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Decision No. 14,265

Appeals of FREDERICK J. GORMAN from actions of the Board of Education of the Sachem Central School District regarding a contingency budget.

Decision No. 14,265

(December 16, 1999)

Ingerman Smith, L.L.P., attorneys for respondent, Neil M. Block, Esq., of counsel

MILLS, Commissioner.--In two appeals, petitioner challenges the approval by the Board of Education of the Sachem Central School District ("respondent") of certain purchases and expenditures while the district was operating under a contingency budget. Because the issues in the two appeals are clearly related, they are consolidated for decision. The appeals must be sustained in part.

For the 1993-94 through 1996-97 school years, respondent operated on a contingency budget. During that time, respondent approved a number of purchases and expenditures. Specifically, on June 8, 1994, the district voters defeated a proposition for certain capital projects. On June 15, 1994, respondent approved a resolution authorizing those projects without voter approval. In May 1996, respondent contracted with Eastern Suffolk BOCES for support services for a library automation program. On August 20, 1996, respondent approved the purchase of a mower/snow plow, an air compressor, and a storage container. Respondent also established a Teachers Retirement System contingent liability account in excess of $3,000,000 to assure that funds are available to make payments to the New York State Teachers Retirement System when such payments become due.

In addition, on October 15, 1996, respondent approved the replacement of photocopiers throughout the district and a change order concerning roof repairs at two schools. On November 19, 1996, respondent approved change orders concerning three other construction projects in the district, which reduced the amount due on one project and increased the amounts due on the other two projects.

In his first appeal, petitioner contends that the capital projects authorized by respondent on June 15, 1994; the May 1996 BOCES contract for support services for the library automation project, which petitioner characterizes as a lease-purchase of an extensive library computer system; the purchases of the mower/snow plow, air compressor, and storage container; and the maintenance of the Teachers Retirement System contingent liability account were all improper expenditures while the district was operating under a contingency budget. Petitioner also appears to challenge the use of the proceeds from a bond resolution passed by the voters in 1986.

In his second appeal, petitioner contends that respondent’s approval of the photocopier replacement contract and the roof repair change order on October 15, 1996, and the additional challenged change orders approved on November 19, 1996 were, likewise, improper expenditures under a contingency budget. Petitioner's request for an interim order in this appeal was denied on December 17, 1996.

Respondent contends that the first appeal is untimely with respect to the bond referendum passed in 1986, the inclusion of the capital projects in the contingent budget adopted in June 1994, and the contract with BOCES for instructional support services in May 1996. Respondent further contends that the purchases of the mower/snow plow, air compressor, and storage container are proper expenditures under a contingency budget because they are necessary to maintain the educational program and to assure the health and safety of students and staff. With regard to the instructional support services contract with BOCES, respondent asserts that such contract is an ordinary contingent expense. Finally, respondent asserts that establishment and maintenance of a retirement liability account is fiscally prudent and that expenditures for that purpose constitute ordinary contingent expenses.

Respondent contends that the second appeal is untimely with respect to its actions of October 15, 1996. Respondent further contends that the petition contains no facts supporting petitioner’s assertion that the challenged expenditures were unlawful. With respect to the replacement of photocopiers, respondent asserts that its actions resulted in a financial savings to the district over what it would have cost to maintain the old photocopiers, was required by respondent’s collective bargaining agreement with its teachers, and was necessary to create instructional materials for students. Respondent further asserts that the change order it approved on October 15, 1996 was necessary to preserve the district property; that one of the challenged change orders approved on November 19, 1996 pertained to an energy performance contract between the district and the New York Power Authority and that such contracts are designated as ordinary contingent expenses by Energy Law "9-103(3); and that the other change order approved November 19 was for a fire alarm that was necessary to preserve the health and safety of the occupants of the elementary school in which it was installed. Finally, respondent contends that the contract and all of the change orders challenged by petitioner in the second appeal, except the change order for the New York Power Authority contract, were already completed by the time respondent filed its answer, and that this appeal is, therefore, academic insofar as it applies to those contracts.

Initially, I will address the procedural issues raised by respondent. An appeal to the Commissioner of Education must be commenced within 30 days of the making of the decision or the performance of the act complained of unless excused by the Commissioner for good cause shown (8 NYCRR 275.16). Petitioner's first appeal was commenced on August 29, 1996, and is clearly untimely with regard to the bond resolution of 1986 and to expenditures made in 1994. With regard to respondent’s contract with BOCES for instructional support services for the district’s library automation program, the contract is dated May 1996 with an effective date of July 1, 1996. Because this appeal was commenced more than thirty days after the effective date of the contract, the appeal is untimely with regard to claims challenging the contract.

Petitioner's second appeal was properly commenced on November 26, 1996. However, an improper attempt at service was made on November 13, 1996 when an unverified petition was served on the district’s switchboard operator, an individual who had not been authorized by respondent to receive service. My Counsel’s Office returned that petition to petitioner on November 21, 1996, and a properly verified petition was then served on a member of the board of education on November 26. Petitioner's claims regarding respondent's approval, on October 15, 1996, of a contract for replacement photocopiers and of a roof repair change order are untimely because they were not properly commenced within 30 days of the date of respondent's challenged actions and, therefore, must be dismissed. Petitioner's claims regarding the change orders approved by respondent on November 19, 1996 were properly commenced within 30 days of respondent's challenged actions and are, therefore, timely.

With regard to respondent’s contention that most of petitioner’s claims in his second appeal are now moot, I note that petitioner acted reasonably quickly in commencing this appeal and that one of the types of relief sought by petitioner is a determination that respondent’s actions violated its responsibilities under a contingency budget. Under the circumstances presented, I will not dismiss this appeal as moot, but will consider petitioner’s assertions on their merits.

When the voters of a school district do not approve the budget submitted by the board of education, the board is limited in the amount of money it may raise by tax levy to the amount necessary for teachers’ salaries and for ordinary contingent expenses (Education Law "2023). The responsibility for determining what constitutes an ordinary contingent expense lies in the first instance with the board of education (Appeal of Johnson, 38 Ed Dept Rep 327, Decision No. 14,045; Appeal of Nolan, et al., 35 id. 139, Decision No. 13,492). However, any question concerning a board’s determination of such an expense may be referred to the Commissioner of Education (Education Law "2024). Generally, an expense may be considered contingent if it is a legal obligation of the district or if it is necessary to maintain the educational program, preserve property or assure the health and safety of the students and staff (Formal Opinion of Counsel No. 213, 7 Ed Dept Rep 153).

In the first appeal, petitioner challenges respondent’s approval of purchases of a mower/snow plow, an air compressor, and a storage container. Respondent argues that the mower component of the mower/snow plow was necessary to protect the health of students and staff by trimming the grass to control the infestation of ticks, bees, and bugs on school property, and that the snow plow component was necessary to clear the pathways of the school so that students and staff could "safely traverse on school property." Respondent alleges that it keeps a mower/snow plow at each of its two high school campuses and that one of them had broken and was no longer repairable. With regard to the air compressor, respondent asserts that the district's compressor broke and that a compressor was needed to maintain bus tires and proper wheel alignment in order to safely transport students. Respondent argues that the storage container was purchased to maintain the educational program of the district in that it was necessary to make space for a newly established technology program by consolidating existing woodworking and construction programs in a single room.

Formal Opinion of Counsel No. 213 provides, in pertinent part:

Expenses for capital outlay are not ordinary contingent expenses. However, certain expenses, such as for emergency repairs, or to equip a classroom or classrooms where essential to house additional students, would be deemed ordinary contingent expenses. This does not include replacement of equipment, however.

Thus, although a board of education is authorized to make emergency repairs, it does not generally have the authority to replace equipment when operating under a contingency budget. Moreover, although respondent acknowledges that it maintained a mower/snow plow at each of its two high school campuses, it does not indicate why a single mower/snow plow could not be used for both campuses. Likewise, while it is manifest that the maintenance of safe tires and proper wheel alignment on school buses is an important district responsibility, it does not follow that the only way to meet this obligation is through the purchase of a new air compressor.

In short, while all three of the purchases approved by respondent would be legitimate items to be included in a budget to be submitted to the voters, those purchases were for equipment. Without a compelling showing that they were necessary to maintain the educational program of the district, to preserve the property of the district, or to assure the health and safety of students and staff, such purchases are prohibited under a contingency budget.

Payments to the Teachers Retirement System are legal obligations of the school district and, therefore, ordinary contingent expenses. However, the amounts reserved for payment into the system must be reasonably related to respondent’s potential liability in any given year. It is not possible to tell from the information provided by petitioner whether the size of respondent’s Teachers Retirement System account is reasonably related to respondent’s obligation to the system. In an appeal to the Commissioner of Education, the petitioner bears the burden of demonstrating a clear legal right to the relief requested (Appeal of Andela, 38 Ed Dept Rep 388, Decision No. 14,062). As petitioner has failed to demonstrate that respondent has accumulated an unreasonable amount in its Teachers Retirement System account, his claims with respect to that account are dismissed.

In his second appeal, petitioner challenges respondent’s lease of photocopiers to replace eleven-year old machines which respondent asserts were "in a constant state of disrepair." As discussed above, in general, the replacement of equipment is not an ordinary contingent expense (Formal Opinion of Counsel No. 213, 7 Ed Dept Rep 153; Appeal of Mitzner, 31 id. 142, Decision No. 12,598). However, Formal Opinion of Counsel No. 213 also indicates that expenditures for items necessary to maintain the educational program, including instructional supplies for teachers’ use, are considered ordinary contingent expenses. More specifically, "[t]he rental cost of machines dedicated to creating instructional materials for students is authorized when school districts operate under austerity budgets. However, in a situation where the equipment was not being used for the creation of instructional supplies, it could be a violation of the provisions of "2023 [of the Education Law] for school districts to rent such equipment" (Appeal of Mitzner, supra). Moreover, respondent is obligated under its collective bargaining agreement with its teachers to maintain a specified number of photocopying machines in each of its schools for teacher use. Although petitioner asserts in his reply that some of the photocopiers are placed in locations that would not be accessible to teachers, he has failed to present facts sufficient to establish that assertion. Under the circumstances presented, I conclude that respondent’s lease of photocopying machines is necessary to maintain the educational program of the district and also constitutes a legal obligation of the district.

On October 15, 1996 respondent approved a roof repair change order concerning work on two of the district’s schools. Respondent asserts that the change orders were necessary to preserve the structural integrity of the school buildings, and petitioner offers no facts to contest that assertion. When a roof repair is necessary to preserve the property of the district, it constitutes an ordinary contingent expense (Appeal of Ryman, 29 Ed Dept Rep 74, Decision No. 12,227). Petitioner has failed to establish that respondent abused its discretion in determining that the roof repairs effectuated pursuant to the change approved on October 15, 1996 were an ordinary contingent expense.

Similarly, I find that respondent acted within the scope of its authority when it approved change orders on November 15, 1996. One of the orders challenged by petitioner pertained to an energy performance contract between respondent and the New York Power Authority. Pursuant to Energy Law "9-103(3), in the case of a school district, such contracts "shall be an ordinary contingent expense." I also note that the contract specifically included a contingency fund for change orders and that the amount of the change order was within the allocated contingency fund.

The second challenged change order approved by respondent on November 15, 1996 was for the addition of a smoke detector and base to the installation of a fire alarm system at one of the elementary schools in the district. Respondent argues that the smoke detector was necessary to preserve the health and safety of the occupants of the school, and petitioner has failed to sustain his burden of establishing that respondent acted improperly in reaching that conclusion.

I have considered petitioner’s remaining claims and find them to be without merit.

THE APPEALS ARE SUSTAINED TO THE EXTENT INDICATED.

IT IS ORDERED that respondent henceforth refrain from approving purchases which are not ordinary contingent expenses while operating under a contingency budget.

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