Pennsylvania Virtual Charter School v. PA Dept. of Ed. The Secretary of Ed., P.A. Rivera, (In his Official Capacity)

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pennsylvania Virtual Charter School; :
Pennsylvania Leadership Charter :
School; Agora Cyber Charter School; :
ASPIRA Bilingual Cyber Charter :
School, :
Petitioners :
:
v. :
:
Commonwealth of Pennsylvania, :
Department of Education; The Secretary :
of Education, Pedro A. Rivera, (In his :
Official Capacity), : No. 561 M.D. 2019
Respondents : Argued: September 16, 2020
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE J. ANDREW CROMPTON, Judge
OPINION BY
JUDGE COVEY FILED: December 21, 2020
Before this Court is the Department of Education’s (Department) and the
Secretary of Education Pedro A. Rivera’s (Secretary)1 (collectively, PDE)
Preliminary Objection in the nature of a Demurrer (Preliminary Objection) to
Pennsylvania Virtual Charter School, Pennsylvania Leadership Charter School,
Agora Cyber Charter School and ASPIRA Bilingual Cyber Charter School’s2
(collectively, Cyber Charter Schools) Petition for Review (Petition) against PDE
1
Noe Ortega is the current Acting Secretary of Education.
2
By December 13, 2019 Order, this Court discontinued ASPIRA Bilingual Cyber Charter
School from this action.
seeking a declaratory judgment and an injunction enjoining the Department from
collecting a fee from charter schools any time the Department processes a redirection
request under the Charter School Law (CSL)3 (Redirection Fee). After review, we
overrule the Preliminary Objection.
Background
On September 4, 2019, the Department notified the Cyber Charter
Schools by email that it would impose a fee on charter schools each time the
Department processed a redirection request.4 See Petition ¶27; see also Petition Ex.
B. The Department further announced that the fee would be imposed upon all
requests made for September 2019. See Petition ¶28; see also Petition Ex. B. The
Department did not state whether the fee would be charged before or after a
reconciliation was processed or paid to charter schools or was a condition for
payment of redirection for charter schools. See Petition ¶29; see also Petition Ex. B.
On October 3, 2019, the Cyber Charter Schools filed the Petition in this
Court’s original jurisdiction against PDE seeking a declaratory judgment and an
injunction enjoining the Department from collecting Redirection Fees. On October
10, 2019, the Cyber Charter Schools filed an Application for Preliminary Injunction.
On November 6, 2019, PDE filed the Preliminary Objection. On November 7, 2019,
3
Act of March 10, 1949, P.L. 30, as amended, added by Section 1 of the Act of June 19,
1997, P.L. 225, 24 P.S. §§ 17-1701-A - 17-1732-A.
4
On September 12, 2019, the Cyber Charter Schools responded to the announcement
stating, inter alia:
We are aware of no legal authority that permits the [Department] to
penalize the charter schools for a school district’s active and
deliberate violation of the laws that your office is required to correct.
So that we can continue to be in full compliance with the law, kindly
provide a response to this correspondence by no later than Friday,
September 20, 2019.
Petition Ex. C.
2
PDE filed an Answer to the Cyber Charter Schools’ Application for Preliminary
Injunction. On December 6, 2019, the Cyber Charter Schools filed their Answer to
PDE’s Preliminary Objection. By December 18, 2019 Order, this Court, upon all
parties’ agreement, held in abeyance the Redirection Fee implemented by the
Department as to all charter schools; directed the Department not to process, and to
make reasonable efforts to return any checks that had been issued to the Department
related to the Redirection Fee and not to issue further invoices for the Redirection Fee
payment; and stayed all discovery, pending decision on PDE’s Preliminary Objection
to the Petition.
Discussion
In ruling on preliminary objections, we must accept as true
all well-pleaded material allegations in the petition for
review, as well as all inferences reasonably deduced
therefrom. The Court need not accept as true conclusions
of law, unwarranted inferences from facts, argumentative
allegations, or expressions of opinion. In order to sustain
preliminary objections, it must appear with certainty that
the law will not permit recovery, and any doubt should be
resolved by a refusal to sustain them.
A preliminary objection in the nature of a demurrer admits
every well-pleaded fact in the [petition for review in the
nature of a] complaint and all inferences reasonably
deducible therefrom. It tests the legal sufficiency of the
challenged pleadings and will be sustained only in cases
where the pleader has clearly failed to state a claim for
which relief can be granted. When ruling on a demurrer, a
court must confine its analysis to the [petition for review in
the nature of a] complaint.
Torres v. Beard, 997 A.2d 1242, 1245 (Pa. Cmwlth. 2010) (emphasis added; citations
omitted). “[C]ourts reviewing preliminary objections may not only consider the facts
pled in the complaint, but also any documents or exhibits attached to it.” Allen v.
Dep’t of Corr., 103 A.3d 365, 369 (Pa. Cmwlth. 2014).
3
Controlling Law
Before addressing the issues, the Court sets forth the relevant law.
Section 1725-A(a) of the CSL mandates, in relevant part:
Funding for a charter school shall be provided in the
following manner:
....
(2) For non-special education students, the charter school
shall receive for each student enrolled no less than the
budgeted total expenditure per average daily
membership of the prior school year, as defined in
[S]ection 2501(20) [of the Public School Code of 1949
(School Code),5 24 P.S. § 25-2501(20)], minus the budgeted
expenditures of the district of residence for nonpublic
school programs; adult education programs;
community/junior college programs; student transportation
services; for special education programs; facilities
acquisition, construction and improvement services; and
other financing uses, including debt service and fund
transfers as provided in the Manual of Accounting and
Related Financial Procedures for Pennsylvania School
Systems established by the [D]epartment. This amount
shall be paid by the district of residence of each student.
(3) For special education students, the charter school shall
receive for each student enrolled the same funding as for
each non-special education student as provided in clause
(2), plus an additional amount determined by dividing the
district of residence’s total special education expenditure by
the product of multiplying the combined percentage of
[S]ection 2509.5(k) [of the School Code,6 24 P.S. § 25-
2509.5(k)] times the district of residence’s total average
daily membership for the prior school year. This amount
shall be paid by the district of residence of each student.
5
Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §§ 1-101 - 27-2702.
6
Added by Section 18 of the Act of August 5, 1991, P.L. 219.
4
....
(5) Payments shall be made to the charter school in twelve
(12) equal monthly payments, by the fifth day of each
month, within the operating school year. A student enrolled
in a charter school shall be included in the average daily
membership of the student’s district of residence for the
purpose of providing basic education funding payments and
special education funding pursuant to Article XXV. If a
school district fails to make a payment to a charter school as
prescribed in this clause, the [S]ecretary shall deduct the
estimated amount, as documented by the charter school,
from any and all [s]tate payments made to the district after
receipt of documentation from the charter school. No later
than October 1 of each year, a charter school shall submit to
the school district of residence of each student final
documentation of payment to be made based on the average
daily membership for the students enrolled in the charter
school from the school district for the previous school year.
If a school district fails to make payment to the charter
school, the [S]ecretary shall deduct and pay the amount
as documented by the charter school from any and all
[s]tate payments made to the district after receipt of
documentation from the charter school from the
appropriations for the fiscal year in which the final
documentation of payment was submitted to the school
district of residence.
24 P.S. § 17-1725-A(a) (emphasis added).
Section 1 of The Administrative Code7 provides:
The [Secretary8] may fix and collect reasonable fees for
certain services rendered to persons or agencies other
than departments of the [s]tate government by the
[Department9] in the distribution of lantern slides and
films, in furnishing certified copies, or photographic or
7
Act of April 2, 1925, P.L. 122, as amended, 71 P.S. § 1011.
8
Reference to “Superintendent of Public Instruction” is deemed to be a reference to
Secretary of Education, pursuant to Section 3(b) of the Act of July 23, 1969, P.L. 181.
9
Reference to “Department of Public Instruction” is deemed to be a reference to Department
of Education, pursuant to Section 3(a) of the Act of July 23, 1969, P.L. 181.
5
photostat copies, in the distribution of printed matter issued
by the [Department], in holding examinations for pre-
professional certification, and for other services rendered
by such department, and may alter such fees from time to
time as may be desirable: Provided, That the charge for
such services shall not be in excess of the actual cost of
such services: And provided further, That all fees
collected . . . shall be paid into the State Treasury as
part of the general fund.
71 P.S. § 1011 (emphasis added).
Section 1732-A of the CSL states:
(a) Charter schools shall be subject to the following:
(1) [Specified] Sections [of the School Code]
[The Pennsylvania Fair Educational Opportunities Act.10]
[An act providing for the use of eye protective devices by
persons engaged in hazardous activities or exposed to
known dangers in schools, colleges and universities.11]
Section 4 of . . . An act providing scholarships and
providing funds to secure [f]ederal funds for qualified
students of the Commonwealth of Pennsylvania who need
financial assistance to attend post[-]secondary institutions
of higher learning, making an appropriation, and providing
for the administration of this act.[12]
[An act relating to drugs and alcohol and their abuse,
providing for projects and programs and grants to
educational agencies, other public or private agencies,
institutions or organizations.13]
[The Antihazing Law.14]
(b) Charter schools shall be subject to [specified] provisions
of [the Board of Education’s Regulations.]
10
Act of July 17, 1961, P.L. 776, as amended, 24 P.S. §§ 5001-5010.
11
Act of July 19, 1965, P.L. 215.
12
Act of January 25, 1966, P.L. 1546.
13
Act of July 12, 1972, P.L. 765.
14
Act of December 15, 1986, P.L. 1595.
6
(c)(1) The [S]ecretary may promulgate additional
regulations relating to charter schools.
(2) The [S]ecretary shall have the authority and the
responsibility to ensure that charter schools comply with
[f]ederal laws and regulations governing children with
disabilities. The [S]ecretary shall promulgate regulations to
implement this provision.
24 P.S. § 17-1732-A.
Count I
A. Whether the Redirection Fee Conflicts with the CSL
In its Preliminary Objection, PDE first argues that the Cyber Charter
Schools have not sufficiently pled a claim for declaratory judgment (Count I).
Specifically, PDE contends the Redirection Fee is plainly authorized pursuant to
Section 1 of The Administrative Code. PDE asserts that Section 1 of The
Administrative Code grants the Department broad authority to assess reasonable fees
for the services it renders when the Department determines in its discretion that
certain people or organizations are benefitting unfairly from its services at the broader
public’s expense. PDE further avers that nothing in the CSL even purports to limit
the authority granted to the Department under Section 1 of The Administrative Code.
Thus, PDE claims that the Cyber Charter Schools have failed to allege a violation of
the CSL.
The Cyber Charter Schools rejoin that the Redirection Fee is inconsistent
with the CSL because it is not specifically authorized by the CSL, and it results in the
charter schools receiving less money than the statutorily authorized amounts through
no fault of their own. Further, the Cyber Charter Schools contend that the
Department’s stated authority for imposing the Redirection Fee, Section 1 of The
7
Administrative Code, does not apply because the Redirection Fee does not fall within
its provisions.15
Section 1725-A(a)(2) of the CSL mandates that for “non-special
education students,” charter schools “shall receive for each student enrolled no less
than the budgeted total expenditure per average daily membership of the prior school
year.” 24 P.S. § 17-1725-A(a)(2) (emphasis added); see also 24 P.S. § 17-1725-
A(a)(3) (for “special education students” charter schools “shall receive for each
student enrolled no less than the budgeted total expenditure per average daily
membership of the prior school year[,]” plus an additional sum.) (emphasis added).
The General Assembly stated in Section 1725-A(a)(5) of the CSL that, if the school
district fails to make a payment, PDE “shall deduct [from state payments made to the
school district] and pay [to the charter school] the amount as documented by the
charter school[,]” thereby ensuring that the charter school “receive[s] . . . no less”
than the amount owed. 24 P.S. § 17-1725-A(a)(5) (emphasis added). As a result of
the Redirection Fee, however, for each school district that does not pay a charter
school and the charter school seeks payment for services rendered, the charter school
will receive $15.00 less than the total amount documented and requested by the
charter school from PDE for that month.16 This decreased amount received appears
to be contrary to the CSL’s plain language.
15
Specifically, the Cyber Charter Schools maintain that because Section 1 of The
Administrative Code is not specified in Section 1732-A of the CSL, it does not apply to charter
schools. However, because Section 1732-A of the CSL appears to include only education-related
statutes and regulations, this Court cannot hold that it is entirely exclusive of all other statutes,
including but not limited to, Section 1 of The Administrative Code.
16
Should all 500 school districts refuse to directly pay cyber charter schools, the invoices
that would then be sent to PDE could potentially be 500 (districts) x 14 (cyber charter schools) x
$15.00 (per redirection) x 12 (months) = $1,260,000.00 (per year in fees to cyber charter schools
that would go to PDE each year). See Cyber Charter Schools’ Br. at 18 n.2; see also 24 P.S. § 17-
1725-A(a)(5) (“Payments shall be made to the charter school in twelve (12) equal monthly
payments, by the fifth day of each month, within the operating school year.”).
8
Further, Section 1 of The Administrative Code states that the Secretary
“may fix and collect reasonable fees for certain services rendered[.]” 71 P.S. § 1011
(emphasis added). However,
‘[t]here is no air in Section 1725-A(a)(5) [of the CSL]. . . .
There is no discretion to exercise . . . .’ Chester [Cmty.
Charter Sch. v. Dep’t of Educ.], 996 A.2d [68,] 77-78 [(Pa.
Cmwlth. 2010) (Chester I)] (emphasis added). Rather,
‘[t]he Department has a mandatory, non-discretionary
duty to withhold subsidies to a school district based upon
the estimated amount documented by the charter school.’
Id. at 78 (emphasis added).
Kipp Phila. Charter Sch. v. Dep’t of Educ., 161 A.3d 430, 438 (Pa. Cmwlth. 2017),
aff’d, 185 A.3d 984 (Pa. 2018). The list of services articulated in Section 1 of The
Administrative Code are discretionary in nature, whereas the Department’s statutory
mandate to redirect funds from the school district to a charter school which the
district has not paid for services rendered is mandatory and remedial in nature.
Indeed, Section 1725-A(a)(5) of the CSL provides “the exclusive remedy for
underpayment(s) to a charter school[.]” Chester Cmty. Charter Sch. v. Dep’t of
Educ., 44 A.3d 715, 722 (Pa. Cmwlth. 2012) (Chester II) (emphasis added). Clearly,
fulfilling a “mandatory non-discretionary duty,” Kipp, 161 A.3d at 438 (quoting
Chester I, 996 A.2d at 78), as an “exclusive remedy,” Chester II, 44 A.3d at 722,
cannot be equated to the services specified in Section 1 of The Administrative Code,
i.e., “the distribution of lantern slides and films, [] furnishing certified copies, or
photographic or photostat copies, [] the distribution of printed matter issued by the
[Department.]” 71 P.S. § 1011. Accordingly, it is not clear as the Department asserts
that Section 1 of The Administrative Code authorizes the Redirection Fee.
9
B. Whether the Redirection Fee Violates the Separation of Powers Doctrine
PDE contends that the Redirection Fee does not violate the separation of
powers doctrine because the General Assembly, not the Department, drafted and
adopted Section 1 of The Administrative Code. The Cyber Charter Schools rejoin
that the Redirection Fee violates the separation of powers doctrine because the
General Assembly did not grant the Department statutory authority to charge a
Redirection Fee for simply fulfilling its mandatory duties to redirect funds when a
school district does not pay a charter school.
The Pennsylvania Supreme Court has explained:
The rationale underlying this separation of powers is that it
prevents one branch of government from exercising,
infringing upon, or usurping the powers of the other two
branches. Thus, to ‘avert the danger inherent in the
concentration of power in any single branch or body,’ no
branch may exercise the functions delegated to another
branch.
Renner v. Court of Common Pleas of Lehigh Cnty., 234 A.3d 411, 419 (Pa. 2020)
(quoting Jefferson Cnty. Court Appointed Emps. Ass’n v. Pa. Lab. Rels. Bd., 985
A.2d 697, 706-07 (Pa. 2009)).
By drafting Section 1 of The Administrative Code, the General
Assembly authorized the charging of fees for certain services rendered. As explained
above, such services do not include fulfilling a mandatory, non-discretionary duty in
response to an exclusive remedy. See Kipp; Chester II. Because it appears that there
is no authority for the Department’s Redirection Fee, it is not clear that the
Department’s imposition of the Redirection Fee is not an usurpation and infringement
upon the legislative branch, and thus not a violation of the separation of powers
doctrine.
10
C. Whether the Department Abused its Discretion
PDE asserts that the Department’s assessment of the Redirection Fee is
not an abuse of discretion. In addition, PDE avers that the Redirection Fee’s purpose
is to recoup the costs of thousands of staff time hours the Department incurs from
implementing the CSL when it redirects payments from school districts to charter
schools, and the Cyber Charter Schools do not allege any facts that contradict the
patently reasonable basis for the Redirection Fee.
The Cyber Charter Schools respond that the Redirection Fee is an abuse
of discretion because the Department has chosen to impose the Redirection Fee on
the charter schools, and not the school districts whose failure to pay the charter
schools results in the charter schools needing to request the funds’ redirection.17
‘[A]n abuse of discretion occurs when the course pursued
represents not merely an error of judgment, but where the
judgment is manifestly unreasonable or where the law is
not applied or where the record shows that the action is a
result of partiality, prejudice, bias or ill will.’ B.B. v.
Dep[’t] of Pub[.] Welfare, 118 A.3d 482, 485 (Pa. Cmwlth.
2015) (internal quotation marks omitted)[.]
Pa. Tpk. Comm’n v. Elec. Transaction Consultants Corp., 230 A.3d 548, 560-61 (Pa.
Cmwlth. 2020) (emphasis added).
This Court has explained that it was “the intention of the legislature to
place the burden on the school district to fund charter schools in the correct amount.”
Chester I, 996 A.2d at 78. Further,
[i]t is clear . . . that as between the school district and the
charter school, the legislature has decided that more harm
will befall a charter school that is not paid timely and
accurately than upon a school district that may experience a
17
During oral argument, PDE’s counsel acknowledged that the Department could not
impose the Redirection Fee on a school district because it had no such authority.
11
delay in the receipt of the state subsidy to which it is
entitled.
Id.
Pursuant to Section 1725-A(a)(5) of the CSL, “[i]f a school district fails
to make payment to the charter school, the [S]ecretary shall deduct and pay the
amount as documented by the charter school from any and all [s]tate payments made
to the district . . . .” 24 P.S. § 17-1725-A(a). Thus, the charter schools may not avoid
the Redirection Fee if they wish to be paid. The school districts, however, can avoid
the costs the Department seeks to recoup through the Redirection Fee by paying the
charter schools their statutorily mandated funds. Because it appears that the General
Assembly’s intent was for “the burden” to be placed on school districts “to fund []
charter schools,” Chester I, 996 A.2d at 78, and that “more harm will befall a charter
school . . . than [] a school district” to go without funds for any time period, id., it
may be “manifestly unreasonable” for the Department to charge the charter schools a
fee for requesting payment for services rendered, rather than the school districts,
which can, as the legislature determined, more aptly afford such fees, and more
importantly, avoid the Redirection Fee from the outset. Pa. Tpk. Comm’n, 230 A.3d
at 560 (quoting B.B., 118 A.3d at 485). Accordingly, it is not clear that the
Department’s Redirection Fee is not an abuse of discretion.
D. Whether the Redirection Fee is Unconstitutionally Vague
PDE maintains that the Redirection Fee is not unconstitutionally vague
because the Department’s announcement of the Redirection Fee clearly describes the
conduct that would cause the Department to assess the Redirection Fee.
The Cyber Charter Schools maintain that the Redirection Fee is
unconstitutionally vague because there are numerous questions left unanswered by
the Department’s new fee policy, including when the Redirection Fee will be
12
enforced, the consequences if the charter school refuses to pay the Redirection Fee,
and whether the Redirection Fee may be arbitrarily increased in the future without
notice to the charter schools.
This Court has declared: “A statute or regulation is unconstitutionally
vague when its terms are not sufficiently specific to inform those who are subject to it
what conduct on their part will render them liable to its penalties.” Nelson v. State
Bd. of Veterinary Med., 863 A.2d 129, 138 (Pa. Cmwlth. 2004). Here, the “conduct”
in question - seeking payment for services rendered within the stated time period - is
statutorily mandated. Id. Thus, the Department assesses the Cyber Charter Schools a
fee merely for complying with the CSL. Because other than putting the Cyber
Charter Schools on notice that they are now subject to the Redirection Fee, it appears
that the Department has provided no other pertinent information, such as when the
Redirection Fee is due and/or what the penalty is for failure to pay it. Accordingly,
given that the Department may not have informed the Cyber Charter Schools, inter
alia, when the Redirection Fee is due and what “penalties” they are liable for if
payment is late or they do not pay it, it is not clear that the Redirection Fee is not
“unconstitutionally vague.” Id.E. Conclusion
Because it appears that Section 1 of The Administrative Code does not
authorize the Redirection Fee,
[i]t is certainly not clear and free from doubt, under both
[the CSL and The Administrative Code], that the law will
not sustain [the Cyber Charter Schools’] claim for
declaratory relief. Therefore, [PDE’s] [P]reliminary
[O]bjection[] in the nature of a demurrer to [the Cyber
Charter Schools’] claim for declaratory relief must be
overruled.
P.J.S. v. Pa. State Ethics Comm’n, 669 A.2d 1105, 1112 (Pa. Cmwlth. 1996).
13
Count II
With respect to Count II, in its Preliminary Objection, PDE does not
specifically argue that the Cyber Charter Schools have not sufficiently pled a claim
for injunctive relief. Rather, PDE contends that because the Cyber Charter Schools
do not state a viable claim for relief, both counts should be dismissed. The Cyber
Charter Schools rejoin that they have asserted a viable claim for injunctive relief on
all of the grounds addressed above: the Department’s Redirection Fee is inconsistent
with the CSL; it violates the separation of powers doctrine; it is an abuse of
discretion; and it is unconstitutionally vague and invalid.
The law is well settled:
An applicant seeking mandatory injunctive relief must
establish the following elements: (1) irreparable harm will
occur that is not compensable by money damages; (2)
greater injury will result from the denial of the injunction
than by granting the injunction; (3) the injunction will
restore the status quo between the parties; and (4) the party
seeking relief has a clear right to relief in an actionable
claim.
Kipp, 161 A.3d at 442 (quoting Wyland v. W. Shore Sch. Dist., 52 A.3d 572, 582 (Pa.
Cmwlth. 2012) (citations omitted)). “Ultimately, the grant or denial of a permanent
injunction will turn on whether . . . the party seeking the injunction established a clear
right to relief as a matter of law.” City of Phila. v. Shih Tai Pien, 224 A.3d 71, 78 n.3
(Pa. Cmwlth. 2019) (quoting Buffalo Twp. v. Jones, 813 A.2d 659, 664 n.4 (Pa.
2002)). As explained above, this Court concludes that the Cyber Charter Schools
have sufficiently pled a viable claim for relief. “Thus, we overrule [PDE’s]
[P]reliminary [O]bjection[] to [the Cyber Charter School’s] claim for a permanent
injunction, because it is not clear that [the Cyber Charter Schools] will be unable to
establish facts sufficient to justify injunctive relief.” P.J.S., 669 A.2d at 1113.
14
Conclusion
For all of the above reasons, PDE’s Preliminary Objection is overruled.
___________________________
ANNE E. COVEY, Judge
15
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pennsylvania Virtual Charter School; :
Pennsylvania Leadership Charter :
School; Agora Cyber Charter School; :
ASPIRA Bilingual Cyber Charter :
School, :
Petitioners :
:
v. :
:
Commonwealth of Pennsylvania, :
Department of Education; The Secretary :
of Education, Pedro A. Rivera, (In his :
Official Capacity), : No. 561 M.D. 2019
Respondents :
ORDER
AND NOW, this 21st day of December, 2020, the Department of
Education’s (Department) and the Department Secretary Pedro A. Rivera’s
(collectively, PDE) Preliminary Objection in the nature of a Demurrer is
OVERRULED. PDE is directed to file an answer to Pennsylvania Virtual Charter
School, Pennsylvania Leadership Charter School, and Agora Cyber Charter School’s
Petition for Review within 30 days of the date of this Order.
___________________________
ANNE E. COVEY, Judge