BOARD OF EDUCATION OF THE BOROUGH OF MOUNTAINSIDE, UNION COUNTY - v. BOARD OF EDUCATION OF THE TOWNSHIP OF BERKELEY HEIGHTS, UNION COUNTY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6215-07T36215-07T3

BOARD OF EDUCATION OF THE BOROUGH

OF MOUNTAINSIDE, UNION COUNTY,

Petitioner-Respondent,

v.

BOARD OF EDUCATION OF THE TOWNSHIP

OF BERKELEY HEIGHTS, UNION COUNTY,

Respondent-Appellant.

___________________________________________________

 

Argued October 27, 2009 - Decided

Before Judges Wefing, Messano and LeWinn.

On appeal from a Final Decision of the State Board of Education, 25-1/08.

Vito A. Gagliardi, Jr., argued the cause for appellant (Porzio, Bromberg & Newman, P.C., attorneys; Mr. Gagliardi, of counsel and on the brief; Kerri A. Wright and Michael S. Williams, on the brief).

David B. Rubin argued the cause for respondent Borough of Mountainside.

Anne Milgram, Attorney General, attorney for respondent State Board of Education (Joyce D. Atkins, Deputy Attorney General, on the statement in lieu of brief).

PER CURIAM

The Board of Education of the Township of Berkeley Heights (Berkeley Heights) appeals from a Final Decision of the Commissioner of Education (the Commissioner) that essentially adopted the findings of facts and conclusions of law made by an administrative law judge (ALJ) in her summary decision. In so doing, the Commissioner resolved disputes that had arisen between Berkeley Heights and the Board of Education of the Borough of Mountainside (Mountainside) pursuant to a sending/receiving agreement (the Agreement), see N.J.A.C. 6A:23A-17.1(f), whereby Mountainside reimbursed Berkeley Heights for tuition costs associated with high school students domiciled in Mountainside who attended school in Berkeley Heights.

We have considered the arguments raised on appeal in light of the record and applicable legal standards. We affirm.

I.

Initially we set forth the regulatory scheme governing these sending/receiving agreements. In order to meet the obligation to provide a free public education, N.J.S.A. 18A:38-1, "any New Jersey school district[] may enter into a send-receive relationship with another district whereby it sends its pupils to the receiving district's schools for one grade or more, N.J.S.A. 18A:38-8, in return for a tuition payment . . . ." English v. Bd. of Educ. of Boonton, 301 F.3d 69, 72 (3d Cir. 2002), cert. denied, 537 U.S. 1148, 123 S. Ct. 852, 154 L. Ed. 2d 851 (2003). Tuition may "not exceed the 'actual cost' of the students enrolled, N.J.S.A. 18A:38-19, with 'actual cost' defined in detail by the New Jersey Administrative Code." Id. at 73.

N.J.A.C. 6A:23A-17.1(f) provides:

The receiving district . . . and the sending district . . . shall establish by written contractual agreement a tentative tuition charge for budgetary purposes. Such tentative charge shall equal an amount not in excess of the receiving district['s] . . . "estimated cost per student" for the ensuing school year . . . for which tuition is being charged, multiplied by the "estimated average daily enrollment of students" expected to be received during the ensuing school year . . . .

The sending and receiving districts must enter into an agreement

for the ensuing school year . . . no later than seven days prior to the date on which the proposed budget for the ensuing school year is required to be submitted to the . . . county superintendent. [N.J.A.C. 6A:23A-17.1(f)(3).] The sending district shall be required in the contractual agreement to pay 10 percent of the tentative tuition charge no later than the first of each month from September through June of the contract year.

[N.J.A.C. 6A:23-17.1(f)(3).]

The regulations contemplate the need for adjustments to be made based upon the actual tuition costs and number of students in any given school year. See In re Div. of Assets and Liabs. Among the Constituent Dists. of Lower Camden County Reg'l High School Dist. No. 1, 381 N.J. Super. 91, 104 (App. Div. 2005) (recognizing the Commissioner's role in rectifying tuition payments between the sending and receiving school districts), certif. denied, 186 N.J. 605 (2006). Upon the Commissioner's determination that the tentative yearly charge was more or less than the "actual cost per student" in any given year, N.J.A.C. 6A:23A-17.1(b), the regulations authorize the parties to make adjustments to their agreement in ensuing years. See N.J.A.C. 6A:23A-17.1(f)(6) and (7).

We now turn to the facts presented here. Mountainside and Berkeley Heights entered into the Agreement in 1997. While the Agreement generally complied with the regulations, the parties initially chose a per student average cost for the first two years of the Agreement and simply continued to use that estimate during the initial years the Agreement was operational. In this respect, their course of conduct deviated from strict compliance with the regulatory formula.

Both parties functioned under the Agreement, however, without apparent problem until July 2005, when Mountainside hired a new secretary/business administrator who reviewed the payments previously made under the Agreement. As a result, Mountainside claimed it was owed credits for overpayments made for the 2001-02 and 2002-03 school years. Berkeley Heights agreed and credited Mountainside $402,500 toward the overcharges; the parties consented to the credit being paid in monthly installments over the remainder of the current school year. The parties further agreed to continue discussions regarding credits that would be anticipated from the 2003-04 school year, due to be certified in December 2005 and reflected in the 2006-07 budget cycle.

When informal negotiations proved to be unsuccessful, the parties, through their school business administrators and superintendents, engaged in a mediation session at the county superintendent's offices on March 16, 2006. Berkeley Heights claimed that Mountainside was owed a "maximum" further credit of $127,482; Mountainside claimed a much more significant credit. The parties could not reach any agreement as impending budget submissions loomed.

Mountainside advised the county superintendent that it "would have no choice but to adopt [a] budget with those credits [it claimed were due] included as an offset to [the] tuition payments to Berkeley Heights." Mountainside's business administrator certified that it was "apparent" to both parties that "each of [the] districts would likely adopt budgets reflecting [their] respective positions on the matter, and take appropriate steps to resolve [the] disagreement afterwards."

On March 27, 2006, Berkeley Heights approved its proposed 2006-2007 budget that included the $127,482 credit, not the $673,496 that Mountainside alleged was owed. Mountainside's representative on the Berkeley Heights Board, Marybeth Schaumberg, certified that "[i]t was well known to both the Mountainside and Berkeley Heights Board[s] by then that our two Business Administrators were seriously at odds over the proper method of calculating the[] credits." The next day Mountainside adopted its budget for the 2006-07 school year reflecting a credit of $673,496 from Berkeley Heights.

On July 11, 2006, Mountainside filed a verified petition with the Commissioner, seeking "a credit or refund . . . [in] the sum of $673,496, representing total overcharges for fiscal years 2001-2002, 2002-2003 and 2003-2004." On August 1, Berkeley Heights filed an answer that denied it overcharged Mountainside, and pled as an affirmative defense the "applicable statutes of limitations." The matter was transmitted to the Office of Administrative Law (OAL) as a contested case.

Berkeley Heights billed Mountainside for tuition payments under the Agreement in September and October 2006. Mountainside refused to pay. On November 8, Berkeley Heights filed a cross-petition seeking an order compelling Mountainside to "immediately pay . . . all monies wrongfully withheld[,]" and "[d]eclaring that [Mountainside] pay the full amount due and owing for the 2006-07 school year."

On November 22, 2006, Mountainside filed a motion for summary decision. Berkeley Heights cross-moved for summary decision asserting that Mountainside's petition was time-barred. In the alternative Berkeley Heights contended that it was entitled to "summary decision on the merits" because Mountainside had utilized a "method of calculation [that was] erroneous." Each side filed replies to the other's motion.

The ALJ reserved decision and, without objection, scheduled a date to take testimony "on the issue of the proper method of calculating tuition credits under" the regulations. Both sides submitted expert reports; at a plenary hearing on April 24, 2007, each side's expert testified.

On July 20, the ALJ issued her decision. After an exhaustive discussion of the applicable regulations, how they applied to the specific facts alleged, and mathematical calculations based upon those facts, the judge concluded that neither Mountainside's claim, nor Berkeley Heights's cross-claim was time-barred, and that she was empowered to decide that issue in a summary fashion. She also determined that the parties were "not free to agree to a [funding] formula that contradict[ed] the provisions of the statute and regulations[,]" and that "the proper method of calculating tuition credit [wa]s that which was outlined in regulation." Pursuant to "the proper formula," the judge determined that "Mountainside, in order to be current[,] should pay Berkeley Heights $2,980,313.90 for the 2006-2007 school year. In addition, Mountainside should receive a credit of $236,046.10, which would bring the total estimated tuition for the 2006-2007 school year to $3,216,360." The judge also determined that Berkeley Heights's claims for tuition credits "for special education students [were] not encompassed in th[e] petition and w[ould] not be considered in th[e] action."

Both parties filed exceptions with the Commissioner who rendered her final decision on January 17, 2008. Preliminarily, the Commissioner concurred with the ALJ's conclusion that the "matter c[ould] be fully and fairly decided on the parties' cross-motions for summary decision together with the record developed" at the April plenary hearing because "the material facts necessary for disposition . . . [we]re clear on the record and largely undisputed . . . ." While the Commissioner agreed that the petition and cross-petition were not time-barred, she did so for reasons other than those expressed by the ALJ. Eschewing the proposition that resolution of the dispute "serve[d] the general public interest," the Commissioner concluded "it [was] necessary to decide th[e] matter in the . . . specific interest of the citizens of Mountainside and Berkeley Heights, who [we]re entitled to have the tuition arrangements . . . brought back into alignment with [the] law designed to ensure fairness to both."

Turning to the merits of the dispute, the Commissioner concluded that "the regulatory provisions . . . rather than the parties' contractual terms govern the calculation of tuition credits," thus denying Berkeley Heights's claim that it was entitled to reimbursement for a greater amount of tuition credits for the 1997-98 and 1998-99 school year under the Agreement. She also concluded that Berkeley Heights's claim for special education credits, which was never made before the litigation and never "expressly ple[]d in its cross-petition[,]" was not "appropriately considered in th[e] matter." And, as to two specific disputed amounts that Mountainside claimed it previously made as tuition payments in the 2000-01 school year, the Commissioner determined, the "$49,250 payment . . . was for tuition, while [the] $400 payment was not."

The Commissioner further concurred with the ALJ's determination that all payments made between the parties from the inception of the Agreement should be "analyze[d] and recast[,]" notwithstanding the fact that Mountainside's petition only addressed the 2001-02, 2002-03, and 2003-04 school years, and the parties had "made an agreement between themselves with respect to the 2007-08 school year." The Commissioner adopted the "ALJ's methodology" with respect to payments that were due under the Agreement, and ordered Mountainside "to remit to Berkeley Heights tuition for the 2006-07 school year in the amount necessary to bring its total payments for the year to $2,980,313.90, reflecting the total estimated tuition of $3,216,360 less $236,046.10 in prior year credit."

Mountainside sought clarification based upon the voluntary agreement it had reached with Berkeley Heights regarding the 2007-08 school year which was already in progress when the Commissioner issued her order. The Commissioner issued a letter of clarification, which we discuss in greater detail below. This appeal followed.

II.

Berkeley Heights first contends that Mountainside's petition was untimely and should have been dismissed. Second, Berkeley Heights argues that the Commissioner's decision to exclude special-education costs from the case was erroneous because the issue was adequately raised in the petition or cross-petition. Third, Berkeley Heights contends that there were disputed material facts at issue such that summary decision was inappropriate, and that the Commissioner decided issues "not raised in the motion or in the petition." And lastly, Berkeley Heights argues in the alternative that assuming we affirm the Commissioner's decision, it is entitled to the immediate payment of $44,251.60, which it alleges is the difference between what Mountainside was ordered to pay, and what it has actually paid.

We begin by noting that our standard of review is limited. "[W]e will not reverse the determination of an administrative agency unless it is arbitrary, capricious or unreasonable, or is not supported by substantial credible evidence in the record as a whole." Kaprow v. Bd. of Educ. of Berkeley Twp., 131 N.J. 572, 591 (1993) (citing Dennery v. Bd. of Educ., 131 N.J. 626, 641 (1993)). We limit our review "to a determination of whether the [Commissioner's] decision is 'unreasonable, unsupported by the record or violative of the legislative will.'" D.L. v. Bd. of Educ. of Princeton Reg'l Sch. Dist., 366 N.J. Super. 269, 273 (App. Div. 2004) (quoting Capodilupo v. Bd. of Educ. of W. Orange, 218 N.J. Super. 510, 515 (App. Div.), certif. denied, 109 N.J. 514 (1987)). Although we are not bound by an administrative agency's legal opinions, Levine v. State Dep't of Transp., 338 N.J. Super. 28, 32 (App. Div. 2001) (citing G.S. v. Dep't of Human Servs., Div. of Youth and Family, 157 N.J. 161, 170 (1999)), the "'agency's interpretation of statutes and regulations within its implementing and enforcing responsibility is ordinarily entitled to our deference.'" Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (quoting In re Appeal by Progressive Cas. Ins. Co., 307 N.J. Super. 93, 102 (App. Div. 1997)).

We now turn to consideration of the specific arguments raised on appeal.

(a)

Berkeley Heights contends that Mountainside's petition was time barred by operation of N.J.A.C. 6A:3-1.3(i), the so-called "ninety day rule." The Commissioner determined that Mountainside knew as of March 16, 2006, the date of the unsuccessful mediation at the county superintendent's offices, that the dispute was at an "impasse," and Mountainside "needed no further 'trigger' to file a petition . . . ." Berkeley Heights argues that since Mountainside did not file the petition until July 11, the Commissioner should have dismissed the claim, and was without authority to consider the merits of the petition based upon her belief that resolution was in the interests of the citizens of Mountainside and Berkeley Heights.

The Commissioner has "jurisdiction to hear and determine . . . all controversies and disputes arising under the school laws . . . ." N.J.S.A. 18A:6-9. "To initiate a contested case for the Commissioner's determination[,]" a party must file and serve "a petition of appeal" on the Commissioner and all respondents. N.J.A.C. 6A:3-1.3(a). The petition must include: "the name[s] and address[es] of" the parties; "a statement of the specific allegation(s) and essential facts supporting them which have given rise to a dispute under the school laws; the relief petitioner is seeking; and a notarized statement of verification or certification in lieu of affidavit for each petitioner." N.J.A.C. 6A:3-1.4(a). A petition must be filed "no later than the 90th day from the date of receipt of the notice of a final order, ruling or other action by the district board of education . . . which is the subject of the requested contested case hearing." N.J.A.C. 6A:3-1.3(i).

In Kaprow, supra, the Court recognized that "[t]he Legislature's broad delegation of power to the Commissioner . . . encompasse[d] the authority to establish a time limitation for the resolution of disputes under the school laws." 131 N.J. at 582. The "limitation period gives school districts the security of knowing that administrative decisions regarding the operation of the school cannot be challenged after ninety days." Ibid. Like other limitations periods, the purpose of the ninety-day rule is twofold: "to stimulate litigants to pursue a right of action within a reasonable time so that the opposing party may have a fair opportunity to defend, thus preventing the litigation of stale claims"; and, "to penalize dilatoriness and serve as a measure of repose by giving security and stability to human affairs." Id. at 587 (internal quotations and citations omitted).

A "final order, ruling, or other action by" a school district need not take a specific form and may be "unofficial and informal." Id. at 588. "[A]dequate notice under [the regulation]," is provided if the aggrieved party becomes aware of "the existence of that state of facts that would enable [it] to file a timely claim." Id. at 588-89. In this case, the Commissioner's determination that Mountainside was on notice of Berkeley Heights's final action as of March 16, 2006 is adequately supported by evidence in the record and we find no reason to disturb it.

However, N.J.A.C. 6A:3-1.16 provides:

The rules in this chapter shall be considered general rules of practice to govern, expedite and effectuate the procedure before, and the actions of the Commissioner in connection with, the determination of controversies and disputes under the school laws. Where such rules do not reflect a specific statutory requirement or an underlying rule of the OAL, they may be relaxed or dispensed with by the Commissioner, in the Commissioner's discretion, in any case where a strict adherence thereto may be deemed inappropriate or unnecessary or may result in injustice.

[Emphasis added.]

Contrary to Berkeley Heights's argument, the ninety-day rule "do[es] not reflect a specific statutory requirement or an underlying rule of the OAL"; therefore, the Commissioner had the power, in the exercise of her significant discretion, to relax the rule's strict application to avoid an injustice. See Ibid.

We reject Berkeley Heights's arguments to the contrary. It argues that N.J.A.C. 6A:3-1.3(i) is a statute of repose that must be strictly applied. See generally R.A.C. v. P.J.S., Jr., 192 N.J. 81, 96-100 (2007) (discussing the difference between statutes of repose and statutes of limitation). Such construction, however, flies in the face of the express language of the regulation which specifically accords the Commissioner the opportunity to relax the ninety-day time period.

Berkeley Heights also contends that the Commissioner must demonstrate "unusual and compelling circumstances" to justify relaxation of the 90-day rule, citing Kaprow, supra, 131 N.J. at 591. However, this misstates the Court's holding. In Kaprow, the State Board refused to relax the 90-day rule to permit the late filing of an individual superintendent's challenge to his termination. Id. at 576. The Court concluded that the facts of the case did not present "exceptional circumstances that compel the . . . waive[r] [of] the ninety-day limitation." Id. at 591 (emphasis added). The test by which we must review the Commissioner's action in this case is not whether "unusual and compelling circumstances" were presented that compelled the Commissioner to relax the rule, though indeed they may have been. Rather, we must only decide whether she abused her discretion in choosing to relax the rule. We find no basis to conclude she did.

Berkeley Heights argues that relaxation was not appropriate because this case "[wa]s not any different than any other case dealing with application of tuition credits . . . ." However, this overlooks the fact that years of tuition credits were disputed and the positions of the parties were intractable. Moreover, the parties had operated under the Agreement in contravention of the appropriate funding formula, and, in order to maintain some ability to move forward, had entered into a consensual agreement for the 2007-08 school year that clearly anticipated adjustments depending upon the outcome of this dispute. In short, we cannot conclude that the Commissioner mistakenly exercised her discretion to resolve a dispute in the interests of the citizens of the two municipalities.

(b)

Berkeley Heights argues that the Commissioner erred in excluding its claim for tuition payments under the Agreement regarding special-education or classified students. It argues that Mountainside raised the issue "generally" in its petition or, alternatively, that its cross-petition sufficiently put Mountainside on notice that Berkeley Heights was making a claim in this regard. We find the argument to be of insufficient merit to warrant extensive discussion in this opinion. See R. 2:11-3(e)(1)(E).

It is clear that neither the petition nor the cross-petition specifically raised the claim. The matter was first addressed in a certification Berkeley Heights filed in support of its cross-motion for summary decision wherein it alleged that it had never billed Mountainside for special education costs but rather had "absorbed" them.

The Commissioner rightfully determined that the issue of tuition reimbursements for special-education students was not properly part of this case, and noted that Berkeley Heights could "file a separate matter to recover these costs." We find no principled reason to disturb that conclusion.

(c)

Berkeley Heights contends that the issues presented should not have been decided in a summary fashion because material disputed facts existed. To the extent it moved for summary disposition itself, Berkeley Heights argues that its motion was limited only to application of the 90-day rule and whether Mountainside's petition should have been dismissed as time-barred. Berkeley Heights also contends that the Commissioner "made legal findings with respect to the 2007-08 school year" which were not "part of either the [p]etition [or] [c]ross-[p]etition of appeal . . . ." We find the arguments unavailing.

"It is well-established that where no disputed issues of material fact exist, an administrative agency need not hold an evidential hearing in a contested case. The mere existence of disputed facts is not conclusive. An agency must grant a plenary hearing only if material disputed adjudicative facts exist." Frank v. Ivy Club, 120 N.J. 73, 98 (1990)(citations omitted), cert. denied sub nom., Tiger Inn v. Frank, 498 U.S. 1073, 111 S. Ct. 799, 112 L. Ed. 2d 860 (1991); see In re Farmers' Mut. Fire Assurance Ass'n of N.J., 256 N.J. Super. 607, 618 (App. Div. 1992) (noting that under the Administrative Procedure Act, N.J.S.A. 52:14B-1 to -15, the agency can exercise its discretion to determine whether an evidentiary hearing is necessary).

N.J.A.C. 1:1-12.5(a) provides that "[a] party may move for summary decision upon all or any of the substantive issues in a contested case." The ALJ's power over the conduct of the proceedings is quite broad, however, and the regulations specifically permit her to "convert any form of proceeding into another, whether more or less formal or whether in-person or by telephone." N.J.A.C. 1:1-14.6(d). In addition to the specific powers listed in the regulations, the ALJ may take any "other actions . . . necessary for the proper, expeditious and fair conduct of the hearing or other proceeding, development of the record and rendering of a decision." N.J.A.C. 1:1-14.6(p); see Contini v. Bd. of Educ. of Newark, 286 N.J. Super. 106, 116 (App. Div. 1995) (observing that the summary decision rule "is 'related to and, indeed, essential to the proper conduct of administrative hearings in contested cases'" (quoting In re Unif. Admin. Procedure Rules, 90 N.J. 85, 106 (1982))), certif. denied, 145 N.J. 372 (1996).

In this case, both sides moved for summary decision. Berkeley Heights argued in its cross-motion that Mountainside's petition was "time-barred by the applicable statute of limitations" and, alternatively, that "summary decision on the merits should be granted in favor of Berkeley Heights." Berkeley Heights further contended that Mountainside's "calculations [were] erroneous," noting specifically that "[w]hen the amount actually paid by [Mountainside] [wa]s considered -- and the record w[ould] not be in dispute -- it [wa]s impossible for [Mountainside] to obtain the relief it [wa]s seeking." Thus, we reject the argument that the relief Berkeley Heights sought in its motion for summary decision was limited solely to the legal issue of whether the 90-day rule required dismissal of Mountainside's petition.

We also reject the argument that material adjudicative facts were disputed such that the matter was not ripe for summary decision. The crux of the dispute was the funding formula that should apply to the Agreement. Each party submitted certifications, exhibits, and experts' reports in support of their claims. The ALJ took extensive testimony from the experts regarding their interpretation of the regulations and the history of how the parties actually interacted under the Agreement. In the end, the ALJ concluded, and the Commissioner concurred, that the regulations governed the dispute, not the conduct of Mountainside or Berkeley Heights. The ALJ computed the amounts due, the Commissioner adopted those calculations, and neither party has appealed the methodology utilized.

Despite this extensive record of essentially undisputed facts, Berkeley Heights contends that summary decision was inappropriate. However, it points to only two examples of alleged disputed material facts. First, it suggests that the $402,500 it paid in 2005 was actually a "settlement compensat[ing] Mountainside for all prior school years up to and including the 2002-2003 school year." Second, it argues that it is "entitled to . . . a factual hearing as to the $49,250[] payment."

There is nothing in the record suggesting that when Berkeley Heights made its payment in 2005, the parties were settling their dispute regarding all payments through the 2002-03 school year. In support of its cross-motion, Berkeley Heights submitted a certification from William Van Tassel, its Board Secretary and Business Administrator from December 1985 to February 2006. He was directly involved in the interim agreement in 2005. Van Tassel certified:

In an effort to help [Mountainside], we agreed to a credit of $402,500.00 that [Mountainside] received over the remainder of the 2005-2006 school year. I felt comfortable with this number because I knew that the cumulative adjustment owed to [Mountainside] would be a number close to $400,000. We therefore would not be giving petitioner something it was not owed.

Thus, the actual representative of Berkeley Heights who negotiated the payment never claimed it was made in settlement of all of Mountainside's claims. Therefore, no material factual dispute on the issue was raised by Berkeley Heights.

The evidential record regarding Mountainside's $49,250 payment in 2000-01 does not present material disputed facts that required a further evidentiary hearing either. During negotiations, Mountainside asserted it had made the payment as part of billed tuition costs; counsel for Berkeley Heights advised the ALJ that it "[wa]s not currently in possession of any documentation to substantiate Mountainside's representation as to the $49,250.00, which is still at issue." However, counsel for Mountainside subsequently advised the ALJ:

I enclose for your review a copy of a voucher, countersigned by Berkeley Heights on July 31, 2000, reflecting a payment of $49,250 toward the "97/98 Tuition Agreement". I also enclose an activity register showing payments actually made to Berkeley Heights during the 2000-2001 school year, allocating that payment to Account Number 11-000-100-561-000-02, "TUITION/REG," which is to account for regular education tuition.

Counsel for Berkeley Heights responded,

Although Berkeley Heights did not send an invoice to Mountainside that specifically related to the $49,250[] at issue, Berkeley Heights does not contest receiving the above-referenced funds. However, the reference on the face of the counter-signed voucher provided by [counsel for Mountainside] is not dispositive proof that the $49,250[] was a tuition payment. In fact, it has been confirmed by the Berkeley Heights business office that a payment in the amount of $49,250[] was received from Mountainside in Summer 2000 and was recognized in audit work papers for 2000-2001 as "miscellaneous income." The dubious nature of this payment is also called into question due to the contested fact that all other sums at issue in the litigation and termed "tuition" were in fact allocated to an identifiable tuition line-item account. It is Berkeley Heights' position that had the $49,250[] been a tuition payment, it would have been similarly treated.

Further letters from counsel followed, but neither requested a hearing on this issue.

It is apparent that by the time this matter was heard, in April 2007, live testimony would have provided no additional evidence on the subject. Each side clearly stated their position, and each supplied the documentary evidence regarding what had transpired nearly seven years earlier. Based upon the evidence before her, the ALJ decided the factual question of whether or not the money was a tuition payment under the Agreement. The Commissioner adopted that finding, and we see no basis to disturb it.

As to the final argument, i.e., that the Commissioner reached conclusions regarding a school year outside those named in Mountainside's petition, it lacks sufficient merit to warrant extensive discussion. See R. 2:11-3(e)(1)(E).

Berkeley Heights contends that Mountainside's petition only sought adjustments up to and including the 2003-04 school year. Because final certified per student costs for the 2005-06 school year had not been released by the Commissioner at the time of her decision, Berkeley Heights argues it was improper for her to order adjustments for "payments made in the 2005-06 school year or beyond . . . ." It further contends that the parties had been operating under a consensual agreement for the 2007-08 school year and the Commissioner's decision failed to consider this.

It suffices to say that when Mountainside unilaterally withheld payment in 2006, Berkeley Heights filed a cross-petition seeking an order requiring Mountainside to "immediately pay . . . all monies wrongfully withheld," as well as "the full amount due and owing for the 2006-07 school year." We believe, therefore, that the issue was squarely before the Commissioner because adjustments from prior years significantly impacted the amount due to Berkeley Heights in 2006-07. We find no prejudice to Berkeley Heights in this regard since the Commissioner's order did not preclude the potential for future adjustments under the regulations.

(d)

Lastly, Berkeley Heights argues that if the Commissioner's decision is affirmed, it is "immediately entitled to $44,251.60," which it claims is the difference between what Mountainside was ordered to pay, and what it actually paid. This contention segues from Berkeley Heights's earlier argument that the Commissioner decided issues beyond those presented by the petition and cross-petition. To fully understand the argument, we provide some explication of events that followed the issuance of the Commissioner's January 17, 2008 decision.

On January 28, 2008, Mountainside moved for clarification. It noted that while the matter was pending before the ALJ, the parties had entered into an agreement regarding tuition payments for the 2007-08 school year. In light of the ALJ's calculations, and the Commissioner's adoption of same, Mountainside argued that when those calculations were applied to the 2007-08 school year payments, it was entitled to a larger credit than it was actually receiving under the interim agreement. Mountainside's supporting certification acknowledged that even under its interpretation of the Commissioner's decision, it owed a net balance of $18,745.

Berkeley Heights took the position that any comments regarding credits for the 2007-08 school year in the ALJ's decision were "dicta" and that "the Commissioner did not convert the ALJ's narrative to precedent but [instead] concluded that the 2007-08 school year was not at issue." Berkeley Heights argued that, pursuant to regulation, "[a]ny credit due for that year can be addressed three years thereafter, as in the normal course." It argued that it was owed $44,251.60.

The Commissioner responded on March 14, 2008. After recounting each side's argument, she concluded that "[her] own decision [was] clear on [its] face." She granted Mountainside's motion "in the interest of averting further dispute . . . ." The Commissioner continued that "it was [her] intention . . . to bring the parties' payment/credit status at the conclusion of this matter into alignment with the structure provided by law, so that they could put years of improper 'ad hoc' arrangements behind them and continue thereafter strictly in accordance with applicable rule." She noted that she had indeed adopted the ALJ's "methodology," including the monies "generated" as a credit in 2004-05 which were to be "applied, by operation of rule, in 2007-08."

Nevertheless, the Commissioner "decline[d] to address specific numbers outside the record before [her] at the time of" her decision. She reiterated that Mountainside was entitled to "an immediate offset" for any overpayment resulting from the parties' 2007-08 agreement and the "263,574.80 credit to be applied in 2007-08 as found by the ALJ."

Berkeley Heights reiterates before us that Mountainside has refused to pay $44,251.60 it is entitled to receive under calculations made pursuant to the Commissioner's letter of clarification. Mountainside argues that that the Commissioner was supplied with the numbers in dispute, and that she did not order it to pay any further amount. It contends, therefore, that the competing claims are a "wash" given the small amount in dispute.

It is clear that the Commissioner's January 2008 decision did not specifically address the issue of credits to be applied during the 2007-08 school year. It is also clear that she declined the opportunity to resolve the actual dispute finding the record before her to be inadequate. Berkeley Heights's notice of appeal did not specifically seek review of the Commissioner's letter decision. As a result, we refuse to exercise original jurisdiction to consider the issue, and we leave the parties to whatever remedies may be available under the applicable regulations.

Affirmed.

 

This section was formerly codified as N.J.A.C. 6A:23-3.1(f). Since this appeal was filed, the governing regulations have been re-codified and may now be found at N.J.A.C. 6A:23A-17.1. Because the regulatory language of import to our decision is virtually identical, we shall use the new citations throughout this opinion.

The regulations formerly permitted the adjustment to be made "in the third school year following the contract year" in which the tentative payment was made. See N.J.A.C. 6A:23A-3.1(f)(6) and (7) (2006)(current version at N.J.A.C. 6A:23A-17.1(f)(6)and(7)(2009)). The current regulations permit the adjustment to "be paid during the second school year following the school year for which the tentative charge was paid." N.J.A.C. 6A:23A-17.1(f)(6) and (7).

We set forth the factual background as contained in the certifications and materials submitted in support of, and in opposition to, the motion and cross-motion for summary decision filed with the Office of Administrative Law (OAL) which we discuss in greater length below. With few exceptions, the parties are in substantial agreement as to the underlying facts.

Both parties initially filed notices of appeal with the State Board of Education, but Mountainside withdrew its notice. After the Legislature abolished the State Board, and enacted N.J.S.A. 18A:6-9.1(b) (permitting all pending administrative appeals to be filed with the Appellate Division within 45 days), Berkeley Heights filed this appeal in a timely manner. Mountainside has not cross-appealed.

This also supports our conclusion that Berkeley Heights sought relief on the merits of Mountainside's claim and on its cross-petition, not just resolution of the legal issue regarding application of the 90-day rule.

(continued)

(continued)

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A-6215-07T3

March 15, 2010