IN THE MATTER OF THE REQUEST FOR EMERGENCY AID SUBMITTED BY THE BOARD OF EDUCATION OF THE NORTH WARREN REGIONAL SCHOOL DISTRICT. (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NOT FOR PUBLICATION WITHOUT THE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
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1559-18
IN THE MATTER OF THE
REQUEST FOR EMERGENCY
AID SUBMITTED BY THE
BOARD OF EDUCATION OF
THE NORTH WARREN
REGIONAL SCHOOL DISTRICT.
_____________________________
Submitted June 3, 2020 – Decided July 16, 2021
Before Judges Fuentes, Haas, and Enright.
On appeal from the New Jersey Commissioner of
Education.
Fogarty & Hara, attorneys for appellant Board of
Education of the North Warren Regional School
District (Robert D. Lorfink, of counsel and on the
briefs).
Gurbir S. Grewal, Attorney General, attorney for
respondent Commissioner of Education (Melissa
Dutton Schaffer, Assistant Attorney General, of
counsel; Michal Czarnecki, Deputy Attorney General,
on the brief).
The opinion of the court was delivered by
FUENTES, P.J.A.D.
The North Warren Regional School District challenges a decision made
by the Commissioner of Education to deny its application for emergency state
aid. On March 15, 2018, the District learned that it was projected to receive
$5,034,937 in state aid from the Department of Education for the 2018-2019
school year or FY2019. However, on July 13, 2018, the District discovered that
its projected state aid for FY2019 would be reduced by $253,897, lowering the
total amount of state aid to $4,781,040.
On August 30, 2018, the District applied to the Commissioner for
$153,897 in emergency state aid. The Commissioner has the authority to
determine the repayment terms for emergency aid applications and decided to
defer acting upon the District's application until the Department of Education
conducted a "district needs assessment." The Commissioner ultimately denied
the District’s emergency aid application because the District has alternative
financial resources that may be utilized to offset the reduction in state aid.
In this appeal, the District argues the Commissioner’s decision to deny its
application was arbitrary, capricious, and unreasonable because he failed to
employ a "readily identifiable standard for the district needs assessmen t." The
District maintains that this approach violated the Administrative Procedures
Act. We reject these arguments and affirm.
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On March 15, 2018, the District received its projected State financial aid
for the 2018-2019 school year. In this document, the Department of Education
(DOE) apprised appellant that it would receive $5,034,937 in State aid for the
2018-2019 school year. On July 13, 2018, the Commissioner issued a Fiscal
Year 2018-2019 State Budget Notification to all chief school administrators and
charter school leads in which he explained that the Governor had "reached an
agreement with the [L]egislature on the Fiscal Year 2019 state budget, which
includes revised state aid for all school districts." The Commissioner made clear
that "[a]ny district that is set to receive less state aid in the revised notice must
follow the instructions in the [attached] guidance document."
On that same date, appellant became aware that its total aid for FY2019
had been reduced by $253,897, bringing the total amount of state aid for FY2019
to $4,781,040. This revised budget fell below the amount of state aid received
by appellant during the 2017-2018 school year. The DOE memorandum
attached thereto explained that "[a]ny district notified of a reduction in state aid
must reduce its budgetary basis state aid revenue and receivable" for 2018 -19.
The DOE provided school districts that experienced a reduction in state aid with
several options to be adopted by local board of education resolution:
1. Use unassigned general fund surplus to maintain
budgeted appropriations; or
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2. Request Commissioner approval to withdraw from
emergency reserve; or
3. Pursuant to N.J.A.C. 6A:23A-14.2(d), withdraw
from maintenance reserve to cover budgeted required
maintenance costs; or
4. Reduce appropriations for 2018-19; or
5. A combination of 1, 2, 3, and 4 above.
The DOE Notice made clear that those school districts that received a
reduction in general fund state aid were entitled to apply for emergency aid,
provided they "are able to demonstrate fiscal distress." (Emphasis added). On
August 3, 2018, the DOE issued a supplemental "guidance" document that
provided school districts with comprehensive instructions on how to navigate
the application process successfully. This included a two-page list of twenty-
four required documents.
After it received this information, appellant modified its recently
negotiated employee health care base and reduced its budgeted appropriations
by $100,000. On August 30, 2018, appellant submitted to the DOE a 211-page
application requesting $153,897 in emergency aid. The application identified
the following six indicators of fiscal distress: (1) "[a]n inadequate fund balance
mandate;" (2) the tax levy cap; ( 3) "[a]n error on the Aid Reductio n
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Calculation;" (4) "[s]udden [c]hanges to [g]uidance on State [a]id;" (5)
"[c]ontinued [r]eductions to [e]xtraordinary [a]id;" and 6) "[u]nreasonable
[a]djusted [t]uition [r]ates by Warren County Special Services School District."
On October 26, 2018, the Commissioner denied appellant’s application
for emergency aid. The Commissioner noted the DOE had reviewed the school
district's application and considered other "fiscal information necessary for a
thorough review including, but not limited to, historical reserve balances and
statistical trend information . . . obtained from the district's fiscal year end June
30, 2017, Comprehensive Annual Financial Report (CAFR) and from the
district's 2018-2019 original budget certified for taxes." Based on these data,
the Commissioner found approximately $496,000 in unbudgeted available
funds.
Appellant argues the Commissioner’s denial of its emergency aid
application is unreasonable because it would require appellant "to invade" the
meager funds it has in reserves. According to appellant, the Commissioner
unreasonably failed to recognize that the combination of the District's tuition
adjustment and an unexpected loss of $253,897 in state aid constitutes "fiscal
distress" within the meaning of the DOE's guidelines. Under these
circumstances, appellant maintains the Commissioner unreasonably
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contravened the legislature’s intent for emergency aid to be more accessible by
denying appellant’s application. L. 2018, c. 54, §34.
In response, the Commissioner argues appellant’s application did not
accurately reflect the District's true fiscal status. The Commissioner found that
North Warren's projection of $250,000 in surplus for FY18 significantly
undervalued its actual unspent appropriations of approximately $565,100.
Furthermore, the DOE authorized the District to withdraw funds from its
maintenance reserve account to appropriate funds for required maintenance
costs. See N.J.A.C. 6A:23A-14.2(d). According to the Commissioner, the
availability of these funds supported his determination that emergency aid was
unnecessary.
Our Supreme Court has recently reaffirmed the guiding principle of
judicial review of a decision made by a State administrative agency.
We will not overturn an agency determination unless it
is arbitrary, capricious, or unreasonable. The party
challenging the agency action has the burden to show
that the administrative determination is arbitrary,
capricious or unreasonable.
The deferential standard that governs administrative
appeals
is consistent with the strong presumption
of reasonableness that an appellate court
must accord an administrative agency's
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exercise of statutorily delegated
responsibility. The standard also
recognizes the "agency's expertise and
superior knowledge of a particular field,"
as well as the Judiciary's "limited role . . .
in reviewing the actions of other branches
of government.
[In re Renewal TEAM Acad. Charter Sch.,
____ N.J. ____, ____ (2021), slip op. at 36.
(internal citations omitted).
Against this standard of review, we discern no legal basis to disturb the
Commissioner's decision. Appellant's argument is predicated in large part on
how the DOE decided different school districts' applications for emergency aid
as an indicator of arbitrary, disparate treatment. This argument is unavailing.
The Commissioner found that the District had sufficient funds available to react
to the reduction in State aid without requiring emergency aid. It is beyond this
court's role to substitute our judgment and overrule the Commissioner's
expertise displayed in his well-grounded decision.
Finally, appellant argues that the Commissioner reached this decision in
violation of the Administrative Procedures Act and urges this court to
characterize the DOE's actions here as the functional equivalent of promulgating
a regulatory scheme. This argument lacks sufficient merit to warrant discussion
in a written opinion. R. 2:11-3 (1)(e)(E). The informational memoranda the
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DOE distributed to the school districts merely explained the application process.
The information contained therein informed districts of the parameters of the
needs assessment required by the FY19 Appropriations Act. The
Commissioner's decision to grant or deny an emergency aid application for
FY19 is an exercise of the powers of his office and do not create a new legal
standard.
Affirmed.
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