Court Opinion

ID: 4704163
Source: CourtListenerOpinion
Date Created: 2021-07-16 14:09:25.853943+00
Date Added: 2024-06-11T08:05:09.961047
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-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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                                         3
            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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                                        4
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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                                       6
                  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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