BOARD OF EDUCATION OF THE CITY OF EAST ORANGE, ESSEX COUNTY V. NEW JERSEY STATE DEPARTMENT OF EDUCATION, 10/28/03 (#595-03)

595-03 (Link to OAL Decision: http://lawlibrary.rutgers.edu/oal/html/initial/edu05492-03_1.html)
BOARD OF EDUCATION OF THE CITY 	:
OF EAST ORANGE, ESSEX COUNTY,
:
PETITIONER,
:
V. 	COMMISSIONER OF EDUCATION
:
NEW JERSEY STATE DEPARTMENT 	DECISION
OF EDUCATION, 	:
RESPONDENT. 	:
SYNOPSIS
Petitioning 	“Abbott” 	District 	appealed 	the 	Department’s 	determination 	of 	its 	2003-04
preliminary “maintenance budget,” alleging that the definition of “maintenance budget” set forth
in N.J.A.C. 6A:10-1.2 conflicts with the July 23, 2003 Order of the Supreme Court and,
therefore, should not govern the case; that the Department’s calculation for charter school tuition
did not take into account the correct and actual documented increases in tuition; and that the
Department’s calculation for utilities rate increases fails to include the utilities costs for two
buildings that were not fully utilized in the 2002-03 school year.
The ALJ found: 1) the rule duly promulgated to implement the Court’s Order for “maintenance”
controlled in this proceeding, and that the Office of Administrative Law lacked jurisdiction to
determine its validity; 2) that the Department properly adjusted the maintenance calculation for
charter school tuition; and 3) that the proofs offered by the District in support of its projected
utility rate cost increase were deficient and devoid of any competent evidence that would offer
credence to the District’s position in this regard. The ALJ upheld the Department’s calculations,
concluding that the Department properly determined the District’s increase in utilities costs in
accordance with established Supreme Court criteria and appropriate Department regulations,
with such calculations being subject to adjustment upon receipt of supportive information from
the District in the course of the Comprehensive Annual Financial Report (CAFR) process.
The Commissioner concurred with the ALJ’s findings and conclusions and adopted the Initial
Decision.
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.
October 28, 2003

OAL DKT. NO. EDU 05492-03
AGENCY DKT. NO. 191-6/03
BOARD OF EDUCATION OF THE CITY 	:
OF EAST ORANGE, ESSEX COUNTY,
:
PETITIONER,
:
V. 	COMMISSIONER OF EDUCATION
:
NEW JERSEY STATE DEPARTMENT 	DECISION
OF EDUCATION, 	:
RESPONDENT. 	:
The record of this local “Abbott” District’s appeal of the Department’s decision
on its supplemental funding request for the 2003-04 school year, and the Initial Decision of the
Office of Administrative Law (OAL) have been reviewed. East Orange’s exceptions were duly
submitted in accordance with the schedule established in response to the Court’s order for
expedition and were considered by the Commissioner in reaching this decision.
Upon careful and independent review of the record, the Commissioner adopts the
Administrative Law Judge’s (ALJ) decision as he determines her factual findings, analysis and
legal conclusions are consistent with the Supreme Court’s Order of July 23, 2003, as well as the
Department’s regulatory amendments adopted on August 22, 2003.
Initially, it is noted that petitioner’s exceptions object to the ALJ’s failure to
address an issue, raised in its post-hearing brief, with respect to the legal propriety of the
Department’s fund balance calculation. 	(Petitioner’s Exceptions at 1, 2) 	In this regard, the
District states that the Department’s August 27, 2003 budget letter projected the District’s excess
fund balance, made reductions to what it had determined was a balance in excess of the required
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two percent, and denied the District’s Abbott v. Burke receivable for 2002-03 based on its
projected calculations. It charges that the Department’s “projection of excess fund balance prior
to the receipt of the [Comprehensive Annual Financial Review] CAFR violates the language and
intent of the FY 04 Appropriations Act.” (Id. at 8, 9)
The Commissioner finds the District’s charge in this regard without merit. 	It is
observed that the Supreme Court’s Order directed the Department to provide Abbott districts
with 	their 	preliminary 	maintenance 	budget 	figures 	for 	the 	2003-04 	school 	year 	by
August 27, 2003. 	In fulfillment of that directive, the Department, pursuant to N.J.A.C. 6A:10-
3.1(c), reviewed the most recent budget calculations provided by the District to determine if all
available resources and reallocations and other factors had been incorporated in the budget and
that the budget submitted comported with the maintenance standard. 	Based on this review, the
Department made the requisite projections in its August 27, 2003 preliminary maintenance
budget letter. 	It must be emphasized that the preliminary maintenance budget figure for the
District here is just that, preliminary, subject to the CAFR, which will establish the District’s
actual audited expenses for the 2002-03 school year. 	Likewise, the estimate of the District’s
discretionary Abbott v. Burke aid is also subject to the District’s true audited fund balance and
available revenue, if any, as of June 30, 2003.
Next, the Commissioner concurs with the ALJ, that N.J.A.C. 6A:10-1.2, the
regulation duly promulgated to implement the Court’s July 23, 2003 Order, must control in the
instant proceeding, and that the OAL does not have jurisdiction to determine, directly or
indirectly, its validity, as such determination is solely within the jurisdictional purview of the
Appellate Division or the Supreme Court. R. 2:2-3(a); see, also, Pascucci v. Vagott, 71 N.J. 40,
51-52 (1976); Wendling v. N.J. Racing Com’n, 279 N.J. Super. 477, 485 (App. Div. 1995).
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However, even if the Commissioner were to accept, arguendo, the District’s contention that a
“choice of law” may be made without passing on the validity of the rule itself, the Commissioner
here agrees with the ALJ that the Department’s definition of “maintenance budget,” as set forth
in N.J.A.C. 6A:10-1.2, is entirely consistent with the language and intent of the Court, with no
conflict between it and the underlying order.
In 	his 	consideration 	of 	the 	District’s 	remaining 	arguments 	herein, 	the
Commissioner finds that a review of the respective parties’ burdens of proof is particularly
instructive. 	In this regard, the Commissioner recognizes that the Supreme Court’s Order
provides that the Department “shall bear the [initial] burden of moving forward to establish the
basis for any proposed reductions to the [Abbott] district’s maintenance budget based on the
effective and efficient standard set forth in the DOE’s emergency regulations.”***Abbott v.
Burke, M-976 September Term 2002, at 7. 	However, as indicated in the Department’s
preliminary maintenance decision letter dated August 27, 2003 (Exhibit J-1), the District’s
maintenance budget was not reduced based on ineffectiveness or inefficiency. 	Therefore,
pursuant to N.J.A.C. 6A:24-9.6(c), the District bears the burden of proving that the Department’s
calculations were unreasonable or otherwise improper.
This 	said, 	the 	Commissioner 	agrees 	with 	the 	ALJ 	that 	the 	Department’s
calculation of charter school tuition must be sustained, as he finds that the District has not met its
burden of establishing that the Department’s use of an approved plan-to-plan review to
determine the tuition calculation figure was unreasonable or otherwise improper. 	In the
Commissioner’s view, the process used by the Department, based on the only available “like”
components for comparison, i.e., approved 2002-03 and 2003-04 charter school tuition, in order
to determine the change in the district need from one year to the next, fully allows for
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reasonable, fair and consistent preliminary determinations under circumstances where precise
calculations must necessarily await the results of the CAFR. 	As well articulated by the ALJ in
her Initial Decision in Board of Education of the City of Plainfield, Union County, v. New Jersey
State Department of Education, OAL Dkt. No. EDU 5502-03, Agency Dkt. No. 206-6/03,
decided September 26, 2003:
I have considered the arguments of counsel and must agree with
the position espoused by the DOE. 	(footnote omitted) Although I
agree with the District that the consistent use of the DOE’s
methodology does not in itself make it correct, I do not agree that
simply because it does not work to the District’s advantage makes
it incorrect. 	The methodology utilized by the DOE has been
applied to all “Abbott Districts” uniformly and has served to
increase maintenance budgets in over half of the Districts. 	The
District has not established that the use of this methodology is per
se improper, illegal, inconsistent with the New Jersey Supreme
Court’s 	Order 	of 	July 	23, 	2003 	or 	violative 	of 	any 	of 	its
constitutional rights. 	The DOE is obligated only to utilize an
approach that is reasonable and uniformly applied. Here they have
done so. If the methodology is to be changed in each area in which
an Abbott District is not advantaged, there will be no uniformity or
equity to the provision of Abbott funds. 	Thus, I reject the
District’s argument and CONCLUDE that the DOE’s methodology
is reasonable and will not be second-guessed. (Id. at 8)
The 	Commissioner, 	however, 	underscores 	that, 	to 	the 	extent 	the 	results 	of 	the
Department’s reasonable approach may be imperfect, even after adjustment following audit,
N.J.A.C. 6A:10-3.1(g) provides a mechanism for the District to obtain additional supplemental
funding where unanticipated expenditures or unforeseen circumstances warrant.
Turning to the projected utilities increase calculation, the Commissioner, similarly, finds
that the District has failed to satisfy its burden. The Commissioner is in full agreement with the
ALJ that “the proofs [brought to the record are] deficient and devoid of any competent evidence
that would offer credence to the District’s position with regard to utilities cost increases.” (Initial
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Decision at 14, 15) The District’s exceptions maintain that the ALJ, while recognizing that the
Department had not included its two new buildings in the utility increase calculation for 2003-04
(Initial Decision at 14), erred in failing to award the District any funding increase based on a lack
of documented evidence. 	(Petitioner’s Exceptions at 16) 	Rather, it proffers, “the ALJ should
have directed the DOE to develop appropriate documentation in conjunction with the District to
determine what increase should be attributable to these two buildings.” (Id. at 17)
Upon consideration, the Commissioner finds the District’s arguments in this
regard specious. 	The Initial Decision reflects that the Department’s witness, Michael Arizechi,
testified
that he had not taken into account the utilization of the Glenwood
School and the old East Orange High School buildings in arriving
at his figure for utility cost increases of $529,812.50. 	Rather, he
looked at the history and the actual numbers and the auditor[’s]
report to see what the expenditures had been. 	He compared the
auditor[’s] report with the District numbers and used 50% of the
difference (the increase) as his basis for arriving at a figure of
$529,812.50 for non-discretionary increased utility costs for 2003-
04. (Initial Decision at 12)
Given the total unsupportability of the District’s calculations in this regard, it cannot reasonably
be argued that the Department’s calculation for increased utility costs, subject to further refining
after receipt of some logical, supportable additional information from the District during the
course of the CAFR process, was unreasonable.
Accordingly, the Initial Decision of the OAL is adopted for the reasons expressed
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therein and the instant Petition of Appeal is hereby dismissed.1
IT IS SO ORDERED.2
COMMISSIONER OF EDUCATION
Date of Decision: 	October 28, 2003
Date of Mailing: 	N/A
1 The Commissioner so determines, based upon the proofs brought to this record, while acknowledging that the
presentation of such evidence may have been disadvantaged by both a Court Order to expedite proceedings and the
unavailability of the CAFR until November 2003. In any event, beyond his determination herein, the Commissioner
underscores the availability of a mechanism for Abbott districts to address needs, arising during the year due to
unanticipated expenditures or unforeseen circumstances, for additional resources to implement Department-
approved programs and services. N.J.A.C. 6A:10-3.1(g).
2 Pursuant to P.L. 2003, c.122, “Abbott” determinations are final agency actions appealable directly to the Appellate
Division of the New Jersey Superior Court.
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