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Decision No. 12,625

Application of JAMES D. GRIFFIN for the removal of Oscar Smukler, Bettye Blackman, Mozella Richardson and Judith M. Fisher from their positions as members of the Board of Education of the City School District of the City of Buffalo.

Decision No. 12,625

(December 30, 1991)

O'Shea, Reynolds, Napier, Quinn and Cummings, Esqs., attorneys for petitioner, Kenneth R. Kirby, Esq., of counsel

Moot and Sprague, Esqs., attorneys for respondents, Michael J. Ryan, Esq., of counsel

SOBOL, Commissioner.--Petitioner, as resident taxpayer and as Mayor of the City of Buffalo, seeks the removal from office of four members of the Board of Education of the City School District of the City of Buffalo ("the Board") for alleged violations of law. The application must be denied.

Petitioner alleges that the Board adopted a spending plan for the 1988-89 fiscal year in excess of the appropriation adopted by the Mayor and the Common Council of the City of Buffalo (the "Council"), and subsequent to such action overspent its 1988-89 Operations and Maintenance appropriation. Petitioner maintains that as a result of these actions, the Board incurred a deficit for the 1988-89 fiscal year in violation of Education Law '2576(7).

The record establishes that on May 2, 1988, petitioner submitted his proposed budget of $267,175,000 for the Board to the Council. On June 22, 1988, the Board, by a 6 to 2 vote, which included all four respondents voting in the affirmative, authorized a "1988-89 spending plan of no less than $282,000,000 subject to a modification upward if additional funds are provided by order of the U. S. District Court." According to the minutes for this meeting, the then Board President, respondent Fisher, announced that the Board had authorized its attorney to commence action against the City before Judge Curtin in federal district court for the purpose of acquiring additional Operations and Maintenance and Capital Fund appropriations from the city "sufficient to permit the school district to fully comply with all desegregation orders of the court and to attain unitary status as quickly as possible." The budget as proposed by the petitioner, which was less than the Board's spending plan, was approved by the Council and thereupon became the appropriation for the Board for the 1988-89 fiscal year effective July 1, 1988. The record also indicates that the Board did commence such litigation before Judge Curtin. On July 6, 1989, Judge Curtin issued a decision in which he concluded that the Board had failed to establish that it was entitled to any additional funding.

In December 1989, the City Comptroller, Robert E. Whelan, issued his "Comprehensive Annual Financial Report for the fiscal year ended June 30, 1989" describing the financial standing of the city and the Board. The Board published the report of its independent auditors, Deloitte, Touche, for the year ended June 30, 1989, at its December 13, 1989 meeting. The Deloitte, Touche report showed a deficit of $6,009,336. Mr. Richard Planavsky, Commissioner of Administration and Finance for the City, directed a letter dated January 10, 1990, to Deloitte, Touche raising certain concerns related to their report. Deloitte, Touche responded by letter dated February 6, 1990. Petitioner commenced this appeal on March 8, 1990.

Respondents contend that the adoption of the spending plan and the resultant spending do not constitute a wilful violation of Education Law '2576(7) because these actions were carried out upon the recommendation of then Superintendent Reville and pursuant to the advice of legal counsel for the Board for the purpose of funding court-ordered desegregation programs in the City schools. In addition, respondents have raised several procedural defenses to this removal application. I will address the procedural issues first.

Respondents assert that service of the petition upon respondents Smukler and Fisher is defective inasmuch as petitioner did not undertake with due diligence to serve them personally before resorting to substituted service. The affidavits of service submitted by petitioner show that an initial attempt was made to serve Fisher and Smukler at their respective residences on March 8, 1990. On that day the process server also looked for respondent Smukler at a public meeting of the Finance Committee of the Council and then returned for a second time to respondent Smukler's home. The regulations require that the petitioner use "due diligence" to effect personal service upon any respondent before utilizing substituted service (Matter of Community School Bd. 22 of the City of New York, 22 Ed Dept Rep 307 (1982); Matter of the Bd. of Educ., Sachem CSD, 25 id. 325 (1986)). I find that substituted service in the circumstances presented here is permissible. Respondents have not disputed petitioner's assertion that respondent Fisher was out of town when personal service was attempted to be effected and was scheduled to remain so for approximately one week. With respect to respondent Smukler, a total of three attempts were made, two at respondent Smukler's home and one attempt at the public meeting, before the process server effected substituted service upon Mr. Smukler's wife. In any event, no prejudice has been shown by respondents Smukler and Fisher, who each received notice of the petition and obtained additional time in which to submit an answer.

With respect to respondents' contention that the appeal is time barred, it should be noted that the petition asserts that the wrongs complained of are two-fold: the respondents voted for a so-called "spending plan" in excess of the budgeted City appropriation for the Board, and respondents permitted the Board to incur expenditures in excess of the City's appropriation. The first alleged wrong occurred on June 22, 1988, while the second purported wrong occurred at the end of fiscal year 1988-89 when the Board's level of spending was determined to be in excess of the City's appropriation.

I find that those claims arising from Board action that occurred on June 22, 1988, are untimely. In Application of George J. Cotroneo, 29 Ed Dept Rep 421, the petitioner sought to remove the same four board members based on their June 22, 1988 vote regarding the spending plan. I found that the appeal, which was commenced January 31, 1990, was untimely. The present petition suffers from the same defect with respect to Board action that occurred 21 months before commencement of this proceeding.

With respect to the second wrong complained of, the parties dispute when petitioner had knowledge of the level of the Board's spending for fiscal year 1988-89. Petitioner contends that it was impossible for him to determine accurately the actual level of the Board's spending until the Board's operations were reviewed by the City Comptroller and by the Board's independent auditors. Petitioner concedes that he received the City Comptroller's Annual Report on January 10, 1990, and that he received the independent auditor's report at some unspecified earlier time. Nevertheless, petitioner claims that he was entitled to await clarification from the Board's auditors on the issue of overspending before commencing this appeal. The appeal was commenced within thirty days of petitioner's receipt of the Deloitte, Touche letter. "In removal proceedings, the date of the alleged misconduct or at least the time that the misconduct is discovered determines the time to bring the action." Application of Quinones, 25 Ed Dept Rep 497. While the Deloitte, Touche letter did not contain any new information with respect to the Board's financial condition, I find that given the complexity of the issue, petitioner's action was reasonable and, therefore, with respect to the second wrong complained of, the appeal was timely commenced.

With respect to respondents' contention that petitioner failed to join a necessary party, the decisions of the Commissioner clearly indicate that a necessary party is one whose rights would be affected by determination of an appeal favorable to the petitioner (Appeal of Spadone, et al., 25 Ed Dept Rep 9; Appeal of Zimmerman, 28 id. 382). Respondents have not established how current Board President David B. Kelly's rights would be affected by a determination removing the other four board members. Accordingly, Mr. Kelly is not a necessary party.

With respect to the merits, the appropriate standard for removal is set forth in Education Law '306 that provides, in relevant part:

Whenever it shall be proved to his satisfaction that any . . . member of a board of education . . . has been guilty of any wilful violation or neglect of duty under this chapter, or any other act pertaining to common schools . . . or willfully disobeying any decision, order, rule or regulation of the regents or of the commissioner of education, said commissioner, after a hearing . . . may . . . remove such school officer from his office (emphasis added).

Petitioner alleges that respondents intentionally and willfully violated Education

Law '2576(7) which provides:

A board of education shall not incur a liability or an expense chargeable against the funds under its control or the city for any purpose in excess of the amount appropriated or available therefor or otherwise authorized by law.

To be considered wilful, the actions of respondents must have been intentionally done with a wrongful purpose (People v. Skinner, 37 App. Div. 44, aff'd 159 N.Y. 162). I find that petitioner has failed to establish the element of wilfulness required by Education Law '306.

Respondents have alleged that their actions were based upon advice of legal counsel. A board member who acts on the advice of counsel lacks the requisite wilfulness to warrant removal from office (Matter of Gagliotti, 24 Ed Dept Rep 402; Matter of Israel, 20 id. 67). As presented by the respondents, the board's alternatives in the fall of 1988 were that it could either adopt a spending plan in excess of the City's budgeted appropriation and risk violating State law, or adhere to the City's budgeted appropriation and risk violating the federal court's mandate to desegregate the Buffalo City Schools. The record demonstrates that the Board had been successful in earlier years in obtaining additional funds from the City pursuant to court order to implement its desegregation plan.

Petitioner asserts, however, that after the Board's adoption of the spending plan the Board was put on notice by a federal court judge of its duty to adhere to State law with respect to complying with its appropriated budget. Petitioner's contention is that even if the Board acted pursuant to advice of legal counsel in adopting the spending plan and initiating litigation in the fall of 1988, by January 1989, it was no longer reasonable to rely on its counsel's extant advice.

In January 1989, in a written decision on a motion before him, Judge Curtin instructed respondents and the entire Board that the Board was required to adhere to the City's budgeted appropriation unless and until the court determined that the Board was entitled to additional funding. To the extent that respondents argue that they were entitled to continue to rely on counsel's advice which directly contravened a direct order of the federal district court, I decline to accept this view. Under our legal system it is for the courts, not individual lawyers, to resolve ultimately legal disputes. Thus, once the court addressed the issue of what the Board's responsibilities and obligations were, under the law, with respect to its budget, the Board was obligated to adhere to the court's determination. Accordingly, respondents' affirmative defense concerning their reliance on counsel is of no avail.

The failure of respondents' affirmative defense, however, does not dispose of the issue of wilfulness. Petitioner maintains the burden of proof on this issue. To meet his burden petitioner contends that the wilfulness of the respondents' conduct is established by the fact that after the federal court decision, respondents did not take any action to avoid incurring a deficit for the 1988-89 fiscal year. Petitioner further contends that the wilfulness of the respondents' conduct is demonstrated by the fact that they never followed the proper procedure for obtaining additional funds from the City as set forth in Education Law '2576(6).

Although respondents concede that the Board failed to take affirmative steps to reduce its spending to insure compliance with the law, petitioner has failed to establish that respondents induced the Board as a whole to ignore Judge Curtin's directive. The Board as a corporate body had to take steps to monitor its spending, and to reduce spending if necessary, to stay within the City's appropriation. It has not been established what actual knowledge respondents and the other Board members had of the rate of spending between January 1989 and the end of the fiscal year. The record shows that throughout the course of litigation before Judge Curtin, the Board had difficulty assembling clear and accurate financial information. Under the circumstances, petitioner has failed to show whether respondents and/or the Board incurred the deficit with knowledge that it was doing so with the intent to defy Judge Curtin's order, and thus the resulting deficit may have occurred inadvertently. Nor has petitioner provided persuasive evidence that respondents' stated purpose of seeking funds to comply with desegregation orders was a mere pretext, especially in light of the fact that the Board had obtained additional funds in the past to comply with desegregation orders. Accordingly, petitioner has failed to demonstrate that respondents were motivated by a wrongful purpose.

While I have found that petitioner has not established that respondents willfully sought to violate Education Law '2576(7), I recognize that substantial fiscal problems may result from a negligent or inadvertent violation of this law. Accordingly, I urge petitioner and the entire Board to implement management, accounting and data processing systems necessary to enable the Board to manage its appropriated funds properly as outlined in a clear and cogent fashion by Judge Curtin in Arthur v. Nyquist, 716 F Supp 1484, 1492 (W.D.N.Y. 1989).