Township of Wantage, Sussex County, et. al. v. New Jersey Department of Education, et al., 4/13/2021, (#83-21)

OCR transcription for search; preserved printed pages are authoritative

83-21

New Jersey Commissioner of Education

Decision

Township of Wantage, Sussex County, Borough of
Sussex, Sussex County, Borough of Branchville,
Sussex County, Township of Lafayette,

Sussex County, Ronald Bassani, Edward Meyer,
Anthony Frato, Sr., and Richard Hughes,

Petitioners,

V.
New Jersey Department of Education, Board of
of the High Point Regional School District,
Sussex County, and Board of Education of the

Township of Montague, Sussex County,

Respondents.

Synopsis

The petitioning municipalities and taxpayers sought relief in regard to the 2020-2021 budget of the High
Point Regional School District (HPRSD), arguing, inter alia, that the meaning of the pertinent statute —
N.J.S.A. 18A:7F-39(e) — is uncertain, and that the tax rate for petitioners and all other taxpayers in the
district for the 2020-2021 budget year was improperly inflated as a result. The respondents contended that
the language of N.J.S.A. 18A:7F-39(e) is clear and unambiguous, and that the development of HPRSD’s
budget for the 2020-2021 year comported with the statute.

The ALJ found, inter alia, that: the operative statute is N.J.S.A. 18A:7F-39(e), which allows HPRSD to
add to its adjusted tax levy, in any one of the next three succeeding budget years, the amount of the
difference between the maximum allowable amount to be raised by taxation for the current school budget
year and the actual amount to be raised by taxation for the current school budget year; the First Amended
Petition in this matter reflects that HPRSD added to one of the next three succeeding budget years (2020-
2021) the amount of the difference between the maximum allowable amount and the actual amount to be
raised; while HPRSD’s actions resulted in an increase for 2020-2021 that was higher that 2%, its actions
resulted in lower percentages in the preceding years; the language of V.J.S.A. 18A:7F-39(e) is clear and
unambiguous; and the respondents did not act in an arbitrary, capricious or unreasonable manner in
developing HPRSD’s 2020-2021 budget. As such, the ALJ concluded that petitioners’ remedy in this
matter is political, not legal, and dismissed the petition.

Upon review, the Commissioner concurred with the ALJ that the petition must be dismissed. Accordingly,
the Initial Decision of the Office of Administrative Law was adopted as the final decision in this matter.
The petition was dismissed.

This synopsis is not part of the Commissioner’s decision. It has been prepared for the convenience of the reader. It
has been neither reviewed nor approved by the Commissioner.

April 13, 2021

2
OAL Dkt. No. EDU 05439-20
Agency Dkt. No. 129-6/20
New Jersey Commissioner of Education
Final Decision
Township of Wantage, Sussex County,
Borough of Sussex, Sussex County,
Borough of Branchville, Sussex County,
Township of Lafayette, Sussex County,
Ronald Bassani, Edward Meyer,
Anthony Frato, Sr., and Richard Hughes,
Petitioners,
v.
New Jersey Department of Education,
Board of Education of the High Point
Regional School District, Sussex County,
and Board of Education of the Township
of Montague, Sussex County,
Respondents.
The record of this matter and the Initial Decision of the Office of Administrative
Law (OAL) have been reviewed. The parties did not file exceptions.1
1 However, following the issuance of the Initial Decision, petitioners submitted correspondence to the Commissioner
attempting to withdraw the petition of appeal. There is no provision in the applicable statutes or regulations permitting
the withdrawal of a petition of appeal following the issuance of an Initial Decision.

3
Upon review, the Commissioner concurs with the Administrative Law Judge (ALJ)
that the petition of appeal should be dismissed. Accordingly, the Initial Decision of the OAL is
adopted as the final decision in this matter, and the petition of appeal is hereby dismissed.
IT IS SO ORDERED.2
ACTING COMMISSIONER OF EDUCATION
Date of Decision: 	April 13, 2021
Date of Mailing: 	April 13, 2021
2 This decision may be appealed to the Appellate Division of the Superior Court pursuant to N.J.S.A. 18A:6-
9.1. Under N.J.Ct.R. 2:4-1(b), a notice of appeal must be filed with the Appellate Division within 45 days from the
date of mailing of this decision.

ila

State of New Jersey
OFFICE OF ADMINISTRATIVE LAW

INITIAL DECISION
OAL DKT. NO. EDU 05439-20
AGENCY DKT. NO. 129-6/20

TOWNSHIP OF WANTAGE, SUSSEX COUNTY,
BOROUGH OF SUSSEX, SUSSEX COUNTY,
BOROUGH OF BRANCHVILLE, SUSSEX
COUNTY, TOWNSHIP OF LAFAYETTE, SUSSEX
COUNTY, RONALD SBASSANI, EDWARD
MEYER, ANTHONY FRATO, SR., AND RICHARD
HUGHES,

Petitioners,

v.
NEW JERSEY DEPARTMENT OF EDUCATION,
BOARD OF EDUCATION OF THE HIGH POINT
REGIONAL HIGH SCHOOL DISTRICT, SUSSEX
COUNTY, AND BOARD OF EDUCATION OF THE
TOWNSHIP OF MONTAGUE, SUSSEX COUNTY,

Respondents.

Stephen J. Edelstein, Esq., for petitioners (Weiner Law Group, attorneys)

David Kalisky, Deputy Attorney General, for respondent New Jersey Department
of Education (Gurbir S. Grewal, Attorney General of New Jersey, attorney)

New Jersey is an Equal Opportunity Employer

OAL DKT. NO. EDU 05439-20

Marc G. Mucciolo, Esq., for respondent High Point Regional High School District
Board of Education (Methfessel & Werbel, attorneys)

Sean M. McBratnie, Esq., for respondent Montague Township Board of Education

(Comegno Law Group, attorneys)
Record Closed: November 9, 2020 Decided: March 1, 2021
BEFORE KELLY J. KIRK, ALJ:

STATEMENT OF THE CASE

Petitioning municipalities and taxpayers seek relief regarding the 2020-2021
budget of High Point Regional High School District (HPRHSD).

PROCEDURAL HISTORY

On June 10, 2020, petitioners Township of Wantage, Sussex County (Wantage
Township), Borough of Sussex, Sussex County (Sussex Borough), Borough of
Branchville, Sussex County (Branchville Borough), Township of Lafayette, Sussex
County (Lafayette Township), Ronald Bassani, Edward Meyer, Anthony Frato, Sr., and
Richard Hughes filed with the New Jersey Department of Education a Verified Petition of
Appeal (Verified Petition) and a motion for emergent relief, accompanied by a letter brief.

The Department of Education (Department) transmitted the case to the Office of
Administrative Law (OAL) under the Administrative Procedure Act, N.J.S.A. 52:14B-1 to
-15, and the act establishing the office, N.J.S.A. 52:14F-1 to -23, for a hearing under the
Uniform Administrative Procedure Rules, N.J.A.C. 1:1-1.1 to -21.6, and the rules of
procedure established by the Department of Education to hear and decide controversies
and disputes arising under school laws, N.J.A.C. 6A:3-1.1 to -1.17. Jurisdiction is

OAL DKT. NO. EDU 05439-20
conferred under N.J.S.A. 18A:6-9. The case was filed at the Office of Administrative Law (OAL) on June 11, 2020.
On June 23, 2020, HPRHSD filed a letter brief and the Department filed a letter brief and Certification of Neil Cramer in opposition to petitioners' motion for emergent relief. Montague Township did not submit opposition. On June 23, 2020, petitioners filed a reply letter brief, accompanied by the Certification of Stephen Edelstein with four exhibits, and Certification of Dieter Lerch with two exhibits.
On June 23, 2020, petitioners also filed a motion for leave to take the deposition of HPRHSD superintendent Scott Ripley and the deposition of any expert who might issue a report on behalf of HPRHSD, accompanied by the Certification of Stephen Edelstein.
Oral argument was held on the motion for emergent relief on June 24, 2020. By order dated June 26, 2020, the motion for emergent relief was denied.1
On July 2, 2020, the Department filed a motion to dismiss, accompanied by a letter brief.
On July 3, 2020, HPRHSD filed its Answer to the Verified Petition.
During a July 8, 2020, telephone conference petitioners requested to file a motion to amend the petition, so it was determined that the Department's motion to dismiss would be held in abeyance until the petitioners' motion to amend was decided.
On July 13, 2020, petitioners filed a motion to amend the petition, accompanied by the proposed First Amended Verified Petition of Appeal, and Certification of Stephen Edelstein, Esq. On July 30, 2020, the Department filed a letter brief in opposition to the motion to amend, and HPRHSD filed a letter brief in opposition to the motion to amend
1 The Order denying emergent relief was adopted by the Department on August 7, 2020.
3

OAL DKT. NO. EDU 05439-20
and in opposition to the motion for leave to take the deposition of superintendent Scott Ripley. On August 6, 2020, petitioners filed a letter brief in reply to the Department's and HPRHSD's opposition.
On August 19, 2020, petitioners filed a motion to compel discovery from HPRHSD and the Commissioner of Education relative to demands served on July 6, 2020, accompanied by a letter brief and Certification of Stephen Edelstein, Esq.
By Order dated September 1, 2020, petitioners' motion to amend was granted, the Department's July 2, 2020, motion to dismiss was denied as moot, petitioners' motion for leave to take depositions was denied, and petitioners' motion to compel discovery was denied. Petitioners were directed to file the proposed First Amended Verified Petition of Appeal2 and respondents were directed file answers to the First Amended Verified Petition of Appeal, unless a motion to dismiss was re-filed/filed by respondent(s) prior thereto.
Petitioners filed the First Amended Verified Petition of Appeal on September 3, 2020. The First Amended Verified Petition of Appeal (First Amended Petition) states, in part, the following:
Petitioners, municipalities located in Sussex County, New Jersey, and taxpayers located in Sussex County, New Jersey, state for their First Amended Petition of Appeal as follows:
JURISDICTION
1. Pursuant to N.J.S.A. 18:6-9, the Commissioner of Education, as the chief officer of the New Jersey Department of Education, has jurisdiction to hear this matter and all ancillary issues. In addition, and as a separate cause of action, the Petitioners seek a declaratory ruling pursuant to N.J.A.C. 6A:3-2.1 that N.J.S.A. 18A:7F-39 shall be construed so as to permit school districts to use, as banked cap, the unused portion of permissible increases for three succeeding
2 Exhibit A to petitioners' motion to amend.
4

OAL DKT. NO. EDU 05439-20

years, and not to include as banked cap any tax decreases
during the same time period.

BACKGROUND

2. The High Point Regional High School District
(‘HPRHSD") is located in Sussex County, New Jersey and is
comprised of five Sussex County communities: Wantage
Township (“Wantage”), Sussex Borough, Branchville Borough
(“Branchville”), Lafayette Township (‘Lafayette’), and
Frankford Township (“Frankford”). Four of the five constituent
communities, as well as a Mayor, former Mayor, or committee
member from each of the four, are Petitioners in this action.

3. This action is brought to obtain declaratory and other
relief from the extraordinary and economically crushing
burden on the Petitioners and their citizens of a 14%
($2,000,000) increase in local taxes imposed by the HPRHSD
at the same time as an extreme financial crisis and
unprecedented unemployment. This budget was approved by
the HPRHSD on April 28, 2020, well after the impact of the
COVID-19 crisis was well known and after Governor Murphy's
first twenty-five (25) COVID-19-related Executive Orders
(Nos. 104-129).

4. The Petitioner Ronald Bassani is a resident of,
taxpayer in, and elected committee member of Wantage. He
brings this action as an individual.

5. The Petitioner Edward Meyer is a resident of, taxpayer
in, and Mayor of Sussex Borough. He brings this action as an
individual.

6. The Petitioner Anthony Frato, Sr., is a resident of,
taxpayer in, and Mayor of Branchville. He brings this action
as an individual.

7. The Petitioner Richard Hughes is a resident of,
taxpayer in, and former Mayor of Lafayette. He brings this
action as an individual.

8. Respondent Dr. Lamont Repollet (“Dr. Repollet” or
“Commissioner’) is the Commissioner of Education for the
State of New Jersey (“DOE”). In his capacity as
Commissioner of Education, Dr. Repollet serves as the head
of the New Jersey Department of Education, which reviews
and approves all school district annual budgets.

OAL DKT. NO. EDU 05439-20

9. Montague Township Schoo! District (“Montague”) is a
K-8 school district located in Montague, New Jersey.
Montague has a send-receive relationship with HPRHSD and
pays tuition on a per student basis. Although no relief is
sought against Montague, it is named because it may be
impacted by the outcome of this Verified Petition and,
therefore, may wish to be heard.

10. Sussex County has suffered from COVID-19
disproportionately to the State of New Jersey. According to
the Sussex County Division of Health, the death rate from
coronavirus in the County as of the beginning of May was
12%, based on known infections, compared to a Statewide
average of 6.25%.

11. Aid to Sussex County has been less than that to other
New Jersey counties. As of April, of $82,202,575 in federal
grants to New Jersey from the federal government for COVID-
19 relief, only 17 counties will receive funds, Four counties—
Sussex, Warren, Hunterdon, and Salem—received nothing.

12. The school budget approval process in New Jersey is
well established for Type !| school districts. For those Type II
Districts which hold school elections in April, the budget is
submitted to the voters for approval at the same time as the
election of board members. For those Type II districts which
hold elections in November, the budget is not submitted to the
voters for approval.

13. | HPRHSD is a Type II school district with November
elections.

14. Instead of placing the proposed budget on a public
ballot, Type jl school districts with November elections follow
a budget approval process provided for by statute, as follows:

a. First, the District must develop and adopt a
Tentative Budget, which is submitted to the Executive
County Superintendent for Review. N.J.S.A. 18A:7F-5
and 7F-6, This year, the due date for that action was
March 20, 2020,

b. Next, the Executive County Superintendent
must review and approve the budget in time for it to be
publicly advertised. See N.J.A.C. 6A:23A-9.1; N.JLS.A.

OAL DKT. NO. EDU 05439-20

19A:22-10, 11, and 12. This year, the due date for that
action was April 20, 2020.

Cc. Following administrative approval and
advertising, there must be a public hearing on the
budget. N.J.S.A. 18A:22-10. This year, the earliest
date for such a public hearing was April 24, 2020 and
the latest date was May 7, 2020.

d. The deadline for Board of Education adoption of
the budget this year was May 14, 2020. NJS.A.
18A:22-32.

15. The HPRHSD approved its Tentative Budget on March
17, 2020.

16. The HPRHSD advertised its budget on April 24, 2020,
which was a Friday.

17. On Tuesday, April 28, 2020—only four days after it
advertised the budget and more than two weeks before it was
required to act—the HPRHSD conducted the public hearing
and approved the budget. The meeting was virtual, and that
fact, exacerbated by the unnecessary acceleration by the
HPRHSD of the budget approval process by sixteen (16)
days, essentially eliminated public scrutiny and participation.

18. At the April 28 public hearing, HPRHSD
Superintendent Ripley reviewed the budget, with the aid of a
power point presentation.

19. During his presentation, Superintendent Ripley
repeatedly stressed that the Board of Education had been
“fiscally responsible” over the past three years and that the
14% tax increase was needed to offset three years of State
aid decreases.

20. In fact, neither of those statements is accurate.
Instead, the HPRHSD has, as indicated in the chart below at
Paragraph 24, refused year after year to confront losses in
State aid for the 2016-2017, 2017-2018, 2018-2019, and
2019-2020 school years in the amount of $1,039,880; has
ignored the need for fiscal planning; has inexplicably lowered
the local tax levy by more than $1,100,000 over that same
period of time, effectively doubling its loss of revenue during
those years to more than $2.1 million instead of trying to
reduce it; and has alternately increased and decreased its

OAL DKT. NO. EDU 05439-20

operating budget by more than $1,000,000 every single
year—going up more than $1,000,000 for the 2020-2021
budget—despite a declining enrollment. Since 2005, it has
not sought public approval for a referendum for capital
improvements.

21. ‘If there is a now a [sic] fiscal problem at the HPRHSD
at all, it is entirely self-created by the HPRHSD and selif-
inflicted by the HPRHSD, which is now looking to solve a
problem that took four years for it to create in a single year,
during the worst economic conditions in generations, and ata
time when the Governor and the Legislature are focused on
providing relief, rather than inflicting more pain. The history is
as follows:

YEAR | LOCAL STATE OPER, ENR} LOCAL OPER. TAX%

SHARE AID BUDGET LEVY BUDGET +/-
+/- +/-

2016—) 15,401,826 | (-70,324) | 24,024,950 | 994

2017

2017—| 14,356,619 | (-128,000)) 22,745,620 | 903 | (-1.045M) | (-1.4M) (-6.7)

2018

2018—| 14,256,964 | (-362,989) | 24,084,190 | 909 | (-99K) +1.3M (-.005)

2019

2019—| 14,537,446 | (-478,657) | 22,244,421 | 866 | +280K (-$1.8M) +#1.9

2020

2020—| 16,572,880 | (-753,678) | 23,512,019 | 854) +2.03M *1.26M +14

2021

22. Although local tax levy increases are statutorily

capped at 2%, the proposed HPRHSD budget, which has
been approved by the Executive County Superintendent,
provided for an increase in the local tax levy of 14%, which is
12% higher than the presumptive 2% capped increase.

23. The BOE asserts that it is entitled to impose a 14%
increase, rather than a 2% increase, because it is using
“banked cap” in the amount of $1,744,688.

OAL DKT. NO. EDU 05439-20

On October 2, 2020, the Department filed a motion to dismiss the First Amended
Petition, consisting of a letter brief. On October 26, 2020, petitioners filed opposition to
the motion, consisting of a letter brief and Certification of Stephen Edelstein, Esq. On
November 9, 2020, the Department filed a reply letter brief in further support of its motion.

MOTION TO DISMISS

The Department's motion to dismiss argues that the First Amended Petition must
be dismissed because: it fails to state a claim upon which relief can be granted;
petitioners improperly sought a declaratory ruling; petitioners’ claims are predicated on a
facially incorrect interpretation of N.J.S.A. 18A:7F-39(e); and petitioners do not point to
any “potential inefficiencies” in the “administrative operations” of HPRHSD.

It is evident from the “Jurisdiction” paragraph of the First Amended Petition, which
states, “In addition, and as a separate cause of action, the Petitioners seek a declaratory
ruling pursuant to N.J.A.C. 6A:3-2.1 that N.J.S.A. 18A:7F-39 shall be construed as to
permit school districts to use, as banked cap, the unused portion of permissible increases
for three succeeding years, and not to include as banked cap any tax increases during
the same time period,” and from “Background” paragraph 3, which states, “This action is
brought to obtain declaratory and other relief,” that petitioners seek not only a declaratory
ruling, but also seek other relief. More specifically, the First Count of the First Amended
Petition is as follows:

FIRST COUNT
(Declaratory Ruling)

24. The Petitioners repeat the allegations of Paragraphs
1-23 as if set forth a [sic] length.

25. The statute which permits the use of banked cap by a
Board of Education is N.J.S.A.18A:7F-39(e), which states in
relevant part:

A school district that has not been granted
approval to exceed the cap pursuant to

OAL DKT. NO. EDU 05439-20

subsection c. of this section, may add to its
adjusted tax levy in any one of the next three
succeeding budget years, the amount of the
difference between the maximum allowable
amount to be raised by taxation for the current
school budget year and the actual amount to be
raised by taxation for the current school budget
year.

This is the same standard contained in N.J.S.A. 40A:4-45.45.

26. On June 23, 2010, the Senate Budget and
Appropriations Committee issued a Statement regarding the
proposed “levy cap banking” provision which was being
considered as Senate Bill No. 29 (now N.J.S.A. 18A:7F-
39(e)).

27. The Committee stated, in part:

The bill would also permit levy cap “banking” of
any portion of the permitted 2.9% increase"!
under the property tax cap levy that is not used
by a county or municipality in any budget year.
In the case of a school district it would allow
cap banking of any portion of the permitted
2.9% increase plus applicable adjustments
not used by the school district in a budget
year....

Under the bill, the cap is being reduced, but
any unused permissible increase amount
under the reduced levy cap limit could be
used in any one of the next three succeeding
budget years. This concept is similar to cap
banking under the municipal and county
appropriations cap law (N.J.S.A. 40A:4-45.1 et
seq.). (emphasis added)

28. On July 14, 2010, which was the day after the
amendment took effect, the Office of Legislative Services
(“OLS”) issued a Legislative Fiscal Estimate regarding Senate
Bill No. 29 which evaluated the possible fiscal impact of the
amendment. The OLS report summarized the amendment as
follows: “Reduces school district, county, and municipal
properly tax levy cap from 4 percent to 2.0 percent and

3 What was 2.9% is now 2%,

10

OAL DKT. NO. EDU 05439-20

permits unused school district, county, and municipal
increases to be banked for three succeeding years.” The OLS
report also contained some of the same language from the
Senate and Budget Appropriations Committee Statement,
which described the amendment as allowing for the “banking”
of the “permitted increase[s]” of the property tax levy.

29. The last page of the bill (Senate Bill No. 29) contained
a one-sentence summary of the legislation: “Reduces school
district, county, and municipal property tax levy cap from 4%
to 2.0% and permits unused school district, county, and
municipal increases to be banked for three succeeding years.”
(emphasis added) There is no reference to tax reductions
coming into play in the formula.

30. The positions of the parties with regard to the proper
construction of N.J.S.A.18A:7F-39(e) are adverse.

31. ‘It is the position of the Petitioners that banked cap may
include only the unused portion of increases, which
construction would limit banked cap to a maximum of 2% per
year.

32. It is the position of the Respondents that banked cap
may include both the unused portion of increases plus the
amount of any decreases, which construction would not limit
banked cap to a maximum of 2% per year but. [sic]

WHEREFORE, the Petitioners seek a Declaratory Judgment,
on this First Count, that the banked cap provision of N.J.S.A.
18A:7F-39(e) be construed as permitting the inclusion as
banked cap of only the unused portion of permissible
increases, limited to a maximum of 2% per year, and awarding
the Petitioners attorneys’ fees, costs of this action, and such
other relief as may be just and proper.

As set forth above, the First Count seeks “a Declaratory Judgment. . . that the
banked cap provision of N.J.S.A. 18A:7F-39(e) be construed as permitting the inclusion
as banked cap of only the unused portion of permissible increases, limited to a maximum
of 2% per year,” and “attorney's fees, costs of this action, and such other relief as may be
just and proper.” Further, there are three additional counts in the First Amended Petition.
The Second Count (Breach of N.J.S.A. 18A:7F-39(e)), Third Count (Breach of N.J.A.C.
6A:23A-10.1), and Fourth Count (Breach of Fiduciary Duty) each demand the following:

11

OAL DKT. NO, EDU 05439-20

{a} That the HPRHSD budget for the 2020-2021 school
year be revised and reduced in accordance with the maximum
limitations of N.J.S.A, 18A:7F-39(e); and

(b) That the tax rate for Petitioners and all other property
tax payers in the Petitioning municipalities be adjusted to
eliminate that portion of the property taxes which result from
the improperly inflated HPRHSD budget for the 2020-2021
school year and that the Commissioner fashion a remedy to
compensate those taxpayers for the overpayment which has
taken place prior to this ruling; and

(c) That the Commissioner retain jurisdiction and oversee
over this matter to ensure that these Orders and declarations
are carried out; and

(d) Counsel fees and costs of this action;

(e) Such other relief as may be just and proper.

The Department argues that the First Amended Petition should be dismissed
because petitioners have improperly sought a declaratory ruling. NJAC. 6A:3-2.1
governs petitions for declaratory ruling as follows:

(a) Pursuant to NJ.S.A. 52:14B-8, any _ interested
person(s) may petition the Commissioner for a declaratory
ruling with respect to rights, responsibilities, and status arising
from any statute or rule within the jurisdiction of the
Commissioner. The determination to entertain such petitions
for declaratory ruling shall be within the sole discretion of the
Commissioner. If such request is granted, the matter shall
proceed in accordance with this chapter as they pertain to
petitions. A declaratory ruling shall be binding upon the
Commissioner and all parties to the proceedings on the
specific statement of facts set forth therein.

1. A request for a declaratory ruling shall reflect
adverse positions on the statute or rule in question by
the parties in interest, may not seek consequential
relief beyond a declaration as to the meaning of the
statute or rule, and may not be based on underlying
facts that are future, contingent, uncertain, or disputed.

12

OAL DKT. NO. EDU 05439-20
(b) Except that the format of the petition shall be as set forth in this subchapter, the rules pertaining to filing, service and answer of petitions as set forth in this chapter shall apply to petitions for declaratory ruling.
Additionally, N.J.A.C. 6A:3-2.2 specifies the format of a petition for declaratory ruling, which format includes, inter alia, a caption that specifies that the petition is a "PETITION FOR DECLARATORY RULING"; language that "requests the Commissioner to render a declaratory ruling concerning the application of (N.J.S.A. 18A; _, N.J.A.C. 6: N.J.A.C. 6A: _) to the controversy which has arisen between petitioner and respondent"; and language that "WHEREFORE, petitioner respectfully prays that the Commissioner shall construe the provisions of and determine and declare
=
The Verified Petition did not "reflect adverse positions on the statute or rule in question by the parties in interest," and it sought "consequential relief beyond a declaration as to the meaning of the statute or rule." Although the First Amended Petition, filed after the Department's first motion to dismiss, now reflects that the positions of the parties are adverse and states that it is "the position of the Petitioners that banked cap may include only the unused portion of increases, which construction would limit banked cap to a maximum of 2% per year," and "the position of the Respondents that banked cap may include both the unused portion of increases plus the amount of any decrease, which construction would not limit banked cap to a maximum of 2% per year," it nevertheless contains three other counts and requests for relief in contravention of N.J.A.C. 6A:3-2.1 and still does not comport with the format of N.J.A.C. 6A:3-2.2.
Additionally, the Verified Petition demanded, inter alia, a "declaration that the HPRHSD is not permitted to use banked cap for its 2020-2021 budget in a dollar amount which is greater than that which is equal to the difference between zero and the amount of tax increase actually imposed for each of the past three years, not to exceed two- percent for any one year, and that the budget shall be revised consistent with this declaration prior not later than June 30, 2020." In support of their position, the petitioners
13

OAL DKT. NO. EDU 05439-20
cited to N.J.S.A. 40A:4-45.45, but the First Amended Petition instead seeks a declaratory judgment "that the banked cap provision of N.J.S.A. 18A:7F-39(e) be construed." While the underlying position of the petitioners-that the banked cap cannot be utilized in the manner in which it was utilized-remains the same, certainly no request for a declaratory ruling specific to N.J.S.A. 18A:7F-39(e) was ever filed with the Commissioner prior to the transmittal of the matter to the OAL, and therefore the Commissioner would not have been on notice.
Pursuant to N.J.A.C. 6A:3-1.10, at any time prior to transmittal of the pleadings to the OAL, in the Commissioner's discretion or upon motion to dismiss filed in lieu of answer, the Commissioner may dismiss the petition on the grounds that the petitioner has advanced no cause of action even if the petitioner's factual allegations are accepted as true or for lack of jurisdiction, failure to prosecute, or other good reason. The Department's motion was filed after transmittal of the pleadings, but pursuant to N.J.A.C. 1:1-12.1(a), where a party seeks an order of a judge, the party shall apply by motion and state the grounds upon which the motion is made and the relief or order being sought. The judge may render any ruling or order necessary to decide any matter presented to him or her which is within the jurisdiction of the transmitting agency or the agency conducting the hearing. N.J.A.C. 1:1-14.6(h).
I CONCLUDE that the Verified Petition was not properly filed as a request for a declaratory ruling pursuant to N.J.A.C. 6A:3-2.1 and N.J.A.C. 6A:3-2.2, as it did not reflect adverse positions on the statute or rule in question by the parties in interest, it did not request that the Commissioner render a declaratory ruling concerning the specific statute or regulation, and it improperly sought consequential relief beyond a declaration as to the meaning of the statute or rule. If petitioners intended to have the Commissioner construe the provisions of the applicable statute - which statute was changed in the First Amended Petition - and determine and declare that the respondents cannot utilize banked cap in the manner in which it was utilized, their petition should have been filed as a petition for declaratory ruling and it should have complied with the applicable requirements. Since it was not properly filed as a petition for a declaratory ruling and did not comply with the
14

OAL BKT. NO. EDU 05439-20

applicable requirements, the Commissioner was not provided appropriate notice of a
petition for a declaratory ruling and it was transmitted to the OAL instead as a contested
case. Merely separating the request for a declaratory ruling into its own count in the First
Amended Petition does not remedy the defects. Accordingly, | CONCLUDE that the First
Count of the First Amended Petition should be dismissed.

Although petitioners argue that there are three total counts, the First Amended
Petition contains four counts. The Second Count, Third Count, and Fourth Count are as
follows:

SECOND COUNT
(Breach of N.J.S.A. 18A:7F-39(e))

33. Petitioners repeat the allegations of Paragraphs 1-32
as if set forth at length.

34, The use of banked cap by the HPRHSD so as to
include the amount of property tax decreases, and the
approval of that use by the Commissioner of Education,
violated the provisions of N.J.S.A. 18A:7F-39(e).

35. The 2020-2021 HPRHSD school budget, which
included increases in violation of 18A:7F-39{e), went into
effect on July 1, 2020.

36. As aresult of these statutory violations, the Petitioners,
as well as all of the property tax owners in the Petitioning
municipalities have been damaged by the requirement that
they pay a property tax rate based, in part, on an improperly
inflated HPRHSD school budget.

WHEREFORE, the Petitioners demand:

(a} That the HPRHSD budget for the 2020-2021 school
year be revised and reduced in accordance with the maximum
limitations of N.J.S.A. 18A:7F-39(e); and

(b) That the tax rate for Petitioners and all other property
tax payers in the Petitioning municipalities be adjusted to
eliminate that portion of the property taxes which result from
the improperly inflated HPRHSD budget for the 2020-2021

15

OAL DKT. NO. EDU 05439-20

school year and that the Commissioner fashion a remedy to
compensate those taxpayers for the overpayment which has
taken place prior to this ruling; and

(c) Thatthe Commissioner retain jurisdiction and oversight
over this matter to ensure that these Orders and declarations
are carried out; and

(d) Counsel fees and costs of this action; and

(e) Such other relief as may be just and proper.

THIRD COUNT
(Breach of N.J.A.C. 6A:23A-10.1)

37. The Petitioners repeat the allegations of Paragraphs
1-36 as if set forth at length,

38. The Executive County Superintendent of Schools
supervises and administers the day-to-day functions of the
County Office of Education as a representative of the State
Commissioner of Education. The County Superintendent
provides educational leadership to and general over-sight of
the public school districts in the County pursuant to law and
code. N.J.S.A.18A:7-l et seq.

39. NJAC, 6A:23A-10.1 is titled “Unused tax authority
(banked cap).” Subsection 3(e) of that Code provision states:

The executive county superintendent may
disapprove use of banked cap, pursuant to
N.J.S.A, 18A:F-5, if he or she determines the
district board of education has not implemented
all potential efficiencies in the administrative
operations of the school district.

40. Even if otherwise permissible, which it is not, the use
of banked cap in the amount permitted in the HPRHSD 2020-
2021 school budget should have been disallowed by the
Executive County Superintendent pursuant to NJAC.
6A:23A-10.1 because the HPRHSD did not implement all
potential efficiencies in the administrative operations of the
school district.

16

OAL DKT. NO. EDU 05439-20

41. The failure by the Commissioner of Education, acting
through the Executive County Superintendent, to disallow the
questioned use of banked cap pursuant to N.J.A.C. 6A:23A-
10.1 constituted a breach of that Code provision, an arbitrary
action, and a violation of the Commissioner's duty.

WHEREFORE, ... .4

FOURTH COUNT
(Breach of Fiduciary Duty)

42. The Petitioners repeat the allegations of Paragraphs
1-41 as if at length.

43, “The members of the board of education .. . are public
officers holding positions of public trust. They stand in a
fiduciary relationship to the people whom they have been
appointed or elected to serve.” Lawrence/Cranbury v. Bd. of
Educ., 27 N.J. Super. 243, 248 (App. Div. 1953).

44. According to its own budget presentation, the
HPRHSD is seeking, in one year, to offset the loss of $1.723
million in State aid by using $1.744 million in allegedly banked
cap, thereby imposing a local tax levy increased by 14%
rather than by 2%.

45. Touse of banked cap in the fashion and in the amount
that the HPRHSD has used it in its 2020-2021 budget flies in
the face of recent actions by Governor Murphy.

46. The Governor's policy is not to permit exceptions to the
cap law to avoid the impact of the loss of State aid. That is
why, in January of 2020, on the last day of the Legislative
Session, he returned unsigned a bill, $4289, which would
have allowed school districts to exceed cap to offset losses in
State aid.

47. The HPRHSD has, since the 2016-2017 school year,
breached its fiduciary responsibilities over the past three
years by permitting the short-term gratification of tax-cuts to
outweigh the need for fiscal planning and, currently, by
imposing a 14% tax increase.

4 The WHEREFORE clause is identical to that of Count 2.

17

OAL DKT. NO. EDU 05439-20

48. |n so doing, the HPRHSD engaged in a manipulation
of the local tax share.

49. By their actions, the HPRHSD and its members
breached their fiduciary obligations pursuant to law.

50. As aconsequence, the Petitioners and every property
tax payer in the Petitioning municipalities has been harmed.

WHEREFORE, ...

The allegations in the Second Count and Third Count were not included in the
Verified Petition and appear for the first time in the First Amended Petition. However, the
allegations in the Fourth Count, with the exception of the allegations that “the HPRHSD
engaged in a manipulation of the local tax share”; “[b]y their actions, the HPRHSD and its
members breached their fiduciary obligations pursuant to law”; and “the Petitioners and
every property tax payer in the Petitioning municipalities has been harmed,” were
included in the Verified Petition. Additionally, excepting the demands that “the
Commissioner retain jurisdiction and oversight over this matter to ensure that these
Orders and declarations are carried out” and for counsel fees and costs and such other
relief as may be just and proper, the relief in the Second Count, Third Count, and Fourth
Count of the First Amended Petition differs from that sought in the Verified Petition.

“It is within the Commissioner's authority to treat a motion to dismiss on the ground
that ‘no sufficient cause for determination has been advanced’ as encompassing not only
a claim that the petition on its face fails to set forth a basis for relief, but also that
petitioners have failed to provide any factual support for the general allegations of their
petition.” Sloan v. Klagholtz, 342 N.J. Super. 385, 394 (App. Div. 2001). The entirety of
the within controversy, including the requests for consequential relief, stems from a
dispute over how the banked cap was utilized. Certainly, if HPRHSD’s utilization of the
banked cap was permissible, the various allegations in the Second Count (Breach of
N.J.S.A. 18A:7F-39(e)), Third Count (Breach of N.J.A.C. 6A:23A-10.1), and Fourth Count
(Breach of Fiduciary Duty) fail.

5 The WHEREFORE clause is identical to that of Counts 2 and 3.

18

OAL DKT. NO. EDU 05439-20

Accepting for purposes of this motion the “Background” facts set forth in
petitioners’ First Amended Petition, the HPRHSD approved its tentative budget on March
17, 2020 (before the March 20, 2020, deadline) and it was submitted to the executive
county superintendent for review and approval; the executive county superintendent
approved the tentative budget in time (before the April 20, 2020, deadline) for it to be
publicly advertised; it was publicly advertised on April 24, 2020; there was a public hearing
on the budget on April 28, 2020—which was after the earliest date for a public hearing
(April 24, 2020) and before the latest date (May 7, 2020); and the Board of Education
ultimately approved the budget. Although the public hearing was a virtual hearing, and
the budget was approved days before the deadline by which the Board was required to
act, there is no assertion of any procedural violation of N.J.S.A. 18A:22-10 to -13 and no
assertion that the budget was not submitted to the executive county superintendent for
review and approval in accordance with N.J.A.C. 6A:23A-9.1. Accordingly, the First
Amended Petition reflects that the 2020-2021 budget was approved by way of the
statutory process.

Notwithstanding the provisions of any other law to the contrary, a school district
may not adopt a budget pursuant to N.J.S.A. 18A:7F-5 and N.J.S.A. 18A:7F-6 with an
increase in its adjusted tax levy that exceeds, except as provided in N.J.S.A. 18A:7F-39,
the tax levy growth limitation calculated as follows: the sum of the prebudget year
adjusted tax levy and the adjustment for increases in enrollment multiplied by 2.0 percent,
and adjustments for an increase in health care costs, increases in amounts for certain
normal and accrued liability pension contributions. N.J.S.A. 18A:7F-38(a).

Petitioners argue—and there is no dispute—that the maximum allowable increase

is 2 percent. The statute in question is N.J.S.A. 18A:7F-39(e), which states as follows:

Aschool district that has not been granted approval to exceed
the cap pursuant to subsection c.!© of this section, may add to

8 A school district may submit to the voters at the annual school election, or on such other date
as is set by regulation of the commissioner, a proposal or proposals to increase the adjusted tax

19

OAL DKT. NO. EDU 05439-20

its adjusted tax levy in any one of the next three succeeding
budget years, the amount of the difference between the
maximum allowable amount to be raised by taxation for the
current school budget year and the actual amount to be raised
by taxation for the current school budget year.

Petitioners further argue that “[w]hat is uncertain is the meaning of the statute.”
Conversely, the Department argues that the statute is clear and unambiguous.

Within the First Count, petitioners cite to a June 23, 2010, Senate Budget and
Appropriations Committee statement “regarding the proposed ‘levy cap banking’
provision which was being considered as Senate Bill No. 29 (now N.J.S.A. 18A:7F-39(e))”
and to a July 14, 2010, OLS Legislative Fiscal Estimate regarding Senate Bill No. 29
“which evaluated the possible fiscal impact of the amendment.” However, with respect to
legislative intent, the Supreme Court of New Jersey stated as follows:

The best evidence of that legislative intent is the statutory
language, which is, accordingly, “the first place we look.”
Richardson v. Bd. of Trs., PERS, 192 N.J. 189, 195, 927 A.2d
543 (2007). If the statute’s plain language leads to a clearly
understood result, the judicial inquiry is complete. Ibid.; Felix
v. Richards, 241 N.J. 169, 179, 226 A.3d 937 (2020) (noting
that when “language admits of only one clear interpretation,”
the interpretive task ends and the court enforces that
meaning).

“{I]t is not our function to rewrite a plainly written statute or to
presume that the Legislature meant something other than
what it conveyed in its clearly expressed language.” Shipyard
Assocs., LP v. City of Hoboken, 242 N.J. 23, 45, 230 A.3d 278
(2020) (quoting Murray v. Plainfield Rescue Squad, 210 N.J.
581, 592, 46 A.3d 1262 (2012)). It is only when the statute's
language is ambiguous that we consider legislative history
and other extrinsic materials. Sanchez v. Fitness Factory
Edgewater, LLC, 242 N.J. 252, 261, 231 A.3d 606 (2020);

levy by more than the allowable amount authorized pursuant to section 3 of P.L.2007, c.62
(C.18A:7F-38). The proposal or proposals to increase the adjusted tax levy shall be approved if
a majority of people voting shall vote in the affirmative. In the case of a school district with a board
of schoo! estimate, the additional adjusted tax levy shail be authorized only if a quorum is present
for the vote and a majority of those board members who are present vote in the affirmative to
authorize the additional adjusted tax levy. N.J.S.A. 18A:7F-39(c).

20

OAL DKT. NO. EDU 05439-20

Kean Fed'n of Tchrs. v. Morell, 233 N.J. 566, 583, 187 A.3d
153 (2018).

[Branch v. Cream-O-Land Dairy, 2021 N.J. LEXIS 3, *31-32.]

The operative statute, N.J.S.A. 18A:7F-39(e), allows HPRHSD to add to its
adjusted tax levy in any one of the next three succeeding budget years, the amount of
the difference between the maximum allowable amount to be raised by taxation for the
current school budget year and the actual amount to be raised by taxation for the current
school budget year. The ramifications of such action aside, the First Amended Petition
reflects that HPRHSD added to one of the next three succeeding budget years (2020-
2021) the amount of the difference between the maximum allowable amount and the
actual amount to be raised.

Specifically, petitioners’ history chart reflects that the local share was $15,401,826
in 2016-2017. With a 2 percent increase, the local share in 2017-2018 could increase
to amaximum of $15,709,862.52 ($15,401,826 plus a 2 percent increase of $308,036.52).
However, the local share was lowered to $14,356,619 in 2017-2018—leaving a
difference of $1,353,243.52 as “banked cap.” Petitioners’ history chart reflects that the
local share was $14,356,619 in 2017-2018. With a 2 percent increase, the local share in
2018-2019 could increase to a maximum of $14,643,751.38 ($14,356,619 plus a 2
percent increase of $287,132.38). However, the local share was again lowered, to
$14,256,964, in 2018-2019—leaving a difference of $386,787.38 as “banked cap.”
Petitioners’ history chart reflects that the local share was $14,256,964 in 2018-2019.
With a 2 percent increase, the local share in 2019-2020 could increase to a maximum of
$14,542,103.28 (which is $14,256,964 plus a 2 percent increase of $285,139.28).
However, the local share was again lowered, to $14,537,446, in 2019-2020—leaving a
difference of $4,657.28 as “banked cap.” Accordingly, the total “banked cap” for 2017-
2018, 2018-2019, and 2019-2020 was $1,744,688.18 ($1,353,243.52 plus $386,787.38
plus $4,657.28).

21

OAL DKT. NO. EDU 05439-20

Petitioners’ history chart reflects that the local share was $14,537,446 in 2019~
2020. With a 2 percent increase, the local share in 2020-2021 could increase to a
maximum of $14,828,194.92 ($14,537,446 plus a 2 percent increase of $290,748.92). In
fact, the local share was increased by 2 percent to $14,828,194.92, but HPRHSD opted,
as is allowed by statute, to add to its adjusted tax levy ($14,828, 194.92) the three years’
banked cap ($1,744,688.18), which resulted in a local share of $16,572,880. While
HPRHSD’s actions resulted in a higher percentage for 2020-2021 than 2 percent, its
actions resulted in lower percentages in the preceding years. To the extent that
petitioners are dissatisfied with HPRHSD's budget, | concur with the Department that the
remedy is political and not legal.

In sum, the statute’s plain language is clear and unambiguous, and the First
Amended Petition reflects that HPRHSD acted in accordance with the statute. It is not
the function of the undersigned to rewrite the statute or to presume that its plain language
does not comport with the legislative intent. As such, | CONCLUDE that no sufficient
cause for determination has been advanced and the First Amended Petition should be

dismissed.

In view of the foregoing, it is hereby ORDERED that the First Amended Petition is
DISMISSED.

| hereby FILE this initial decision with the COMMISSIONER OF THE
DEPARTMENT OF EDUCATION for consideration.

This recommended decision may be adopted, modified or rejected by the
COMMISSIONER OF THE DEPARTMENT OF EDUCATION, who by law is authorized
to make a final decision in this matter. If the Commissioner of the Department of
Education does not adopt, modify or reject this decision within forty-five days and unless
such time limit is otherwise extended, this recommended decision shalt become a final
decision in accordance with N.J.S.A. 52:14B-10.

22

OAL DKT. NO. EDU 05439-20

Within thirteen days from the date on which this recommended decision was
mailed to the parties, any party may file written exceptions with the COMMISSIONER OF
THE DEPARTMENT OF EDUCATION, ATTN: BUREAU OF CONTROVERSIES AND
DISPUTES, 100 Riverview Plaza, 4th Floor, PO Box 500, Trenton, New Jersey 08625-
0500, marked “Attention: Exceptions.” A copy of any exceptions must be sent to the
judge and to the other parties.

March 1, 2021 Kllly iY (ak

DATE KELLY J. KIRK, ALJ

Date Received at Agency:

Date Mailed to Parties:

23