Decision No. 13,519

(November 20, 1995)

Ehrlich, Frazer & Feldman, Esqs., attorneys for respondents, Jacob S. Feldman and Laura A. Mongelli, Esqs., of counsel

MILLS, Commissioner.--Petitioner seeks the removal of four members of the Board of Education of the Malverne Union Free School District and the superintendent ("respondents"). The application must be denied.

Petitioner claims that respondents have retained unappropriated surplus funds in violation of Real Property Tax Law '1318 ("RPTL"). Petitioner alleges that this practice occurred in the 1991-92, 1992-93, 1993-94 and 1994-95 school years. Under RPTL '1318, at the conclusion of each fiscal year, a board of education must apply any unexpended surplus funds to reduce its upcoming tax levy for the current school year. "Surplus funds" is defined as "any operating funds in excess of 2% of the current school year budget, and shall not include funds properly retained under other sections of law." Accordingly, at the end of each school year, a board of education may not retain more than 2% of its surplus funds for expenditures the following year, and must use the remaining surplus funds to offset its upcoming tax levy.

Petitioner asserts that because respondent board members were responsible for the excess surplus funds and knowingly violated the RPTL, they should be removed from office under Education Law '306. Petitioner also seeks the removal of the superintendent of schools because he allegedly recommended that the district retain unexpended surplus funds in excess of that authorized by statute. Petitioner requests a return of all surplus funds to the taxpayers to reduce the tax levy for the 1995-96 school year. Petitioner seeks withholding of the district's State aid until respondent complies with RPTL '1318. Petitioner also seeks that the employment contracts of the superintendent of schools and assistant superintendent for business be voided and that they be barred from any future employment by the district. Finally, petitioner requests that I assume control of the district until new members are elected to the board of education and a new superintendent of schools is hired.

Respondents contend that the petition is untimely with respect to the 1991-92, 1992-93, 1993-94 and 1994-95 school years. Respondents also claim that any excess fund balance for the 1994-95 school year was de minimus because it exceeded the 2% limit by .08%. Respondents also contend that any claim relating to the 1995-96 fiscal year is premature and also moot since the district has taken steps to reduce the unappropriated fund balance to 2% of the budget for the 1995-96 school year.

Before reaching the merits, I will address respondents' procedural arguments. Section 275.16 of the Commissioner's Regulations requires that an appeal to the Commissioner of Education be commenced within 30 days from the making of the decision or the performance of the act complained of. This application was commenced on July 20, 1995, more than 30 days after the close of the district's 1991-92, 1992-93 and 1993-94 fiscal years. Consequently, those claims that relate to respondents' fiscal practices in those years are untimely. Petitioner's claim with respect to the 1994-95 fiscal year, however, is timely because petitioner brought the application within 30 days of the conclusion of the 1994-95 fiscal year.

The application must also be dismissed on the merits. Education Law '306 provides, in pertinent part:

With respect to the merits of this application, school district officers can only be removed under '306 when they engage in a "wilful violation or neglect of duty." This means that there must be "a purpose or intent to disregard a lawful duty or to violate a legal requirement" (Application of Kozak, 34 Ed Dept Rep 501; Matter of Felicio, et al., 19 id. 414; Matter of Winograd, et al., 17 id. 213; Matter of Trigilio and Iannotta, 14 id. 385). Mere negligence on the part of a school officer is not enough to warrant removal (Appeal of Schofield, 34 Ed Dept Rep 143).

In this case, the acts about which petitioner complains do not rise to the level of wilful misconduct. The record reflects that the district's surplus fund balance exceeded the 2% limitation established by '1318 of the RPTL by only .08%. The record further reflects that this result was an unintended consequence of respondents' estimation of district revenues and expenses for the 1994-95 school year. Petitioner has failed to show any purpose or intent by respondents to disregard a legal requirement. Although respondents' budgeting practice was technically out of compliance with RPTL '1318, that fact alone, without an intentional violation of law, does not subject respondents to removal.

Respondents note that they intend to comply in all respects with RPTL '1318 for the 1995-96 fiscal years. The record reflects that respondent informed the Nassau County Tax Assessor's Office of the estimated school budget of $23,274,532 and a need to raise $17,518,918 to fund the budget. These budget figures include $690,000 in surplus funds from the 1994-95 budget. After committing this amount to offset taxes, respondent estimated the undesignated fund balance to be $410,000 which is less than 2% of respondents' 1995-96 budget. This indicates that respondents' unexpended surplus funds have been reduced in compliance with RPTL '1318. Therefore, it appears that respondents have discontinued the practice in question. Respondents should endeavor to be scrupulous in their future budgetary practices, as another violation of RPTL '1318 may well now be sufficient to warrant their removal from office.

I have considered the parties' remaining contentions and find them without merit.

THE APPLICATION IS DENIED.

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