] has framed its contentions as an issue with
the Department's interpretation of the Act—which
interpretation the Commissioner finds was proper—
petitioner is, nevertheless, questioning the validity of
the regulations. It is clear from the submissions that
petitioner's true contention is with the department's
regulations, which set forth the specific requirements
from which petitioner is seeking relief. Therefore,
petitioner's disagreement with the regulations, and its
challenges to the requirement imposed upon it, is
properly addressed before the Appellate Division in
accordance with R. 2:2-3(2).
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[(Footnote omitted).]
This appeal followed.
II.
As noted at the outset, Piscataway contends that "the Department['s] . . .
charter school regulations are ultra vires to the extent they impose financial
obligations on school districts not included in a charter school's 'district of
residence' or 'region of residence.'" We disagree. 4
The scope of judicial review of a final decision of the Commissioner is
limited. In re Proposed Quest Acad. Charter Sch. of Montclair Founders Grp.,
216 N.J. 370, 385 (2013). Further, "[j]udicial review of agency regulations
begins with a presumption that the regulations are both 'valid and reasonable.'"
4
Initially, Intervenors Hatikvah and College Achieve argue that the appeal is
time-barred because Piscataway had been making payments to charter schools
located outside of its district for years, and waited until 2015 to challenge the
regulations. However, we reject this argument because the Commissioner
agreed to entertain the petition for declaratory ruling on the merits below, and
Piscataway filed an appeal within forty-five days of that final decision. R. 2:4-
1(b). Moreover, in administrative appeals, "[u]nlike quasi-judicial actions, there
is . . . no time limit on . . . direct challenges to the substantive validity of an
agency rule or regulation." Pressler & Verniero, Current N.J. Court Rules, cmt.
3.1 on R. 2:4-1(b) (2019). See In re Six Month Extension of N.J.A.C. 5:91-1,
372 N.J. Super. 61, 87 (App. Div. 2004) ("forty-five-day time limit on appeals
from final decisions of administrative agencies does not generally apply to
challenges to the validity of agency regulations, especially where the challenges
raise constitutional questions or involve important questions implicating the
public interest.")
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N.J. Ass'n of Sch. Adm'rs v. Schundler, 211 N.J. 535, 548 (2012) (quoting N.J.
Soc'y for Prevention of Cruelty to Animals (NJSPCA) v. N.J. Dep't of
Agric.,196 N.J. 366, 385 (2008)). "[T]he party challenging a regulation has the
burden of proving that the agency's action was 'arbitrary, capricious or
unreasonable.'" Ibid. (quoting Henry v. Rahway State Prison, 81 N.J. 571, 579-
80 (1980)). A challenger can meet that burden "by demonstrating an
inconsistency between the regulation and the statute it implements, a violation
of policy expressed or implied by the Legislature, an extension of the statute
beyond what the Legislature intended, or a conflict between the enabling act and
other statutory law that cannot be harmonized.” N.J. Ass'n of Sch. Adm'rs v.
Cerf, 428 N.J. Super. 588, 596 (App. Div. 2012).
Although an appellate court is not bound by an agency's determination on
a question of law, Hargrove v. Sleepy's, LLC, 220 N.J. 289, 301 (2015),
"[c]ourts afford an agency 'great deference' in reviewing its 'interpretation of
statutes within its scope of authority and its adoption of rules implementing' the
laws for which it is responsible." Schundler, 211 N.J. at 549 (quoting NJSPCA,
196 N.J. at 385). Nevertheless, "courts must invalidate a regulation that is
'inconsistent with the statute it purports to interpret. . . .'" Ibid. (quoting
NJSPCA, 196 N.J. at 385).
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"[T]he goal of statutory interpretation is to ascertain and effectuate the
Legislature's intent." Cashin v. Bello, 223 N.J. 328, 335 (2015). "[T]he best
indicator of that intent is the statutory language." DiProspero v. Penn, 183 N.J.
477, 492 (2005). "Accordingly, '[t]he starting point of all statutory
interpretation must be the language used in the enactment.'" Spade v. Select
Comfort Corp., 232 N.J. 504, 515 (2018) (quoting N.J. Div. of Child Prot. &
Permanency v. Y.N., 220 N.J. 165, 178 (2014)).
Courts "construe the words of a statute 'in context with related provisions
so as to give sense to the legislation as a whole.'" Spade, 232 N.J. at 515
(quoting N. Jersey Media Grp., Inc. v. Twp. of Lyndhurst, 229 N.J. 541, 570
(2017)). "If the plain language leads to a clear and unambiguous result, then
our interpretative process is over." Johnson v. Roselle EZ Quick LLC, 226 N.J.
370, 386 (2016). Courts "turn to extrinsic tools to discern legislative intent
. . . only when the statute is ambiguous, the plain language leads to a result
inconsistent with any legitimate public policy objective, or it is at odds with a
general statutory scheme." Shelton v. Restaurant.com, Inc., 214 N.J. 419, 429
(2013).
Charter schools are public schools that operate under a charter granted by
the Commissioner, operate independently of a local board of education, and are
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managed by a board of trustees. N.J.S.A. 18A:36A-3(a). Funding for charter
schools comes from the local school district, and state and federal aid, but is not
equivalent to the per pupil funding that a traditional public school receives.
N.J.S.A. 18A:36A-12(b).
At issue here, the CSPA funding provision provides that:
The school district of residence shall pay directly to the
charter school for each student enrolled in the charter
school who resides in the district an amount equal to
90% of the sum of the budget year equalization aid per
pupil, the prebudget year general fund tax levy per
pupil inflated by the CPI rate most recent to the
calculation, and the employer payroll tax per pupil that
is transferred to the school district pursuant to
subsection d. of section 1 of P.L.2018, c.68. In
addition, the school district of residence shall pay
directly to the charter school the security categorical
aid attributable to the student and a percentage of the
district’s special education categorical aid equal to the
percentage of the district’s special education students
enrolled in the charter school and, if applicable, 100%
of preschool education aid. The district of residence
shall also pay directly to the charter school any federal
funds attributable to the student.
[N.J.S.A. 18A:36A-12(b) (emphasis added).]
The term "school district of residence" is not defined in either the CSPA
or the implementing regulations. The term "district of residence" is, however,
defined in the regulations as "the school district in which a charter school facility
is physically located; if a charter school is approved with a region of residence
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comprised of contiguous school districts, that region is the charter school's
district of residence." N.J.A.C. 6A:11-1.2; N.J.A.C. 6A:23A-15.1. A "resident
student" means "a student who resides in the area served by the district board of
education that is the same as the district of residence of the charter school."
N.J.A.C. 6A:11-1.2; N.J.A.C. 6A:23A-15.1.
However, a non-resident school district is defined as both "a school
district outside the district of residence of the charter school," N.J.A.C. 6A:11 -
1.2, and as "a school district outside the school district of residence of the charter
school." N.J.A.C. 6A:23A-15.1 (emphasis added). A "'non-resident student'
means a student from a non-resident district attending a charter school."
N.J.A.C. 6A:11-1.2; N.J.A.C. 6A:23A-15.1.
In 2009, in accordance with the CSPA, the State Board of Education
promulgated the regulations at issue here, N.J.A.C. 6A:23A-15.2 and -15.3. 41
N.J.R. 642(a) (Jan. 20, 2009). The regulations were designed "to assure the
financial accountability of local public school districts through enhanced State
monitoring, oversight and authority, and to ensure that each district board of
education adopts an annual budget that provides adequate resources to meet the
State Constitution's mandate for a thorough and efficient system of free public
schools for all children." 41 N.J.R. 642(a) (Jan. 20, 2009).
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No commentator objected to the regulations. 41 N.J.R. 642(a) (Jan. 20,
2009); 49 N.J.R. 1038(a) (May 1, 2017). Nor did any commentators object on
that basis to N.J.A.C. 6A:11-1.1 to -6.4, the regulations governing the
application for and operation of a charter school. 29 N.J.R. 3492(a) (Aug. 4,
1997); 32 N.J.R. 3560(a) (Oct. 2, 2000); 49 N.J.R. 1038(a) (May 1, 2017). In
fact, in response to a comment to an amendment to N.J.A.C. 6A:23A-22.4
("Financial Requirements"), the Department explained that "[c]harter school
funding follows the child and, therefore, is only remitted once the school is
operational." 49 N.J.R. 2521(a), 2522 (Aug. 7, 2017).
The funding regulations, N.J.A.C. 6A:23A-15.1 to -15.4, require both a
"district of residence" and a "non-resident district" to pay for its students to
attend a charter school. N.J.A.C. 6A:23A-15.2 details the per pupil payments
to charter schools:
(a) The resident and non-resident school districts shall
use projected charter school aid as established by the
Commissioner in a report to be distributed no later than
February 15 of the prebudget year for budget purposes
and to initiate school district payments to the charter
school for the subsequent year. The report establishes
for each resident and non-resident school district a per
pupil amount for the local and State shares and
categorical aids per student. Once the per pupil amount
is established, it is not adjusted. Projected charter
school aid is based on projected enrollments at the
charter school. The number of students enrolled in the
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charter school is adjusted based on average daily
enrollment for aid purposes throughout the school year
in accordance with the prescribed adjustments listed in
N.J.A.C. 6A:23A-15.3.
(b) The per pupil amount comprises local share as
defined in (b)1 below and State share as defined in (b)2
below.
1. The local share per pupil is the part of the per pupil
amount that includes the general fund tax levy of the
school district of residence's or nonresident district(s)'
budget(s).
2. The State share per pupil is the part of the per pupil
amount that includes the equalization aid portion of the
school district of residence's or nonresident district(s)'
budget(s) or amounts, if any, contained in the annual
appropriations act in-lieu-of or to supplement
equalization aid for the corresponding fiscal year. . . .
[(Emphasis added).]
Also at issue, N.J.A.C. 6A:23A-15.3(g) provides that both the district of
residence and non-resident school districts are, under N.J.S.A. 18A:36A-12(b),
obligated to pay charter schools as follows:
(g) A district board of education shall process
payment(s) and payment adjustments to a charter
school during the school year as follows:
1. The district of residence and non-resident school
district(s) shall initiate payments to the charter school
based on projected enrollment, as set forth in this
section.
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2. The school district of residence and non-resident
school district(s) shall pay directly to a charter school
the local share per pupil at the charter school rate,
pursuant to N.J.S.A. 18A:36A-12.b, in 12 equal
installments starting July 15 and thereafter on the 15th
of each month.
3. Pursuant to N.J.S.A. 18A:36A-12.b, the school
district of residence and non-resident school district(s)
shall pay directly to the charter school the following aid
in 20 equal installments on the 9th and 23rd of every
month starting with September 9 and ending with June
23, or as established by the Legislature:
i. The State share per pupil at the charter
school rate; and
ii. Categorical aid attributable to the
student.
[(Emphasis added).]
Although the challenged regulations expressly impose an obligation to
fund charter schools on both the resident and non-resident school districts, the
regulations also seem to distinguish between a "school district of residence" and
a "non-resident district" N.J.A.C. 6A:23A-15.2, -15.3.
Nonetheless, a review of the term both in the context of the CSPA as a
whole and in light of the legislative history of the Act, supports the
Commissioner's interpretation. In this regard, the fact that the Legislature,
which as recently as last year amended N.J.S.A. 18A:36A-12(b), L. 2018, c. 68,
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21
did not act in response to the agency's adoption of N.J.A.C. 6A:23A -15.1 to -
15.4, eleven years earlier, should be "'granted great weight as evidence of its
conformity with the legislative intent.'" Klumb v. Bd. of Educ. of Manalapan-
Englishtown Reg'l High Sch. Dist., Monmouth Cty., 199 N.J. 14, 24-25 (2009)
(quoting Malone v. Fender, 80 N.J. 129, 137 (1979)).
Moreover, as discussed in Highland Park II, after the Commissioner's
decision in this case, the Appellate Division, in an unpublished decision,
Highland Park Board of Education v. Hespe (Highland Park I), No. A-3890-14
(App. Div. Jan. 24, 2018) (slip op. at 19), certif. denied, 233 N.J. 485 (2018), 5
addressed this precise issue. In that case, this court rejected Highland Park's
argument that only the charter school's "district of residence" was obligated to
pay for its students to attend the school. Ibid. The court found that the plain
language of N.J.S.A. 18A:36A-12(b) "expressly provides that the 'school district
of residence' must pay the charter school for 'each student' enrolled in the
school." Id. at 16. Thus, we held that "as used in N.J.S.A. 18A:36A-12(b), the
term 'school district of residence' refers to the district where the student reside s,
5
The appellant in Highland Park I appealed from the Commissioner's final
decision approving Hatikvah's second application to amend its charter.
Although Highland Park I is unpublished, it involved some of the same parties,
and the identical issue raised here, and thus, although not precedential, it is
instructive.
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22
not the district where the charter school is located." Ibid.
This court found that the CSPA "expressly envisions that students may
enroll in a charter school, even though they reside in a district other than the
district where the charter school is located." Id. at 16-17. There is nothing in
the CSPA "that would allow these students to attend a charter school without a
financial contribution from the school districts in which they reside." Id. at 17.
Thus, under N.J.S.A. 18A:36A-12(b), the obligation of a school district to fund
its student's attendance at a charter school is not limited to the charter school's
"district of residence." Ibid.
We also found that the implementing regulations were "consistent with
this interpretation of N.J.S.A. 18A:36A-12(b)." Ibid. Specifically, the court
cited to N.J.A.C. 6A:23A-15.3(g)(2), (3), one of the challenged regulations in
this case, noting that "[i]ndeed, the regulations expressly provide that both a
charter school's 'district of residence' and the 'non-resident school districts' must
pay for their students to attend a charter school." Ibid.
Lastly, the court found that "extrinsic evidence," notably the OLS fiscal
estimate as relied on by the ALJ here, "also supports this interpretation of
N.J.S.A. 18A:36A-12(b)." Ibid. Thus, we concluded that "as used in N.J.S.A.
18A:36A-12(b), the term 'school district of residence' refers to the district where
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23
the student resides, not the district where the charter school is located." Id. at
16.
On appeal, Piscataway argues that the decision in Highland Park I was
"erroneous and should not be followed." It contends that the more plausible
inference is that the Legislature intended to impose financial responsibility only
on the district where the charter school is located, or at most the region of
residence, because non-resident districts are not entitled to receive notice or
input as to the approval or amendment process. Under that interpretation,
Piscataway would be relieved of any financial responsibility for educating its
students enrolled in charter schools because no charter schools are located in its
district, or in a contiguous district.
However, the Legislature found that "the establishment of a charter school
program is in the best interests of the students of this State and it is therefore the
public policy of the State to encourage and facilitate the development of charter
schools." N.J.S.A. 18A:36A-2. Under that broad policy, the Legislature
mandated that "[a] charter school shall be open to all students on a space
available basis. . . ." N.J.S.A. 18A:36A-7. Significantly, although preference
is given to students who reside in the school district in which the charter school
is located, if available space permits, a charter school may enroll non-resident
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24
students. N.J.S.A. 18A:36A-8(a),(d).
As this court found in Highland Park I, slip op. at 17, there is nothing in
the Act that would allow non-resident students to attend a charter school without
a financial contribution from the school district in which they reside. In fact, in
order to enroll in a charter school, either in or out of district, the student must
first register "in the school district in which he or she resides," N.J.A.C. 6A:23A-
15.3(a), and thus funding would pass through the Board of Education in that
district before being allocated to the charter school. See In re Grant of Charter
Sch. Application of Englewood on the Palisades Charter Sch., 320 N.J. Super.
174, 224 (App. Div. 1999) (discussing funding provision of CSPA), aff'd as
modified, 164 N.J. 316 (2000).
To that end, the interpretation of the term "school district of residence"
used in N.J.S.A. 18A:36A-12(b) to refer to the district where the student resides,
and not the district where the charter school is located, is entirely consistent with
the Act and the policy expressed by the Legislature. As the ALJ found, "[i]f a
school district did not have to pay for all of its residents to attend charter schools,
then charter schools would not truly be 'open to all students.'" Students residing
in districts without a charter school, like Piscataway, would be foreclosed from
attending a charter school unless they could afford to pay to attend the public
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25
charter school—a result inconsistent with the Legislature's intent in drafting the
Charter School Act. See Englewood, 164 N.J. 322 (charter schools were
authorized as an alternate format for providing public education to New Jersey
children).
In fact, as originally enacted, the Legislature differentiated in N.J.S.A.
18A:36A-12 (subsequently amended), between a school district of residence and
a school district where the charter school was located, to protect a wealthy
district from sending excess revenue to charter schools located in less wealthy
districts, as follows:
The school district of residence shall pay directly to the
charter school for each student enrolled in the charter
school who resides in the district a presumptive amount
equal to 90% of the local levy budget per pupil for the
specific grade level in the district. At the discretion of
the commissioner and at the time the charter is granted,
the commissioner may require the school district of
residence to pay directly to the charter school for each
student enrolled in the charter school an amount equal
to less than 90% percent, or an amount which shall not
exceed 100% of the local levy budget per pupil for the
specific grade level in the district of residence. The per
pupil amount paid to the charter school shall not exceed
the local levy budget per pupil for the specific grade
level in the district in which the charter school is
located. The district of residence shall also pay directly
to the charter school any categorical aid attributable to
the student, provided the student is receiving
appropriate categorical services, and any federal funds
attributable to the student.
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[L. 1995, c. 426 (emphasis added).]
Although the underlined provision regarding per pupil expenditures was
subsequently amended, L. 2007, c. 260, § 56, reading the statute as a whole as
originally enacted supports both the Commissioner's and the Highland I court's
interpretation that the Legislature meant the term "school district of residence,"
to refer to the student's residence. There would have been no need for such a
provision if districts were only responsible for funding students attending
charter schools in their districts.
Moreover, the current funding provision, N.J.S.A. 18A:36A-12(b), was
amended by the School Funding Reform Act of 2008 (SFRA), N.J.S.A. 18A:7F-
43 to -63, to apply the "weighted school funding formula" to charter schools.
Our Supreme Court described that formula, which is used to calculate the
amount of state aid to be provided to each school district, as "the State's most
recent, lengthy and painstaking effort to craft a redesigned school funding
formula that satisfies the constitutional standard." Abbott v. Burke (Abbott
XX), 199 N.J. 140, 147 (2009). Under N.J.S.A. 18A:36A-12(b), the school
district of residence shall pay directly to the charter school certain funds,
including equalization aid, security categorical aid, received by the district
under the SFRA formula. N.J.A.C. 6A:23A-15.1. Those funds, which are
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27
"attributable to the student," are paid to the school district where the student
resides and not to the district where the charter school is located. N.J.S.A.
18A:7F-43 to -63.
Thus, it would make no sense to interpret "school district of residence" to
mean the "district of residence." N.J.S.A. 18A:36A-12(b). Given that both
resident and non-resident students can attend a charter school, the term "school
district or residence" logically means the district where the student resides. A
school is located in a district, it does not reside in a district.
This interpretation is also consistent with another section of the CSPA,
N.J.S.A. 18A:36A-11(b), which provides that a charter school shall comply with
the laws concerning the "provision of services to students with disabilities;
except that the fiscal responsibility for any student currently enrolled in or
determined to require a private day or residential school shall remain with the
district of residence." As used in N.J.S.A. 18A:36A-11(b), "district of
residence" must refer to the student's home district, because a non-resident
district would not be obligated to fund a student residing outside its borders. In
fact, the Legislature did not use the term "district of residence" elsewhere in the
Act when referring to the district where the charter school is located. See
N.J.S.A. 18A:36A-8(a); N.J.S.A. 18A:36A-13. Further, in a separate Act, the
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28
Legislature directed the Commissioner, for school funding purposes for children
in State facilities, N.J.S.A. 18A:7B-12(b), to determine the child's "district of
residence" based on the district where the parent or resource family resided.
N.J.S.A. 18A:7B-12.
Additionally, as this court found in Highland Park I, the interpretation is
supported by the legislative history of the CSPA. In its fiscal estimate the OLS
confirmed its understanding that the district in which the student resided would
pay an out-of-district charter school. Legislative Fiscal Estimate to S. 1796 (L.
1995, c. 426). Although, as the ALJ pointed out, the fiscal estimate is not "the
perfect extrinsic aid" because the bill was subsequently amended, and the
estimate was not available at the time of the Sponsor's Statement to S. 1796 5
(L.1995, c. 426), it nonetheless demonstrates the Legislature's understanding
that the student's district would fund the charter school. See In re Pub. Serv.
Elec. & Gas Co.'s Rate Unbundling, 167 N.J. 377, 388 n.2 (2001) (Legislative
Fiscal Estimate was a "slender reed on which to overturn the BPU's Final
Order"); Bd. of Chosen Freeholders of Cty. of Morris v. State, 311 N.J. Super.
637, 645 (Law Div. 1997) (Legislative Fiscal Estimate is very useful in
ascertaining legislative intent if relied on by Legislature in enacting bill), aff'd,
311 N.J. Super. 587 (App. Div. 1998), aff'd, 159 N.J. 565 (1999).
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Nonetheless, Piscataway argues here, as in Highland Park II, that under
that interpretation non-resident school districts will be deprived of due process
because non-resident districts are not entitled to receive formal notice of a
charter school's application to amend its charter, or input into the amendment
process. N.J.A.C. 6A:11-2.1, -2.6(a)(b). Piscataway argues that "surely," the
Legislature did not contemplate a system where every school district had to
constantly monitor charter school activity throughout the state, and was
obligated to fund those schools without consideration of the charter school's
impact.
The notice provisions do not, however, relieve non-resident districts from
bearing financial responsibility for their students' attendance at charter schools.
Because preference for enrollment in a charter school is given to students who
reside in the school district in which the charter school is located, N.J.S.A.
18A:36A-8(a), it is likely that the majority of students will reside in that district,
and thus it makes sense that the district of residence should receive formal notice
and an opportunity for input.
Moreover, it was undisputed that Piscataway, and the appellants in the
other back-to-back appeals, were aware of the applications to amend filed by
Hatikvah and Central Jersey College Prep (CJCP), and had an opportunity to
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submit comments on the amendment requests. In fact, in Highland II, the
Commissioner received, and considered, comments from several school
districts, individuals, an educational service commission, and even several
legislators. Nor is there any indication in this record that the process of tracking
applications to amend a charter would be particularly onerous for a non-resident
district.
Nonetheless, Piscataway contends that its interpretation finds support in
the Court's decision in Englewood, 164 N.J. at 316. However, this argument
also lacks merit. In Englewood, three boards of education brought an action
challenging the New Jersey Board of Education's grants of charters to schools
in their respective districts. Id. at 318-19. In discussing a prior version of
N.J.S.A. 18A:36A-12,6 the Court wrote that "the Act provides that the district
of residence of the charter school shall forward to the school a per-pupil amount
set by the Commissioner, but presumptively set by the Legislature at 90% of the
local levy budget per pupil for that student's grade level in the district." Id. at
322. However, in that passing comment, the Court was merely referring to the
6
N.J.S.A. 18A:36A-12 then provided that "[t]he school district of residence
shall pay directly to the charter school for each student enrolled in the charter
school who resides in the district a presumptive amount equal to 90% of the
local levy budget per pupil for the specific grade level in the district." L. 1995,
c. 426.
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funding provision, and did not address the question of whether the term "school
district of residence" referred to the student's or the school's location.
Finally, the amicus unpersuasively argues that Piscataway's interpretation
is logical because there is no provision in the CSPA prohibiting the charge of
tuition to students from other districts and thus non-resident students must pay
tuition to attend an out-of-district charter school. N.J.S.A. 18A:36A-8(a)
provides that "[a] charter school shall not charge tuition to students who reside
in the district." Although there is no similar provision prohibiting a charter
school from charging a non-resident student tuition, there are also no provisions
specifically authorizing such payment, or defining the method of determining
tuition rates. See N.J.A.C. 6A:23A-22.1 to -22.15 (Financial Operations of
Charter Schools).
For example, with regard to traditional public schools, N.J.S.A.18A:38 -
3(a) provides that "[a]ny person not resident in a school district, if eligible
except for residence, may be admitted to the schools of the district with the
consent of the board of education upon such terms, and with or without payment
of tuition, as the board may prescribe." See N.J.A.C. 6A:23A-17-1 to -17.2
(method of determining tuition rates for regular public schools); N.J.A.C.
6A:23A-18.1 to -18.23 (tuition for private schools for students with disabilities).
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In contrast, for charter schools, the Department specifically provided for
payment of state and federal aid to the charter school by both the resident and
non-resident districts. N.J.A.C. 6A:23A-15.2 to -15.3. As set forth above, the
Legislature did not act in response to that interpretation, and non-resident school
districts have apparently been funding their students' attendance at charter
schools since they were first established in 1997. Further, the Commissioner's
interpretation is consistent with the legislative policy to encourage the
development of charter schools, N.J.S.A. 18A:36A-2, and the OLS statement
that out-of-district districts would pay for the cost of their students to attend the
charter school. Legislative Fiscal Estimate to S. 1796 1 (Sept. 14, 1995).
In sum, we conclude that the Commissioner correctly determined that the
Department properly implemented the funding requirements of N.J.S.A.
18A:36A-12(b) by obligating both a "district of residence" and a "non-resident
district" to fund their students' attendance at charter schools. Therefore,
N.J.A.C. 6A:23A-15.2 and -15.3 are not ultra vires, and Piscataway is obligated
to provide funding for its students enrolled in charter schools located outside its
school district.
Affirmed.
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