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Decision No. 13,760

Appeal of VED SHRAVAH, ROBERT ROBAR, GEORGE MANN AND DOLORES ALEXANDER against the Board of Education of the Wappingers Central School District, Peter Donnelly, Thomas Diorio, Vincent Lordi, Edward Clay, Robert Peterson, and Education Alternatives, Inc.

Appeal of MARYJANE MACNAIR against the Board of Education of the Wappingers Central School District and Education Alternatives, Inc.

Appeal of EDWARD M. BRODERICK, MARLENE M. GALOW, STERLING C. GASTON, AND SHARON B. PERLMAN against the Board of Education of the Wappingers Central School District, Peter Donnelly, Thomas Diorio, Vincent Lordi, Edward Clay, Robert Peterson, and Education Alternatives, Inc.

Appeal of ROBERT A. DYSON against the Board of Education of the Wappingers Central School District, and Education Alternatives, Inc.

Decision No. 13,760

(April 21, 1997)

 

Nancy E. Hoffman, Esq. attorney for petitioner, Marilyn S. Dymond, of counsel, in the second appeal

Michael K. Lambert, Esq., attorney for respondent Board of Education, in all appeals

Hogan & Hartson, L.L.P., Esqs., attorneys for respondent Educational Alternatives, Inc., Elizabeth Heffernan, Esq. of counsel, in all appeals

MILLS, Commissioner.--These appeals are decided together because they concern the same subject, a contract between the Wappingers Central School District and Education Alternatives, Inc. ("EAI"). All petitioners have requested that I determine the contract to be null and void. Petitioners Broderick, etal. also request that I remove the five named respondent board members. Respondents request dismissal of the appeal, and respondent board requests the additional relief of attorney's fees and costs for defending this action. The appeal must be sustained in part.

In 1995-96, Wappingers Central School District operated under a contingency or austerity budget of $99,090,279, including a voter approved proposition. By resolution dated November 13, 1995, respondent board directed the superintendent of schools to prepare a budget for the following school year, 1996-97, that would not exceed $95 million, excluding expenses for co-curricular interscholastic sports. On December 22, 1995, the superintendent submitted to respondent board the requested $95 million budget but made it clear that this was not his recommendation or the recommendation of his staff.

On January 2, 1996, the district promulgated a Request for Proposal (RFP) #01-95/96-009. The RFP requested consulting services which would provide:

oversight in all areas of Financial Management in the Wappingers Central School District. This involves, and is not limited to, the zero-based development of a 95 million dollar budget for the 1996-97 school year which maintains or improves the quality of the education currently offered to the children of the Wappingers Central School District.

In January 1996, the superintendent submitted to respondent board a tentative recommended budget prepared by the administrative staff of the school district in the amount of $99,090,323.

On February 12, 1996, respondent board voted to select EAI as the consultant and to enter into a contract with EAI on the condition that EAI agreed to perform the prescribed services set forth in its proposal for $100,000. EAI accepted that condition on February 13, 1996.

These appeals ensued. On March 19, 1996, I granted the interim relief requested by petitioners Shravah, etal., directing respondent board to immediately cease from disbursing or expending funds or incurring liability on behalf of the district in furtherance of, or in reliance upon, the February 12, 1996 resolution at issue, pending an ultimate determination of the appeal. Subsequently, EAI agreed that the district would incur no liability in connection with EAI providing any services enumerated in RFP #01-95/96-009 should it ultimately be determined by the Commissioner of Education or a court that the expenditure for such services is not an ordinary contingent expense.

Petitioners Shravah, etal. and MacNair request that I determine the contract between respondent board and EAI to be null and void because they alleged that expenditures under the contract do not constitute ordinary contingency expenses within the scope and meaning of Education Law '2023. Respondent board and EAI contend that such expenditures are ordinary contingent expenses because they pay for legal obligations of the school district and are necessary to maintain the district's educational program.

Before reaching the merits, I will the address the procedural issues raised by respondents. Respondent board contends that the petitions filed by petitioners Shravah, etal. and MacNair are defective because EAI was not made a party to the proceeding. That issue is now moot because pursuant to my authority under section 275.1 of the Regulations of the Commissioner of Education (8 NYCRR '275.1), I ordered EAI joined, and EAI has been joined.

Respondent board asserts that the petitions served by petitioners Shravah, etal.; MacNair; and Broderick, etal. were untimely. Respondent EAI also asserts this defense against petitioner MacNair. Section 275.16 of the Regulations of the Commissioner of Education (8 NYCRR '275.16) provides that an appeal to the Commissioner of Education must be commenced within 30 days from the making of the decision or the performance of the act complained of, and the Commissioner in his sole discretion may excuse a failure to commence an appeal within the time prescribed for good cause shown. Respondents contend that the alleged misconduct occurred on January 2, 1996 when the RFP was issued because expenses were incurred to process the RFP and that the 30 days should be counted from that date. I do not agree. Petitioners are appealing the respondent board's decision to enter into the contract with EAI. That did not occur until February 12, 1996. Petitioners Shravah, etal. and MacNair commenced their appeals within 30 days of February 12, 1996 by service on all respondents, except EAI, and I will excuse the untimely service on EAI because EAI was expeditiously served after I ordered them joined. Petitioners Broderick, etal. commenced the appeal within the 30-day period by service on respondent board members and EAI. However, upon filing the Broderick petition, my Office of Counsel advised petitioners that they did not effect proper service. Petitioners served their petition again, all respondents having been served by March 27, 1996. I find no prejudice against respondents as a result of this deminimis delay and will excuse the untimely service of the petition because petitioners appeared prose and did attempt to commence the appeal in a timely manner in the first instance.

Respondent board also contends that petitioners Broderick, et al. did not properly verify their petition because they included newspaper articles as exhibits, and petitioners do not know whether the articles are true. It is well settled that in appeals to the Commissioner of Education, newspaper articles do not constitute proof of any of the facts stated therein (Appeal of Como, 28 Ed Dept Rep 483; Matter of Norden, 23 id. Rep 94). Accordingly, I will disregard the newspaper articles as proof of petitioners' allegations. Petitioners' verification complies with the requirements of section 275.5 and 275.6 of the Regulations of the Commissioner of Education (8 NYCRR ''275.5 and 275.6), and I find the petition to be properly verified.

Respondent board contends that petitioners Broderick, etal. and MacNair submitted replies which contain information which was not previously in their petitions and which did not respond to affirmative defenses in respondent board's answers. The record supports this contention. The purpose of a reply is to respond to new material or affirmative defenses set forth in the answer (8 NYCRR '275.14). A reply is not meant to buttress allegations in the petition or to belatedly add assertions which should have been included in the petition (Appeal of Crawmer, 35 Ed Dept Rep 206; Appeal of Aarseth, 33 id. 522; Application of Verity, 31 id. 485). Accordingly, I will not consider that material in the replies which is not responsive to respondent board's affirmative defenses or that does not respond to new information in respondent board's answers.

I have reviewed respondents' remaining procedural defenses and find them to be without merit.

Turning to the merits, petitioners Shravah, etal. and MacNair contend that the district's contract with EAI should be deemed null and void because they maintain that expenditures under that contract should be considered a noncontingent expense.

Respondent board contends that petitioners Shravah, etal. and MacNair are improperly attempting to draw the Commissioner into a political dispute on how to govern the district. I realize that petitioners Shravah, etal. are the four board members who voted against the EAI contract and that there is political divisiveness in the district. However, it is well settled that the subject matter of this appeal, the question of whether an expense should be considered an ordinary contingent expense, is particularly within the province of the Commissioner of Education to decide (Reiss v Abramowitz, 39 AD2d 916 [2nd Dept, 1972]). Thus, the issue is properly before me. Respondent board asserts that petitioners Shravah, et al. and MacNair do not clearly specify the expenditures that are claimed to be noncontingent. I disagree. Petitioners have specifically identified the expenditures at issue -- the expenses connected with the district's contract with EAI. Respondent board asserts that it relied on the advice of the State Education Department's staff that the contract with EAI was permissible under a contingency budget but fails to provide reliable evidence to substantiate that claim. Moreover, even if such advice were given, it would not be dispositive of the matter as the determination of whether an expense is contingent rests with the Commissioner of Education, and the Commissioner cannot be bound by such advice (See, Education Law '2024; Matter of Ceparano, 17 Ed Dept Rep 298).

Respondent board financed school district operations through a budget which had not been approved by the voters in 1995-96. Instead, the budget was approved by respondent board pursuant to its authority under '2023 of the Education Law, which permits the district to continue to operate under what is known as an austerity or contingency budget. In that circumstance, the board of education has authority to levy a tax in the amount of the sum estimated necessary for "ordinary contingent expenses."

In 1967, Formal Opinion of Counsel, No. 213 was issued to address a number of questions concerning the meaning of the phrase "ordinary contingent expense" (7 Ed Dept Rep 153). In that opinion, an ordinary contingent expense was defined as an expenditure required to be made because of a legal obligation; or specifically authorized by statute; or necessary to maintain the educational program, preserve property or assure the health and safety of the students or staff (Appeal of Parsons, 32 Ed Dept Rep 444).

Respondent board of education and EAI assert that the hiring of EAI is an ordinary contingent expense because it was necessary to meet its legal obligations to maintain the district's educational program, to protect district property and assure the health and safety of students and staff. Respondents assert that the district's staff were unable to produce a budget at the $95 million level without imposing unacceptable reductions in district services.

I disagree with respondents' determination that hiring EAI is an ordinary contingent expense. I have examined EAI's proposal which forms the basis of this contract. The purpose of the contract is clear -- to develop the district's 1996-97 budget. The proposal calls for EAI to review district operations and make recommendations necessary for the creation of that budget. The preparation of the district's budget is a central function of the district's administrative staff and of the superintendent of schools who is the chief executive officer of the district (See, Education Law '1711). Respondent board created a difficult situation for the school district by imposing an immutable $95 million cap on the size of the budget at the outset, and I can find no rationale in the record for imposing the cap other than the general desire to present a fiscally responsible budget. Respondent board did not work with the superintendent and his staff to resolve the problem by directing existing staff to continue to work on the budget. Instead, the board contracted out the service, even though existing staff were already available and being paid to prepare a budget for the district. It is improper for a board of education to require a district's taxpayers to pay twice for the same service while operating under a contingency budget. Likewise, a board's determination to incur a new contractual obligation while under a contingency budget does not convert that contract into an ordinary contingent expense when existing district personnel can adequately perform the function required by the district (Appeal of Nolan, 35 Ed Dept Rep 139). In this instance, the redundant expense of the EAI contract is not a legal obligation; or authorized by statute; or necessary to maintain the educational program, preserve property or assure the health and safety of the students or staff of the school district (Formal Opinion of Counsel No. 213, supra). I have reviewed respondents' remaining factual defenses concerning this claim and find them to be without merit.

Therefore, I find the contract with EAI to be null and void because expenditures under the contract are a noncontingent expense. I will enjoin respondent board from expending or disbursing any funds on behalf of the district pursuant to the contract with EAI.

Because I have disposed of the issue of the validity of the contract, I need not address the remaining issues raised by petitioners, except to address the request by petitioners Broderick, etal. for the removal of the five named respondent board members from office for alleged "egregious, continued, unethical, illegal, and improper behavior" in the course of procuring EAI's services.

Education Law '306 empowers the Commissioner of Education to remove a member of a board of education for willful violation or neglect of duty under the law. To be considered willful, respondents' actions must have been intentional and with a wrongful purpose (Appeal of Hines, 35 Ed Dept Rep 508; Application of Cobler, 35 id. 176). An application for removal can be sustained only upon a showing that the underlying act was intentionally done with a wrongful purpose to disregard a lawful duty or violate a legal requirement (Appeal of Andrews, 31 Ed Dept Rep 453).

Petitioners Broderick, etal. claim that respondent board member Diorio improperly interfered with the RFP process by writing a letter to EAI which changed the scope of the contract from budget formulation to privatization of other district services and that respondent board president Donnelly improperly engaged in negotiations with EAI to lower its bid price. Because the contract concerns the provision of professional services, it was not subject to the sealed competitive bidding requirements of General Municipal Law '103 (Matter of Schultz v Warren County Board of Supervisors, 179 AD2d 118 [3rd Dept, 1992] leave to appeal denied 80 NY2d 754; Matter of Ascher, 12 Ed Dept Rep 223). I have reviewed the Diorio letter and do not find that it changes the scope of the contract. The Diorio letter requests clarification of EAI's proposal, which is a proper request in the context of a review of the services that would be rendered pursuant to a professional services contract. Nor was it improper for respondent Donnelly to engage in negotiations in an attempt to obtain a lower a price on a professional services contract that is not subject to sealed competitive bidding requirements.

Petitioners Broderick, et al. claim that respondent board members improperly awarded the contract to the highest bidder. However, petitioners have failed to establish by adequate evidence in the record that EAI was in fact the highest bidder. In any event, because professional services contracts are outside the scope of competitive bidding, they need not be awarded to the lowest bidder provided that the award is in the best interest of the taxpayers (See, General Municipal Law '104-b; Goodwin-Kent, Inc. v County of Broome, 107 Misc2d 722 [1981]; Matter of Mathalia Motors v City of Oneida, 105 Misc2d 843 [1980] affd 84 AD2d 637). The RFP for this contract clearly states that cost would not be the primary factor in the selection of the consultant, and the February 12, 1996 resolution of the board establishing the contract states plainly that, "the credentials, resources and experience of the selected firm" were the determining factors.

Petitioners Broderick etal. claim that respondent board members engaged in deceptive practices by not adequately describing on the agenda for the February 12, 1996 board meeting the item that constituted the vote on the EAI contract. That agenda item simply read, "Vote on RFP #01-95/96-009." I do not find that the lack of textual description on the agenda provides a basis to conclude that respondent board members acted to deceive the public. Also, although petitioners claim that respondent board members violated their code of ethics, they provide no substantive evidence to support the claim.

Petitioners claim that respondent board members violated the Open Meetings Law. However, I am without jurisdiction to address this issue. Alleged violations of the Open Meetings Law must be pursued in a judicial proceeding in the State Supreme Court pursuant to Article 78 of the Civil Practice Law and Rules, or in a judicial action for declaratory judgment and injunctive relief, and may not be a basis for an appeal to the Commissioner of Education (Public Officers Law '107; Appeal of Chester, 35 Ed Dept Rep 512; Appeal of Loriz, 33 id. Rep 50).

I have reviewed the remaining allegations set forth by petitioners Broderick, etal. in support of their application for removing the five respondent board members from office and do not find that the evidence supports a finding that the board members willfully violated the law or neglected their duty, the standard that must be met for removing a board member from office (Appeal of Andrews, supra; Appeal of Young, 24 Ed Dept Rep 313).

Finally, respondent board's request for attorney's fees and costs for defending this action must be denied. The Commissioner of Education lacks authority to award attorney's fees in an appeal under Education Law '310 (Appeal of Loughlin, 35 Ed Dept Rep 432; Appeal of Stewart, 34 id. 193; Appeal of Ferguson, 32 id. 494).

THE APPEAL IS SUSTAINED TO THE EXTENT INDICATED.

 

IT IS ORDERED that the Board of Education of the Wappingers Central School District shall be enjoined from expending or disbursing any funds on behalf of such district pursuant to a contract executed by Education Alternatives, Inc. and the Wappingers Central School District for the services requested in RFP #01-95/96-009.

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