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Decision No. 15,210

Appeal of GREGORY M. MUENCH from action of the Board of Education of the Central Square Central School District regarding a tax levy.

Decision No. 15,210

(April 19, 2005)

Ferrara, Fiorenza, Larrison, Barrett & Reitz, P.C., attorneys for respondent, Craig M. Atlas, Esq., of counsel

MILLS, Commissioner.--Petitioner appeals the adoption of the tax levy for the 2004-2005 school year by the Board of Education of the Central Square Central School District ("respondent"). The appeal must be sustained in part.

At a special meeting on August 23, 2004, respondent voted to adopt a proposed tax levy and executed tax warrants for the 2004-2005 school year. This appeal ensued. Petitioner's request for interim relief was denied on September 10, 2004.

Petitioner contends that respondent failed to modify the tax levy to reflect an increase in the district's 2004-2005 State aid as provided for in the State budget for the 2004-2005 State fiscal year (Chapter 53, Laws of 2004) in violation of Appeal of Muench, 43 Ed Dept Rep 419, Decision No. 15,039 ( "Muench I") and the Real Property Tax Law. The estimate of State aid used by respondent for development of the district's 2004-2005 budget was $29,526,386. However, the State budget enacted on August 20, 2004 provided for $31,497,661 in State aid to the district. Petitioner contends that the $1,971,275 in additional State aid should have been applied to reduce the tax levy, and requests that I order respondent to recalculate and re-issue the tax levy accordingly.

Respondent contends that its decision not to use the additional State aid solely for the purpose of reducing the tax levy had a rational basis, did not violate any laws, and was not arbitrary or capricious. Respondent also raises several procedural objections.

Respondent contends that the appeal is untimely. 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 any delay is excused for good cause shown (8 NYCRR �275.16). Respondent concedes that the appeal is timely with respect to its actions on August 23, 2004, when the board established the tax rates and adopted the tax warrants for the 2004-2005 school year. However, respondent contends the appeal is untimely as to any actions that occurred more than 30 days prior to August 25, 2004, the date petitioner commenced this appeal. I agree that to the extent petitioner raises similar allegations with respect to the 2003-2004 or earlier school years, such allegations are untimely (Appeal of Molineaux, 38 Ed Dept Rep 672, Decision No. 14,114; Appeal of Aarseth, 35 id. 211, Decision No. 13,519; Appeal of Davis, 33 id. 675, Decision No. 13,192).

Respondent further contends that the appeal is moot. The Commissioner of Education will only decide matters in actual controversy and will not render a decision on a state of facts which no longer exists or which subsequent events have laid to rest (Appeal of L.D. and M.D., 43 Ed Dept Rep 144, Decision No. 14,947; Appeal of Deborah F., 42 id. 178, Decision No. 14,813; Appeal of Johnson, 41 id. 407, Decision No. 14,727). Here, the 2004-2005 taxes were due by the time the parties had submitted all the necessary papers in this appeal. However, "[I]t is settled doctrine that an appeal will, nevertheless, be entertained where, as here, the controversy is of a character which is likely to recur not only with respect to the [same] parties . . . but with respect to others as well" (East Meadow Community Concerts Ass' n v. Bd. of Educ., Union Free School Dist. No. 3, County of Nassau, 18 NY2d 129, 135; Appeal of Muench, supra; Appeal of Student Suspected of Having a Disability, 38 Ed Dept Rep 796, Decision No. 14,145). Therefore, I decline to dismiss this appeal as moot because it raises important legal issues concerning the proper use of State aid estimates in preparation of tax warrants that affect all districts and taxpayers statewide. Moreover, it is the same issue which petitioner raised and I sustained in Muench I.

I also must address petitioner's reply. The purpose of a reply is to respond to new material or affirmative defenses set forth in the answer (8 NYCRR ��275.3 and 275.14). A reply may not be used to belatedly add new assertions that are not part of the pleadings (Appeal of Kirschenbaum, 43 Ed Dept Rep 366, Decision No. 15,020; Appeal of Hollister, 39 id. 109, Decision No. 14,188). The rationale for this procedural rule is to ensure an orderly framing of the issues (Matter of a Handicapped Child, 24 Ed Dept Rep 41, Decision No. 11,308). Therefore, while I have reviewed petitioner's submissions, I have not considered those portions containing new allegations that are not responsive to new material or affirmative defenses set forth in the answer.

In determining the tax levy, respondent should use the best estimate of State aid that is reasonably available at the time the tax warrant is issued (Appeal of Muench, supra). Relying on Muench I, petitioner contends that respondent must recalculate the tax levy using the State aid projection in the enacted State budget. Respondent alleges that when it met on August 23, 2004 to determine the tax warrants, the board did consider the district's updated State aid and discussed using it to lower the tax levy, but decided to levy taxes in the amount approved by the voters on May 18, 2004, which amount was based on the earlier State aid estimate.

Respondent contends that the State aid projection in the enacted State budget is still only an estimate, and that based upon the district's experience, it was prudent to treat it as an estimate and not a definitive prediction of the exact amount of State aid that the district would ultimately receive. Respondent submits an affidavit from the district's business manager in which she states, as an example, that for the 2002-2003 school year (the year involved in Muench I) the actual amount of State aid the district received ($29,182,394) was closer to their original estimate ($29,125,887), and if the district had used the higher estimate in the enacted State budget for 2002-2003 ($30,627,699), the district would have overestimated the amount of State aid it actually received.

The business manager further states that certain types of aid, such as BOCES, building, and transportation aid, are different from more general types of aid and the amount of State aid ultimately received by the district depends on the expenses actually incurred by the district for these purposes and such factors as changes in enrollment, utilization levels, and the actual amount of construction and financing. She states that most of the increase in State aid in the enacted State budget is due to these special types of aid which, being dedicated for particular purposes, are not available to the board to reduce the property tax levy.

I do not find that respondent's reasons provide sufficient justification for its failure to use the most recent State aid projection as set forth in the enacted State education budget. Other than an anecdotal example regarding the 2002-2003 school year, respondent has failed to provide any other evidence that establishes the State aid projections set forth in the State budget, including those for certain types of State aid such as BOCES, building, and transportation aid, are consistently overstated, or that the projections set forth in the 2004-2005 State budget are based upon outdated information or are otherwise unreliable. Accordingly, respondent should have used the State aid projections in the enacted State budget in determining the tax levy to be assessed for the 2004-2005 school year.

Although I sustain the appeal in this regard, there is no need to adjust the 2004-2005 tax levy at this time because the use of the lower estimate of State aid should lead to an excess of revenues over expenditures at the end of the 2004-2005 school year, which the district would then be obligated to apply to reducing the 2005-2006 tax levy (Appeal of Muench, supra). Furthermore, there is no mechanism for returning a pro rata share of funds to the taxpayers once the tax levy has been made (Appeal of Liberatore, 42 Ed Dept Rep 321, Decision No. 14,869).


IT IS ORDERED that respondent henceforth utilize the best estimate of State aid that is reasonably available to respondent at the time it calculates the tax levy and issues tax warrants, consistent with the terms of this decision.