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Decision No. 15,744

Appeal of FRANK J. RUSSO, JR. from action of the Board of Education of the Port Washington Union Free School District regarding contingent expenses.

Decision No. 15,744

(April 14, 2008)

Ehrlich, Frazer & Feldman, attorneys for respondent, James H. Pyun, of counsel

MILLS, Commissioner.--Petitioner, a district resident and taxpayer, appeals the determination of the Board of Education of the Port Washington Union Free School District (“respondent”) to authorize certain expenditures without voter approval while the district was operating on a contingency budget.  The appeal must be dismissed.

In May 2000 and March 2004, district voters rejected capital bond referenda of $87 million and $7.6 million, respectively, which included, interalia, funds to repair and/or replace the roof of the district’s Manorhaven Elementary School (“roof”).  Funds for the roof were also included as part of the district’s proposed 2005-2006 budget.  After the voters twice defeated that proposed budget, respondent adopted a contingency budget pursuant to Education Law §2023 for the 2005-2006 school year.

Following the budget defeat, respondent ordered an evaluation, inspection and investigation of the condition of the roof, and the district retained an architect and engineers to conduct a building and roof assessment, the results of which were issued in a report dated November 29, 2005.  Based on that report, the district’s architect informed respondent that the roof was in a state of emergency, and concluded that a thorough roof replacement and associated repairs were necessary to preserve the remaining structure and to ensure the health and safety of the building’s occupants.  Accordingly, by resolution dated December 6, 2005, respondent declared an emergency with respect to the roof and denoted the necessary repair and replacement work to be an ordinary contingent expense.  It also resolved that “funding for this authorization will come from the undesignated fund balance of the school district and the previously allocated transfer to capital funds designated for the Manorhaven roof replacement.”  This appeal ensued.  Petitioner’s request for interim relief was denied on June 2, 2006.

Petitioner contends that it is improper for respondent to conduct a capital improvement project without voter approval and that respondent is usurping the rights of voters who several times rejected funding for this project.  He claims that respondent falsely declared the roof as an emergency so that it could be classified as an ordinary contingent expense thereby circumventing the statutory requirement for voter approval for capital improvements and the statutory limitation on expenditures while under a contingency budget.  He claims that the roof cannot be an unanticipated emergency because it had been proposed and discussed for seven years.  He further contends that respondent has no authority to transfer funds from its undesignated fund balance for this expenditure.  Petitioner asserts that the cost should have been included in the proposed budget for the 2006-2007 school year.  He also asserts that respondent submitted to the State Education Department (“Department”) inaccurate or fraudulent documents relating to the roof project.

Petitioner requests that I prohibit respondent from using funds from the undesignated fund balance for the roof without voter approval.  He also seeks a declaration that voter approval is required before transferring funds from the undesignated fund balance for a capital project and that future capital projects be supervised to protect the assets and funds of the district.

Respondent asserts that the petition must be dismissed because it is untimely, moot, seeks declaratory and advisory rulings, and fails to state a claim upon which relief may be granted.  It also asserts that petitioner lacks standing to maintain this appeal and has failed to allege sufficient facts to maintain a class action on behalf of the residents and taxpayers of the district.  Respondent contends that it is authorized to fund the repair and replacement of the roof as an ordinary contingent expense.  Respondent denies that funding for the roof will come from its undesignated fund balance but asserts that all funds for the project will come from the district’s available general funds.  Finally, respondent asserts that all its submissions to the Department were proper and accurate.

Petitioner attempts to bring his appeal on behalf of residents and taxpayers.  An appeal may only be maintained on behalf of a class where the class is so numerous that joinder of all members is impracticable and where all questions of fact and law are common to all members of the class (8 NYCRR §275.2; Appeal of Hempstead Parents/Community United, 45 Ed Dept Rep 381, Decision No. 15,357; Appeal of Hempstead Parents/Community United, 45 id. 354, Decision No. 15,346; Appeal of Ockimey, 44 id. 169, Decision No. 15,136).  A petitioner must set forth the number of individuals he or she seeks to represent and must show that all questions of law and fact would be common to all members of the class (Appeal of Hempstead Parents/Community United, 45 Ed Dept Rep 381, Decision No. 15,357; Appeal of Hempstead Parents/Community United, 45 id. 354, Decision No. 15,346; Appeal of Garmaeva, 43 id. 253, Decision No. 14,988).  Petitioner’s pleadings are entirely devoid of any allegations addressing those criteria.  Therefore, petitioner’s request for class status is denied.

Individually, however, petitioner has standing.  District residents have standing to challenge an allegedly illegal expenditure of district funds (Appeal of Samuel, 45 Ed Dept Rep 418, Decision No. 15,371; Appeal of Sweeney, 44 id. 176, Decision No. 15,139; Appeal of Allard, 43 id. 167, Decision No. 14,957).

Generally, an appeal to the Commissioner must be commenced within 30 days from the making of the decision or the performance of the act complained of, unless any delay is excused by the Commissioner for good cause shown (8 NYCRR §275.16; Appeal of O’Brien, 44 Ed Dept Rep 43, Decision No. 15,092; Appeal of Spina, 43 id. 354, Decision No. 15,016).  Here, petitioner challenges the expenditure of district funds while operating on a contingency budget, which, if determined to be illegal, would be in the nature of a continuing wrong (seeAppeal of Aarseth, 32 Ed Dept Rep 506, Decision No. 12,901).  Accordingly, I decline to dismiss the appeal as untimely.

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 Gorman, 39 Ed Dept Rep 377, Decision No. 14,265; Appeal of Johnson, 38 id. 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).  Opinion No. 213 provides in pertinent part: “Expenses for capital outlay are not ordinary contingent expenses.  However, certain expenses, such as for emergency repairs, . . . would be deemed ordinary contingent expenses.  This does not include replacement of equipment, however.”  When a roof repair is necessary to preserve the property of the district, it constitutes an ordinary contingent expense (Appeal of Gorman, 39 Ed Dept Rep 377, Decision No. 14,265; Appeal of Ryman, 29 id. 74, Decision No. 12,227).

Petitioner argues that repair or replacement of the roof in this case cannot be considered an unanticipated emergency because it has long been the subject of previous referenda and budget proposals.  In addition, petitioner contends that the roof conditions resulted from deterioration and dilatory action on the part of the district and that the repairs cannot be an emergency because the conditions were not unforeseen, did not arise from an accident, and did not require immediate corrective action (citing Ops St Comp Nos. 60-905; 69-1073).  These Opinions, however, concern whether emergency situations exist sufficient to exempt a locality from competitive bidding laws pursuant to General Municipal Law §103(4) and are inapplicable here.

Respondent does not maintain that the roof work was an unforeseen or unanticipated emergency.  Rather, it is precisely because the previous proposals were continuously rejected that the conditions of the roof deteriorated to the point where an architect determined that replacement and associated repairs were necessary to preserve the remaining structure and thus were in a state of emergency.  For respondent to disregard this advice would have required it to ignore the safety of students and staff.  Maintaining safe conditions in school buildings is always an obligation of a school district (Appeal of Mitzner, 31 Ed Dept Rep 142, Decision No. 12,598).  Accordingly, under these unique circumstances, I cannot conclude that respondent abused its discretion in determining that the roof repairs and replacement were an ordinary contingent expense, and as such, did not require voter approval.

While respondent states that it has not used any funds from the district’s undesignated fund balance for the roof project, and that it is cognizant of the statutorily mandated limitation on total spending while under a contingency budget, I nevertheless remind respondent that it has no authority to exceed the statutory budget cap imposed by Education Law §2023 while operating under a contingency budget.  Furthermore, pursuant to §2023(4)(b)(iii), certification by the Commissioner is required before certain emergency expenditures can be excluded when determining total spending for purposes of the budget cap.

I have considered petitioner’s remaining contentions and find them without merit.