ELIZABETH EDUCATION ASSOCIATION v. BOARD OF EDUCATION OF THE CITY OF ELIZABETH UNION COUNTY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5506-09T3

ELIZABETH EDUCATION

ASSOCIATION, ROSE CARRETO

and MARIA DEJESUS DIAS,

Petitioners-Respondents,

v.
 

BOARD OF EDUCATION OF THE

CITY OF ELIZABETH, UNION

COUNTY,

Respondent-Appellant.

________________________________________________________________

December 16, 2011

Argued September 27, 2011 - Decided

Before Judges Carchman and Fisher.

On appeal from the New Jersey Board of Education, Docket No. 380-12/08.

Isabel Machado argued the cause for appellant (Machado Law Group, L.L.C., attorneys; Ms. Machado and Peter P. Perla, Jr., on the brief).

Aileen M. O'Driscoll argued the cause for respondents Elizabeth Education Association, Rose Carreto and Maria DeJesus Dias (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, P.C., attorneys; Ms. O'Driscoll, of counsel and on the brief).

Michelle L. Miller, Assistant Attorney General, argued the cause for respondent Commissioner of Education (Paula T. Dow, Attorney General, attorney; Ms. Miller, of counsel; Diane C. Sierotowicz, Deputy Attorney General, on the brief).

PER CURIAM

Appellant Board of Education of the City of Elizabeth (appellant or the Board) appeals from a final decision of the Commissioner of Education (the Commissioner), concluding that the Board violated N.J.A.C. 6A:13-3.1, a class size regulation promulgated pursuant to the 2008 New Jersey School Funding Reform Act (SFRA), N.J.S.A. 18A:7F-43 to -63. For the first time on appeal, appellant challenges the jurisdiction of the Commissioner and the judiciary to resolve the issues in dispute.

Appellant asserts that because the class size regulation is an unconstitutional unfunded mandate, jurisdiction properly resides with the Council on Local Mandates (Council) to determine the regulation's constitutionality. Additionally, appellant asserts that respondents Elizabeth Education Association (Association), Maria DeJesus Dias and Rose Ann Carreto lack standing to challenge appellant's alleged violation of the regulation. It further claims that the summary decision in favor of respondents was improperly granted because there are genuine issues of material fact as to whether defendant violated the regulation.

We conclude that the regulation is not an unfunded mandate, and the Office of Administrative Law (OAL), the Commissioner and the judiciary have jurisdiction over the subject matter of the dispute. We further determine that respondents have standing, and the Commissioner acted properly in adopting the summary decision of the AOL.

These are the relevant facts. The Elizabeth School District is a "high poverty school district," N.J.A.C. 6A:13-3.1(a), in which forty percent or more of the students are at-risk as defined in L.2007, c.260. Elizabeth was previously denoted as an "Abbott District,"1 in accordance with the provisions of N.J.A.C. 6A:10 and N.J.A.C. 6A:10A. The Association is the collective bargaining representative for professional staff employed by defendant. Respondents Carreto and Dias are taxpayers and residents of Elizabeth. Ms. Dias has a child who attended the district's schools at the time the petition was filed but graduated in June 2009. Ms. Carreto is the President of the Association and a teacher in the district.

Pursuant to N.J.A.C. 6A:13-3.1, commencing with the 2008-2009 school year, high poverty school districts such as Elizabeth have been required to comply with state-mandated class size limitations. The regulation requires that

class size . . . shall not exceed 21 students in grades kindergarten through three, 23 in grades four and five and 24 students in grades six through 12; provided that if the district chooses to maintain lower class sizes in grades kindergarten through three, class sizes in grades four and five may equal but not exceed 25. Exceptions to these class sizes are permitted for some physical education and performing arts classes, where appropriate.

[N.J.A.C. 6A:13-3.1(b).]

Commencing in 2008, several classes in the Elizabeth School District had enrollments exceeding the maximum class sizes mandated by the regulation. The district provided data on class sizes during the 2008-2009 and 2009-2010 school years. The data demonstrated that many of the classes exceeded the regulatory limit.2

In the fall of 2008, respondents notified appellant of alleged violations of state-mandated class size limits in appellant's school system. When appellant took no action to address respondents' concerns, respondents filed a petition with the Commissioner on December 24, 2008. After the issue was joined, the matter was transferred to the OAL and thereafter, respondents filed a motion for summary decision. The ALJ granted summary decision in favor of respondents, and the Commissioner adopted the recommended decision of the OAL as the final decision in the matter. This appeal followed.

The threshold issue that we must address is whether we have jurisdiction to adjudicate the issue in dispute. We answer that question in the affirmative.

As we have noted, appellant contends that the OAL, the Commissioner and the judiciary lack subject matter jurisdiction to adjudicate this dispute, based on appellant's contention that N.J.A.C. 6A:13-3.1 is an unfunded mandate, and only the Council has jurisdiction to determine of the constitutionality of the regulation. As provided in N.J. Const. art. VIII, 2, 5(b), the Council has jurisdiction to determine whether specific legislation is an unconstitutional unfunded mandate.

Generally, we decline to consider questions or issues not properly presented initially when an opportunity for such a presentation was available "unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest." Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (citing Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied 31 N.J. 554 (1960)). We recognize, however, that the defense of lack of subject matter jurisdiction, R.4:6-2(a), may be asserted at any time. See Hamilton, Johnston & Co. v. Johnston, 256 N.J. Super.657, 662 (App. Div.), certif. denied, 130 N.J. 595 (1992); see also Peper v. Princeton Univ. Bd. of Trs., 77 N.J. 55, 65-66 (1978) (observing that subject matter jurisdiction may not be conferred by waiver resulting from a party's failure to interpose a timely objection). Accordingly, we need not entertain respondents' argument that the issue was never raised before the OAL because we address the merits here.

In support of its claim that the OAL, the Commissioner and the judiciary lack jurisdiction to hear respondents' complaint, appellant asserts that the Council has exclusive jurisdiction. As we have noted, the Constitution mandates that the Council "shall resolve any dispute regarding whether a law or rule or regulation issued pursuant to a law constitutes an unfunded mandate." N.J.S.A. 52:13H-12 (Local Mandates Act) established the Council. The Council is charged with the following responsibility: "to review, and issue rulings upon, complaints filed with the [C]ouncil . . . that any provision of a statute . . . constitutes an unfunded mandate . . . ." N.J.S.A. 52:13H-12(a) (emphasis added.). If the Council determines that any provision of a state statute is an unfunded mandate, that provision will "cease to be mandatory." Ibid.

A law constitutes an unconstitutional "unfunded mandate" when: (1) the law imposes a "mandate" on a unit of local government; (2) direct expenditures are required for the implementation of the law's requirements; and (3) the law fails to authorize resources, other than the property tax, to offset the additional direct expenditures on the unit of local government. In re Ocean Twp. (Monmouth Cnty.) & Frankford Twp. Council on Local Mandates, (August 2, 2002), available at http://www.state.nj.us/localmandates/decisions.html. "The [Local Mandates Act] directs the Council to evaluate whether a subject rule, regulation or statutory provision constitutes an unfunded mandate 'upon the [complaining] county, municipality or school district,' not all counties, municipalities or school districts." In re Highland Park Bd. of Educ. & Highland Park, Council on Local Mandates, (January 31, 2003), available at http://www.state.nj.us/localmandates/decisions.html (quotingN.J.S.A. 52:13H-12).

Appellant asserts that the regulation mandating class sizes is an unfunded mandate and is therefore unconstitutional.3 Because we conclude that the regulation falls within an exception to the unfunded mandates provisions of the Constitution, the issue is properly before us for consideration.

The "unfunded mandate" amendment to the New Jersey Constitution expressly exempts several categories of laws, and rules or regulations issued pursuant to such laws, from the designation of "unfunded mandate." A law, rule or regulation that "implements the provisions" of the Constitution is not considered to be an "unfunded mandate" and is not subject to the unfunded mandate amendment. N.J. Const. art. VIII, 2, 5(c).

The 2008 class size regulation is exempt from the unfunded mandates amendment to the Constitution. N.J. Const.art. VIII, 4, 1 directs the Legislature "to provide for the maintenance and support of a thorough and efficient system of free public schools for the instruction of all the children in the State between the ages of five and eighteen years." The regulation at issue in this case implements the Thorough and Efficient Education Clause of the Constitution.

The Council has stated that, in order for a regulation to be exempt from its jurisdiction,

[w]hen the Thorough and Efficient Education Clause, N.J. Const. art. VIII, 4, 1, is invoked to excuse an unfunded mandate,4 the Legislature either must state explicitly that it is implementing that clause, or the State bears the burden of making a specific, precise, fact-based showing that the [alleged] unfunded mandate implements the Thorough and Efficient Education Clause within terms previously defined by the Legislature or the courts.

[In re Monmouth-Ocean Educ. Servs. Comm'n, Rumson-Fair Haven Reg'l High Sch. Dist. & Stafford Twp. Bd. of Educ., Council on Local Mandates, (August 20, 2004), available at http://www.state.nj.us/localmandates/decisions.html.]

The Council has previously narrowed the scope of the constitutional exemption for education regulations and has rejected the argument that "any [form of] educational spending . . . . implement[s] the Thorough and Efficient Clause." In re Highland Park Bd.of Educ.& Highland Park, Council on Local Mandates, Nos. 10-98 & 12-98, (August 5, 1999), available at http://www.state.nj.us/localmandates/decisions.html.

The Council's narrowing construction of the Implementation Clause notwithstanding, the legislation here falls within the exemption for the Thorough and Efficient Education Clause of the Constitution on two grounds: the Legislature explicitly stated that it was implementing the Thorough and Efficient Education Clause; and the regulation was crafted to address the constitutional violations exposed in the decades-long Abbott v. Burke litigation interpreting the Thorough and Efficient Education Clause.

First, in the body of the legislation, the Legislature explicitly acknowledged its constitutional obligation to "provide for the maintenance and support of a thorough and efficient system of free public schools for the instruction of all children in the State between the ages of five and eighteen years." N.J.S.A. 18A:7F-44. According to the Council's analysis, this is sufficient grounds to exempt a statute from its jurisdiction. In re Monmouth-Ocean Educ. Servs. Comm'n, supra, Council on Local Mandates, (August 20, 2004).

The legislation also survives scrutiny under the second prong of the Council's disjunctive test. As noted in the SFRA, in interpreting the constitutional requirement of thorough and efficient education, the Supreme Court "has consistently held that the Legislature has the responsibility to substantively define what constitutes a thorough and efficient system of education." N.J.S.A. 18A:7F-44c. In 2009, the Court upheld the constitutionality of the SFRA. Abbott v. Burke (Abbott XX), 199 N.J. 140, 175 (2009). In 2011, the Court found that in the past two years, the State did not meet its constitutional obligation to provide a thorough and efficient education because it failed "to provide full funding under the SFRA's formula," Abbott v. Burke (Abbott XXI), 206 N.J. 332, 341 (2011); the Court ordered that "the funding to the Abbott districts in FY 2012 . . . be calculated and provided in accordance with the SFRA formula," id. at 376, in order for the State to fulfill its constitutional obligation to public school children. The Court's order that the State comply with the SFRA's funding scheme in order to remedy its violation of the Thorough and Efficient Education Clause supports the view that, by its terms, the SFRA implements the constitutional Thorough and Efficient Education Clause.

The SFRA grants the Commissioner the authority to "adopt . . . such rules and regulations as the commissioner deems necessary to implement the provisions" of the statute. N.J.S.A. 18A:7-16. Effective June 2, 2008, the Department of Education promulgated Chapter 13 of Title 6A of the New Jersey Administrative Code pursuant to the SFRA to implement both the constitutional thorough and efficient education mandate and the Court's directives with respect to high poverty districts. In interpreting whether a regulation "implements the provisions" of the Constitution, such that it is exempt from the Council's jurisdiction, the Council abides by the following principle: "The judiciary, not the Council, is responsible for determining what is constitutionally 'necessary.' Moreover, the Council should not presume to narrow the discretion entrusted to the legislative and executive branches to fashion remedies for constitutional problems." In re Complaint Filed by Twp. of Medford, Council on Local Mandates, (June 1, 2009), available athttp://www.state.nj.us/localmandates/decisions/.

Agency regulations are presumed valid, based on the judiciary's recognition "that an agency's specialized expertise renders it particularly well-equipped to understand the issues and enact the appropriate regulations pertaining to the technical matters within its area." In re N.J.A.C. 7:15-5.24(b), 420 N.J. Super. 552, 581 (App. Div. 2011) (quoting In re Stormwater Mgmt. Rules, 384 N.J. Super. 451, 465-66 (App. Div. 2006). Indeed, an agency's regulations are constitutional unless they are found to be arbitrary and capricious. See New Jersey State League of Municipalities v. Dep't of Cmty. Affairs, 158 N.J. 211, 222 (1999). The moving party bears the burden of proving that the regulation is arbitrary and capricious. Ibid.

Appellant's argument that the Council has jurisdiction over the case is based on some factual similarities between this case and Special Servs. Sch. Dists., supra. Special Servs. Sch. Dists. involved a regulation that restricted the age span among students in special education classes. The factual similarities belie significant differences on the level of legal analysis. Whereas in this case the regulations respond directly to a series of Supreme Court cases interpreting the Thorough and Efficient Education Clause, the regulation struck down in Special Servs. Sch. Dists. was not so rooted in any constitutional provision. Because the alleged unfunded mandate at issue in Special Servs. Sch. Dists. did not implicate a constitutional provision, the Council had jurisdiction over the matter. By contrast, this case involves a regulation that enacts a constitutional provision, thereby falling within the jurisdictional exemption in N.J. Const. art VIII, 2, 5(c). For this reason, the Council does not have jurisdiction in this matter.

Critically important, we perceive no basis upon which to conclude that the Commissioner's decision was arbitrary or capricious. The legislative history related to the SFRA and the rulemaking history as described in the New Jersey Register suggest that the Commissioner and the Legislature "engaged nationally recognized experts in education funding and provided significant opportunities for stakeholder involvement and public input to assist in formulating and refining a comprehensive . . . model . . . ." N.J.S.A. 18A:7F-44h; 40 N.J.R. 4229(a) (2008); 41 N.J.R. 4701(b) (2009); 41 N.J.R. 1926(a) (2009). In addition, the Court in Abbott v. Burke(Abbott IV), 149 N.J.145, 224-25 (1997), directed the Commissioner to conduct a comprehensive study of the needs of students in high poverty districts, specify programs that would address those needs, determine the costs of those programs, and devise a plan for implementation. The Court has looked favorably on the Commissioner's proposals to, among other things, reduce recommended class sizes in high poverty school districts. See Abbott XX, supra, 199 N.J. at 225; cf. Abbott v. Burke (Abbott V), 153 N.J. 480, 497-99 (1998). The extensive evidence addressing demographics and student achievement on the record, the Commissioner's use of education experts' input to craft the regulation, the record of public comment and official responses, and the fact of Court approval of similar class size schemes in the past supports the conclusion that N.J.A.C. 6A:13-3.1 was neither arbitrary nor capricious. The regulation "implement[s] the provisions" of the Constitution. The regulation is exempt from the unfunded mandate amendment to the Constitution, and it is not subject to the jurisdiction of the Council.

Finally, we reject appellant's remaining arguments. We are satisfied that respondents Carreto and Dias have standing to challenge appellant's actions. See Ridgewood Educ. Ass'n. v. Ridgewood Bd. of Educ., 284 N.J. Super. 427, 430-33 (App. Div. 1995) (recognizing New Jersey's liberal application of standing criteria including taxpayers, teachers and associations).

We likewise find no merit in appellant's argument that there were material issues of fact in dispute, precluding consideration of a summary decision. Appellant's reliance on N.J.A.C. 6A:32-8.2(e) is misplaced, as that regulation applies to an attendance and accounting regulation that is unrelated to the purpose of complying with the class size regulation.

Affirmed.

1 Abbott districts are school districts in New Jersey covered by a series of New Jersey Supreme Court rulings, in which the Court concluded that the education provided to school children in poor communities was inadequate and unconstitutional and mandated that State funding for these districts be equal to that spent in the wealthiest districts in the state. See Abbott v. Burke, 119 N.J. 287, 384-85 (1990) (Abbott II).

2 The following examples are derived from the data: as of November 2008, at George Washington School (School Number 1), Jasmine Lee's kindergarten class had an enrollment of twenty-three students; at George Washington School (School Number 1), Shawneequa Torres's first grade class had an enrollment of twenty-four students; at Winfield Scott School (School Number 2), three kindergarten and one first grade class had enrollments of twenty-two students; at Joseph Battin School (School Number 4), two fourth grade classes had enrollments of twenty-four students; at Benjamin Franklin School (School Number 13), two sixth grade classes had enrollments of twenty-seven students; at the High School, over fifty ninth grade classes had enrollments in excess of twenty-four students.

As of January 2009: at the High School, over fifty ninth grade classes had enrollments in excess of twenty-four students; at the High School, over fifty twelfth grade classes had enrollments in excess of twenty-four students.

As of November 2009: at George Washington School (School Number 1), several classes in grades one through three had more than twenty-one students enrolled; George Washington School (School Number One), a fifth grade class had twenty-four students enrolled; at Mabel G. Holmes School (School Number 5), a fourth grade class had twenty-five students enrolled.

As of December 2009: at Admiral William F. Halsey, Jr. Leadership Academy, there were two Geometry classes with enrollments of twenty-nine students; at Elizabeth High School, there were three Latin classes with more than twenty-four students.

3 Appellant argues that all of the elements of the test to establish an unconstitutional unfunded mandate are met. Appellant claims that the regulation places a specific mandate upon appellant, a unit of local government, limiting its class sizes as a high poverty school district. Second, appellant argues that it is required to make direct expenditures in order to comply with this mandate. Finally, appellant alleges that the regulation provides no funding resources to assist appellant in complying with this mandate or has cut funding and state aid since the regulation was enacted.

Although the question of whether the regulation is an unfunded mandate is within the Council's jurisdiction to decide, it is not an unfunded mandate. Under the third prong of the "unfunded mandate" test, the Council evaluates whether the law fails to authorize resources, other than the property tax, to offset the additional direct expenditures on the unit of local government. "Under the SFRA, former Abbott districts no longer receive supplemental and parity aid." J.D. v. Davy, 415 N.J. Super. 375, 378 n.1 (App. Div. 2010). The SFRA was designed to provide that every school district have the fiscal resources available for its students to meet the State's educational standards. See N.J.S.A. 18A:7F-44(h). The SFRA provides funding to meet these standards through the establishment of an adequacy budget, which is supported by a combination of State and local funds. See N.J.S.A. 18A:7F-48. The State/local share is calculated based on a community's income and property wealth, relative to the balance maintained by the State. N.J.S.A. 18A:7F-52. All high poverty districts receive State aid to comply with State laws and regulations in accordance with the provisions of the SFRA. N.J.S.A. 18A:7F-43 to -63.

4 In citing the Council's test for determining its jurisdiction over a given matter, we do not concede that the regulation in this case would otherwise be an unfunded mandate.