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Decision No. 16,027

Appeal of GEORGE R. HUBBARD from actions of the Board of Education of the Greece Central School District regarding an employment contract.

Decision No. 16,027

(February 10, 2010)

Harris Beach, PLLC, attorneys for respondent, Laura M. Purcell, Esq., of counsel

STEINER, Commissioner.--Petitioner appeals the actions of the Board of Education of the Greece Central School District (“respondent” or “board”) regarding the approval of an amendment to the superintendent’s employment contract.  The appeal must be dismissed.

At a special board meeting on September 29, 2008, respondent approved a Third Amendment (“Amendment”) to the superintendent’s Employment Agreement (“Agreement”).[1]  Under “Compensation,” the Agreement was amended to increase the superintendent’s salary to $209,399 for the 2008-2009 school year.  Under “Benefits,” the Agreement was amended to provide that the district’s contribution to the superintendent’s health insurance premium would be 80%.

Petitioner alleges that in approving the Amendment, respondent failed to follow Board Policy #6431 (the “Policy”) and failed to comply with commitments it made in response to an Audit Report (“Audit”) issued by the Office of the New York State Comptroller (“Comptroller”).  Petitioner requests that I instruct respondent to comply with the Policy and Audit and to properly adopt an amendment to the superintendent’s employment agreement.

Respondent asserts that petitioner has failed to state a claim upon which relief may be granted and has failed to meet his burden of proof.  Respondent further asserts that it complied with the Policy and Audit recommendations and properly approved the Amendment.

A party whose rights would be adversely affected by a determination of an appeal in favor of a petitioner is a necessary party and must be joined as such (Appeal of G.H.L., 46 Ed Dept Rep 571, Decision No. 15,598; Appeal of Doe, 46 id. 483, Decision No. 15,571; Appeal of Johnson, 46 id. 432, Decision No. 15,555).  Joinder requires that an individual be clearly named as a respondent in the caption and served with a copy of the notice of petition and petition to inform the individual that he or she should respond to the petition and enter a defense (Appeal of G.H.L., 46 Ed Dept Rep 571, Decision No. 15,598; Appeal of Doe, 46 id. 483, Decision No. 15,571; Appeal of Johnson, 46 id. 432, Decision No. 15,555).

To the extent that petitioner requests that respondent reconsider and readopt the Amendment to the Agreement, the superintendent is a necessary party because his employment status and benefits could be affected.  The superintendent was neither named in the caption nor personally served with a copy of the notice of petition or petition.  Accordingly, that portion of the appeal must be dismissed.

I will, however, address petitioner’s allegations that respondent failed to follow its Policy or comply with its response to the Audit.  The Policy, entitled “Employee Contracts and Addendums,” was originally adopted in December 2005.  It requires the district to prepare, to the extent feasible, estimated annual costs for each portion of any new employment contract or addendum; to attach such estimates to the contract or addendum; and to make the estimated costs available to the public 10 days prior to any board discussion, if possible.  In March 2008, respondent reviewed the Policy and amended that portion relating to discussions conducted in executive sessions to provide that “[t]he Board will discuss and report the projected costs of such contracts in open session and the projected costs will be recorded in the official meeting minutes.”

Petitioner contends that respondent failed to comply with its Policy because the Amendment failed to specify the estimated total and annual costs of the health insurance or retirement benefits and therefore respondent did not have proper documentation of estimated costs in advance of the vote.  Petitioner asserts that by approving an Amendment without those costs, respondent not only violated its Policy, but also its fiduciary duties and failed to follow sound business practices.

Respondent asserts that it properly approved the Amendment and complied with its Policy.  It asserts that the Amendment specifies the superintendent’s salary and the percentage that the district will contribute towards his health insurance premium and the specific health insurance plan.  Although respondent’s president admits that the estimated costs of the Amendment were not attached to it, she claims that this was a mere oversight.  She states that at respondent’s September 29, 2008 meeting, the terms of the Amendment were reviewed by the full board in executive session, and members were permitted to ask questions and express opinions in order to determine whether the Amendment was beneficial to the district.  She further states that she read aloud the Amendment in the public session, and, in both executive and public sessions, she explained that the new salary reflected a 3% increase from $203,300 to $209,399, and that the district’s contribution to the health insurance premium would decrease from 90% to 80%.  She also explained that the 10% increase in the superintendent’s share of his contribution for his insurance premium was a concession meant to set an example for other district employees.  The record indicates that the Amendment was incorporated into the minutes of the September 29, 2008 meeting and that a public roll call vote on the Amendment was taken.

The record reveals that documentation of the estimated costs was not attached to the Amendment, as the board president admitted.  Consequently, the board did not have the information ten days in advance of the vote, although the Policy states that the figures need only be made available that early if feasible.  In addition, the actual cost of the health insurance premium, while calculable, was not provided.  Nonetheless, I find that respondent substantially complied with the Policy in that the essential cost aspects of the Amendment were provided and, most important, the Amendment was discussed, approved and reported in open session.

With regard to the Audit, petitioner alleges that respondent failed to comply with its commitment to take corrective action.  The Comptroller issued an Audit of the Greece Central School District in April 2008.  The scope of the Audit, covering the period July 1, 2005 – August 14, 2007, focused mainly on a capital improvement project that began in 2000, Medicaid reimbursements for eligible special education students, and internal controls over information technology and personal services payments.  By letter dated February 28, 2008 and incorporated in the final Audit Report, the superintendent responded to the Audit results and recommendations.  Among other things, the district agreed to present all individual employment agreements to the board of education, seek board approval of any changes that had a financial impact and reflect those changes in the minutes of the board.  The district also stated that “A Board policy will be added to address this corrective action.”  In addition, the district agreed to ensure that all employment agreements that expend funds would be formally approved in an open meeting and reflected in the minutes.

The board president, in her affidavit, states that Board Policy #6431 was not adopted in response to the Audit, but was originally adopted on December 13, 2005 and slated to be reviewed three years later.  Thus, although the district response stated that it would “add” a board policy, Board Policy #6431 already existed, was in effect and was scheduled for review in 2008.  The revised Policy, adopted March 25, 2008, incorporated the district’s February 28, 2008 response to the Audit regarding the discussion and recording of contracts in open session.  In revising the Policy, respondent complied with the Audit recommendation.

Since the Amendment sought to expend funds, it was the type of employment agreement with which the Audit was concerned.  As discussed above, respondent presented the Amendment to the board, sought board approval and presented the Amendment for a vote in open session.  Accordingly, I find that respondent met its commitment to take corrective action regarding employment agreements as stated in the Audit.

THE APPEAL IS DISMISSED.

END OF FILE.

[1] The original Employment Agreement between respondent and the superintendent, dated September 15, 2006, was amended by subsequent Agreements dated June 26, 2007 and July 8, 2008.