IN RE PETITION FOR AUTHORIZATION TO CONDUCT A REFERENDUM ON THE WITHDRAWAL OF THE BOROUGH OF WOODCLIFF LAKE FROM THE PASCACK VALLEY REGIONAL SCHOOL DISTRICT (NEW JERSEY DEPARTMENT OF EDUCATION) ( 2017 )

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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4084-13T2
IN RE PETITION FOR AUTHORIZATION
TO CONDUCT A REFERENDUM ON THE
WITHDRAWAL OF THE BOROUGH OF
WOODCLIFF LAKE FROM THE PASCACK
VALLEY REGIONAL SCHOOL DISTRICT.
_________________________________
Argued April 5, 2017 – Decided July 20, 2017
Before Judges Fuentes, Simonelli and Gooden
Brown.
On appeal from the New Jersey Department of
Education.
William Harla argued the cause for appellants
Township of River Vale and Borough of
Hillsdale (DeCotiis, FitzPatrick & Cole, LLP,
attorneys; Victoria A. Flynn, on the briefs).
Kerri A. Wright argued the cause for
respondent Borough of Woodcliff Lake (Porzio,
Bromberg & Newman, P.C., attorneys; Vito A.
Gagliardi, Jr., of counsel and on the brief;
Ms. Wright, on the brief).
Caroline G. Jones, Deputy Attorney General,
argued the cause for respondent Board of
Review (Christopher S. Porrino, Attorney
General, attorney; Melissa H. Raksa, Assistant
Attorney General, of counsel; Ms. Jones, on
the brief).
PER CURIAM
Appellants Township of River Vale (River Vale) and Borough
of Hillsdale (Hillsdale)1 appeal from the March 27, 2014 final
agency decision of respondent Board of Review of the Department
of Education (Board) to grant the petition of respondent Borough
of Woodcliff Lake (Woodcliff Lake) to pursue a referendum to
withdraw from the Pascack Valley Regional School District (the
Regional). We affirm.
We begin with a review of the authority pertinent to this
appeal. N.J.S.A. 18A:13-51 to -81 establish the process to
withdraw from a limited purpose regional school district, such as
the Regional. A constituent school district "may, by resolution,
apply to the county superintendent of schools to make an
investigation as to the advisability of withdrawal of such local
district from the regional district." N.J.S.A. 18A:13-51. Within
sixty days of the request, the executive county superintendent
must issue a report as to the advisability of the proposed
withdrawal and the effect upon the educational and financial
condition of the withdrawing district and the regional district,
or upon each of the remaining constituent districts. N.J.S.A.
1
We shall sometimes collectively refer to River Vale and Hillsdale
as appellants.
2 A-4084-13T2
18A:13-52. Prior to issuing the report, the executive county
superintendent may require the constituent school districts to
submit a feasibility study in order to determine the educational
and financial impact of the withdrawal. Ibid.
Within thirty days after the filing of the executive county
superintendent's report, the municipal governing body or the board
of education of the withdrawing district may petition the
Commissioner of Education for permission to submit the question
of withdrawal to the voters of all constituent districts. N.J.S.A.
18A:13-54. After the filing of any answers to the petition, the
Commissioner then submits the matter to a board of review to
determine "the effect of the proposed withdrawal . . . upon the
educational and financial condition of the withdrawing and the
remaining districts." N.J.S.A. 18A:13-56.
The basis for the Board's decision "is closely
circumscribed." In re Petition for Authorization to Conduct a
Referendum on the Dissolution of Union Cty. Sch. Dist. No. 1, 298
N.J. Super. 1, 7 (App. Div.), certif. denied, 149 N.J. 37 (1997).
The Board may only deny a petition to withdraw from a limited
purpose regional school district upon a finding that:
1. An excessive debt burden will be imposed
upon the remaining districts, or the
withdrawing district, or upon any of the
constituent districts in the event of a
dissolution;
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2. An efficient school system cannot be
maintained in the remaining districts or the
withdrawing district, or in any of the
constituent districts in the event of a
dissolution, without excessive costs;
3. Insufficient pupils will be left in the
remaining districts, or in any of the
constituent districts in the event of a
dissolution, to maintain a properly graded
school system; or
4. Any other reason, which it may deem to
be sufficient[.]
[N.J.S.A. 18A:13-56(b).]
See also In re Petition for Authorization to Conduct a Referendum
on the Withdrawal of North Haledon from the Passaic Cty. Manchester
Reg'l High Sch. Dist., 181 N.J. 161, 173 (2004). As we have
stated:
Although N.J.S.A. 18A:13-56(b)(1) mandates
that a petition be denied if an excessive debt
burden will result, the statute does not
define what constitutes an excessive debt
burden. N.J.S.A. 18A:24-1 defines certain
terms that pertain to a school district's
financial status. Included among those terms
is "borrowing margin," which establishes a
formula for the amount of money a school
district may borrow for capital expenditures,
and is related to the equalized value of real
estate of the municipality.
[In re Petition for Authorization to Conduct
a Referendum on the Withdrawal of Oradell from
the River Dell Reg'l. Sch. Dist., 406 N.J.
Super. 198, 207 (App. Div. 2009).]
4 A-4084-13T2
We further stated that the catchall phrase in N.J.S.A. 18A:13-
56(b)(4)
is limited to a reason of the same character
as the other three factors, namely, a
constitutional impediment to providing a
thorough and efficient free public education
for students in grades K-12. Thus, the Board
may only deny the petition if any of the first
three factors are present, or for a reason
that would conflict with the State's
obligation to provide a thorough and efficient
system of education.
[Ibid. (citations omitted).]
Any "less weighty reason would be an inadequate ground for
compelling constituent local school districts and municipalities
to preserve a regional school district against the will of a
majority of the voters in a majority of its local districts."
Union Cty., supra, 298 N.J. Super. at 8.
The record reveals that the Regional is comprised of four
constituent school districts: River Vale, Hillsdale, Woodcliff
Lake, and Montvale.2 Each constituent district operates an
independent PK-83 district and sends their grades 9-12 students to
one of the two high schools that comprise the Regional. Students
from River Vale and Hillsdale attend Pascack Valley High School;
2
Montvale did not participate in this appeal.
3
PK means pre-kindergarten.
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students from Woodcliff Lake and Montvale attend Pascack Hills
High School.
Based on an agreement between the constituent municipalities,
from its inception in 1951, the Regional's annual and special tax
levies were apportioned on a per-pupil basis. However, legislation
enacted in 1975 required regional school districts to apportion
tax levies based on equalized property values. L. 1975, c. 212,
§ 29. Because Woodcliff Lake and Montvale had higher property
values, they paid a higher share of the tax levies. Thereafter,
in 1993, the Legislature enacted N.J.S.A. 18A:13-23, which allowed
regional school districts to apportion the annual and special tax
levies based on per-pupil costs, equalized property values, or a
combination of the two; however, all constituent municipalities
in the regional school district had to agree.
In 2009, Woodcliff Lake retained experts to analyze various
options for educating its students and prepare a feasibility study.
Ultimately, the experts recommended that Woodcliff Lake pursue
withdrawal from, or dissolution of, the Regional in order to either
enter into a sending-receiving relationship with the Regional for
the education of its grades 9-12 students, or build its own high
6 A-4084-13T2
school and become a grade K-124 school district and resume full
responsibility for the education of its students.
Woodcliff Lake decided to pursue withdrawal. Because the tax
allocation method was the reason for this decision, Woodcliff Lake
first sought to modify the method, which required the agreement
of all four constituent municipalities. At the request of
Woodcliff Lake and Montvale, in September 2010, a special election
was held for the voters in the four constituent municipalities to
determine by referendum whether to change the tax apportionment
method from one based on an equalized property values to one based
on per-pupil costs. The referendum failed, and the tax
apportionment method remained unchanged.
In 2012, Woodcliff Lake and Montvale each passed resolutions
to apply to the Bergen County Executive County Superintendent of
Schools (Superintendent) for an investigation of the advisability
of their withdrawal from the Regional. Woodcliff Lake submitted
an updated feasibility study that analyzed the demographics of
each constituent district, including projected population growth
and birth-rate data related to the total functional capacities of
each district's capabilities to manage individualized education.
Using that data, the experts applied the Cohort-Survival Ratio
4
K means kindergarten.
7 A-4084-13T2
Method in projecting enrollments from each constituent district.
They also factored in the effects of any proposed housing growth
in each constituent district to the best of their ability, as
River Vale and Hillsdale declined to provide information necessary
to the analysis. The experts indicated that Woodcliff Lake's
enrollment for grades 9-12 would likely slowly decline in the
coming years, while Montvale's enrollment for the same grades
would likely increase by approximately sixty-five students, and
Hillsdale's enrollment would remain status quo. The experts stated
that if Woodcliff Lake and Montvale both withdrew from the Regional
and created a joint regional high school, that high school
enrollment would slowly increase yearly. In analyzing school
capacity, the experts stated that while certain PK-8 schools may
slightly exceed capacity in 2016-17, the capacity of the buildings
was not a fixed number and each constituent district should be
able to accommodate these students without the need for building
additions.
The experts analyzed six different alternative configurations
involving possible withdrawal from or dissolution of the Regional
and compared them to the status quo configuration. Regarding
educational impact, the experts stated that each constituent
district: had sufficient infrastructure to handle every
alternative configuration; would meet the state requirements for
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curriculum; and had substantial community support. The experts
noted that the two current high schools servicing the Regional
performed at extremely high levels, rivaling the best in the State.
They reached similar conclusions as to each constituent district's
PK-8 program, finding they exceeded the State-average in skills
and knowledge competency. The experts considered the four
constituent districts on a comprehensive level, concluding that
all were either high performing districts or successful districts
on many levels.
The experts found that the current configuration of all
constituent districts was working very well for their respective
students. While the current configuration was successful, the
experts determined that any of the other alternative
configurations would also succeed for each district, and cited
ample authority and examples for this conclusion. The experts
conceded that Woodcliff Lake's withdrawal from the Regional had
the potential to create some minor difficulties in maintaining the
articulation with the remaining districts. The experts also
concluded that the PK-12 regional proposals would offer slightly
more possibilities for program continuity. They found that none
of the alternative configurations would have a negative racial
impact.
9 A-4084-13T2
As for financial impact, the experts concluded that Woodcliff
Lake and Montvale disproportionately shared the tax burden on a
per-student basis. After setting forth their methodology and
analytical process, the experts concluded that except for
remaining status quo, Woodcliff Lake and Montvale residents would
save substantial tax monies under any of the alternative
configurations while Hillsdale and River Vale residents would pay
additional taxes. The experts found that if Woodcliff Lake
withdrew and entered into a sending-receiving relationship with
the Regional for the education of its grades 9-12 students,
Woodcliff Lake would experience savings of more than $3 million
annually. If Woodcliff Lake built its own high school, the experts
projected an annual savings of over $500,000, which would increase
following payment of the debt service associated with construction
of the high school.
The experts also determined that each constituent district
had ample borrowing margin to sustain necessary expenses, and
concluded that none of the alternative configurations would cause
significant financial harm to any of the districts. The experts
opined that while withdrawal would cause minor difficulties, the
other alternative configurations were all viable. From a financial
perspective, the experts recommended that Woodcliff Lake withdraw
from the Regional.
10 A-4084-13T2
Appellants submitted a joint feasibility report. Their
experts opined that the petition should be denied because: some
of the educational opportunities may be lost if the Regional broke
apart; a greater financial burden would be imposed upon appellants'
residents; and the petition ran counter to State policy encouraging
consolidation and shared services by and among municipalities.
Woodcliff Lake did not contest these assertions, but rather claimed
they did not provide a basis for rejecting the petition.
Appellants' experts also found the Regional was a high-
performing high school and concluded that potential tax savings
that Woodcliff Lake and Montvale may receive was de minimus. Based
on enrollment projections, the experts concluded that keeping the
Regional intact should be the objective. Regarding educational
impact, the experts concluded that the consequences included: the
need to set up a curriculum office; replication of certain
services; slight reductions in staff; renegotiated schedules;
reductions in course offerings; and reduction in professional
development opportunities. The experts estimated the total
educational expense related to reconfigurations was approximately
$2.2 million. Regarding security, the experts noted that the
schools would need independent security and new technology,
costing approximately $150,000. In addition, clubs and sports
would be more limited, would cost approximately $74,000, and
11 A-4084-13T2
technological expenses would be incurred, such as new email and
servers, costing $683,000. The experts also opined that
possibilities for managing enrollment arise, and costs associated
with managing a central office staff could exist, costing another
$1.2 million. Ability to share staff would also suffer, as would
the ease with which special services could be provided. School
transportation and district governance expenses would also
increase. In sum, the experts concluded that
operational/educational expenses would increase over $6 million
under the proposed withdrawal.
In terms of a financial impact, the experts did not dispute
that Montvale and Woodcliff Lake residents would experience
significant tax savings each year. Rather, they averred that
money should not be considered over the educational deprivation
withdrawal would cause.
The Superintendent issued a report, concluding it was not
advisable for Woodcliff Lake singly, or Woodcliff Lake and Montvale
jointly, to withdraw from the Regional, or to dissolve the
Regional. Thereafter, Woodcliff Lake filed a verified petition
with the Commissioner of Education and Board pursuant to N.J.S.A.
18A:13-56, requesting authorization to pursue a referendum for the
voters in each constituent municipality to determine whether
12 A-4084-13T2
Woodcliff Lake could withdraw from the Regional. Montvale did not
join in the petition; River Vale and Hillsdale opposed it.
Woodcliff Lake submitted a supplemental report, which largely
reiterated the findings made in the prior feasibility study. Its
experts added there would be a sufficient number of students for
Woodcliff Lake to operate a successful K-12 program if necessary,
as shown by a comparison with similarly situated Midland Park.
The experts also concluded that curriculum and management would
benefit from a stand-alone model, as the Woodcliff Lake school
district could more clearly direct grades K-12 coursework and more
directly manage the board of education. The experts also noted
that there may be a reduction in teaching staff for the Regional,
and the Regional may have to cut selected foreign languages and
may not be able to field a football team.
Appellants submitted a supplemental report, which reiterated
the financial analysis in their prior feasibility study. Their
experts also cited "community sentiment" and school size, along
with hypothetical logistical issues, as reasons for maintaining
the status quo.
Following public hearings and review of the entire record,
the Board granted the petition in a March 27, 2014 written opinion.
The Board did not find that an excessive debt burden would be
imposed on any of the remaining constituent districts or Woodcliff
13 A-4084-13T2
Lake by granting the petition. Rather, the Board found that while
the record presented the potential for a financial impact upon
Woodcliff Lake's withdrawal, there was no evidence it would
constitute an excessive debt burden.
The Board did not find evidence that an efficient school
system could not be maintained in the remaining constituent
districts or in Woodcliff Lake without excessive costs. The Board
observed that in the event Woodcliff Lake decided to build a new
high school and create a new K-12 structure, it demonstrated it
could do so without excessive costs.
Lastly, the Board determined that although student enrollment
of a proposed district would be small and would not provide the
same level of varied educational opportunities of a larger regional
district, it was within what was currently accepted as sufficient
to provide a thorough and efficient education. The Board noted
there would be sufficient pupils in both Woodcliff Lake and the
remaining constituent districts to maintain properly graded school
systems in each district.
On appeal, appellants argue that Woodcliff Lake should not
have been permitted to rely on the withdrawal statute, N.J.S.A.
18A:13-56, to change the tax allocation method. Appellants also
argue that the Board failed to articulate a valid legal,
14 A-4084-13T2
educational or financial basis to grant Woodcliff Lake's petition
to withdraw from the Regional.
Our role in reviewing an agency's decision is limited. In
re Stallworth, 208 N.J. 182, 194 (2011). "[A] 'strong presumption
of reasonableness attaches to [an agency decision].'" In re
Carroll, 339 N.J. Super. 429, 437 (App. Div.) (quoting In re Vey,
272 N.J. Super. 199, 205 (App. Div. 1993), aff'd, 135 N.J. 306
(1994)), certif. denied, 170 N.J. 85 (2001). "In order to reverse
an agency's judgment, [we] must find the agency's decision to be
'arbitrary, capricious, or unreasonable, or [] not supported by
substantial credible evidence in the record as a whole.'"
Stallworth, supra, 208 N.J. at 194 (quoting Henry v. Rahway State
Prison, 81 N.J. 571, 579-80 (1980)). As our Supreme Court has
instructed,
[i]n determining whether agency action is
arbitrary, capricious, or unreasonable, [we]
must examine:
(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.
[Ibid. (quoting In re Carter, 191 N.J. 474,
482-83 (2007)).]
15 A-4084-13T2
We "may not substitute [our] own judgment for the agency's,
even though [we] might have reached a different result." Ibid.
(quoting Carter, supra, 191 N.J. at 483). "This is particularly
true when the issue under review is directed to the agency's
special 'expertise and superior knowledge of a particular field.'"
Id. at 195 (quoting In re Hermann, 192 N.J. 19, 28 (2007)).
Furthermore, "[i]t is settled that [a]n administrative agency's
interpretation of statutes and regulations within its implementing
and enforcing responsibility is ordinarily entitled to our
deference." E.S. v. Div. of Med. Assistance & Health Servs., 412
N.J. Super. 340, 355 (App. Div. 2010) (second alteration in
original) (quoting Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J.
Super. 52, 56 (App. Div. 2001)). "Nevertheless, 'we are not bound
by the agency's legal opinions.'" A.B. v. Div. of Med. Assistance
& Health Servs., 407 N.J. Super. 330, 340 (App. Div.) (quoting
Levine v. State Dep't of Transp., 338 N.J. Super. 28, 32 (App.
Div. 2001)), certif. denied, 200 N.J. 210 (2009). "Statutory and
regulatory construction is a purely legal issue subject to de novo
review." Ibid. (citation omitted). The burden of proving that an
agency action is arbitrary, capricious, or unreasonable is on the
challenger. Bueno v. Bd. of Trustees of the Teachers' Pension and
Annuity Fund, 422 N.J. Super. 227, 234 (App. Div. 2011) (citing
16 A-4084-13T2
McGowan v. N.J. State Parole Bd., 347 N.J. Super. 544, 563 (App.
Div. 2002)).
Applying the above standards, we discern no reason to reverse
the Board's decision. The Board was not required to articulate a
valid legal, educational, or financial basis to grant Woodcliff
Lake's petition to withdraw from the Regional. Rather, the Board
had to determine whether any of the four criteria in N.J.S.A.
18A:13-56(b) were implicated by Woodcliff Lake's withdrawal. If
the Board found none of the four criteria were implicated by the
withdrawal, it had to grant the petition.
There was no evidence in this case establishing any of the
four criteria in N.J.S.A. 18A:13-56(b). There was no proof that
an excessive debt burden will be imposed on the remaining
constituent districts or Woodcliff Lake if Woodcliff Lake withdrew
from the Regional. Woodcliff Lake's experts opined that in all
alternative configurations they analyzed, each constituent
district had ample borrowing margin to sustain necessary expenses.
In concluding that none of the alternative configurations would
cause significant financial harm to any of the constituent
districts, the experts opined that Woodcliff Lake would experience
substantial tax savings. The experts concluded that Woodcliff
Lake may have to build a new high school; however, even in that
17 A-4084-13T2
circumstance, it would save Woodcliff Lake $500,000 annually,
exclusive of the land acquisition costs.
As for tax implications on residents of the constituent
districts, Woodcliff Lake's experts predicted that if Woodcliff
Lake withdrew and entered a sending-receiving relationship with
the Regional, its residents would save nearly $1500 per year in
taxes, while the residents of the remaining constituent districts
would see a yearly tax increase of less than $380. If Woodcliff
Lake withdrew entirely and built its own high school, the residents
in the remaining constituent districts would see yearly tax
increases of approximately $1100, but the Regional would
experience savings in other areas, such as teacher and
administrative salaries, of nearly $3 million annually, which
would help offset any expenses incurred. The experts concluded
that these savings would reduce the tax impact to less than $830
for the residents of the remaining constituent districts.
Appellants' experts opined that these reductions would reduce
the Regional's savings, may implicate added personnel costs, and
cause a reduction of staff. They also claimed that withdrawal
would cause "disproportionate impact upon taxpayers" in the
remaining constituent districts. They opined that the Regional
would lose $3.64 million in revenue, if Woodcliff Lake withdrew
and entered into a sending-receiving relationship.
18 A-4084-13T2
All experts presented the Board with a detailed estimate of
financial impact. They all agreed there would be substantial tax
savings for Woodcliff Lake residents and added costs somewhere
between $3 and $6 million annually. However, none of the experts
deemed these costs "excessive," and the record supports a finding
that they are not excessive.
There also is no evidence that an efficient school system
cannot be maintained without excessive costs in the remaining
constituent districts or in Woodcliff Lake if Woodcliff withdrew.
There will be, without doubt, some consequences to withdrawal,
especially in such a high performing district, to curriculum,
technology, clubs, and sports. However, each constituent district
has adequate facilities and are entirely competent to educate
their respective students. Woodcliff Lake's experts conducted a
thorough investigation, compiling large quantities of data,
interviewing leaders of the respective districts, and highlighting
test scores, all of which indicate that each remaining constituent
district could support 9-12 education either alone, or as a
remaining Regional, without Woodcliff Lake's participation. In
fact, the experts opined that each constituent district operating
as individual K-12 districts may even offer "slightly more
possibilities for articulation and program continuity."
19 A-4084-13T2
Lastly, none of the experts suggested that withdrawal of
Woodcliff Lake would leave an insufficient number of pupils in the
remaining constituent districts to maintain a properly graded
school system. The record also does not contain, nor have
appellants pointed to, any other reason why the Board should have
denied the petition.
We conclude that the record amply supports the Board's
decision to grant Woodcliff Lake's petition, and the decision is
not arbitrary, capricious, or unreasonable.
Affirmed.
20 A-4084-13T2