Opinion
Index No. 908568-23
08-28-2024
In the Matter of Charter School of Educational Excellence, Petitioner, v. New York State Board of Regents: New York State Education Department; Betty A. Rosa, as New York State Commissioner of Education, Respondents. For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules
Barton Gilman, LLP, Stephen Adams, Esq. and Paul T. O'Neill, Esq. Attorneys for Petitioner Letitia James Attorney General of the State of New York Alexander Powhida, Assistant Attorney General Attorneys for Respondent
Barton Gilman, LLP,
Stephen Adams, Esq. and Paul T. O'Neill, Esq.
Attorneys for Petitioner
Letitia James
Attorney General of the State of New York
Alexander Powhida, Assistant Attorney General
Attorneys for Respondent
Denise A. Hartman, J.
Hon. Denise A. Hartman, Acting Justice of the Supreme Court
Petitioner Charter School of Educational Excellence (CSEE) is a school chartered by defendant New York State Board of Regents (the Board) and located within the Yonkers School District (District or School District). CSEE commenced this CPLR article 78 proceeding claiming that in its most recent charter renewal the Board of Regents and New York State Education Department (SED) forced it to adopt and/or continue an unlawful admissions and enrollment policy that requires it to maintain a ratio of new students of 50 percent from inside the School District and 50 percent from outside the School District. Specifically, CSEE alleges that respondents, by forcing them to adopt a 50/50 enrollment policy, acted in excess of their statutory authority and/or in violation of Education Law § 2854 (2) (b), which provides for in-district enrollment "preferences."
By decision and order dated February 13, 2024, the Court denied the Board's and SED's motion to dismiss. Respondents have now filed their answer and supporting papers. The Court held oral argument on June 28, 2024. For the reasons that follow, the petition is granted.
Background
CSEE's charter school history, set forth more fully in this Court's previous decisions, is recounted in more abbreviated fashion here. From 2005 to 2018, CSEE served hundreds of children residing in the Yonkers School District from kindergarten through eighth grade. In 2018, CSEE applied for approval of a material change in its charter to expand the school to educate students through the 12th grade. The Board and SED demanded that, in exchange for approval of the grade expansion, CSEE change its admission and enrollment policy to require that 50% of all new students in all grades would come from outside the District, while 50% would continue to come from within the district. CSEE ultimately agreed. On May 31, 2018, the Board formally voted to approve CSEE's charter renewal, as amended to allow expansion to include high-school grades and a 50/50 in-district/out-of-district enrollment requirement.
During the 2018-2023 charter term, CSEE made several unsuccessful requests to modify the 50/50 enrollment requirement, for example, to allow preferences for siblings-who were still mostly in-district students-before accepting out-of-district students, and to have the 50/50 enrollment requirement limited to the expanded high school grades. When CSEE proposed submitting its five-year renewal application in April 2022 that deviated from the 50/50 enrollment rule, SED indicated it would not put forward such revised application to the Board or recommend approval.
While the 2023-2028 renewal application was pending, parents of in-district students and CSEE commenced a prior action claiming that, in "brokering a political compromise instead of following the text," defendants violated the New York Charter Schools Act when they approved the 2018 charter renewal. Specifically, the parents alleged that the 50/50 enrollment mandate violated Education Law § 2854, which provides that, when the number of charter school applications exceeds the school's capacity, an enrollment preference shall be given to students who reside in the charter school's district and siblings of students enrolled in the charter school. Defendants moved, pre-answer, for dismissal on grounds, among others, that the declaratory judgment action should be converted to a proceeding under article 78 of the CPLR and dismissed as untimely. This Court, by decision and order dated July 13, 2023, agreed with defendants, converted the declaratory judgment action to a proceeding for mandamus, and dismissed it for non-compliance with the four-month statute of limitations.
The Board and SED renewed CSEE's charter on May 15, 2023, effective August 23, 2023. The renewed charter continues to authorize K-12 instruction and the former 50/50 in-district/out-of-district enrollment mandate. On September 12, 2023, CSEE commenced this new proceeding to challenge the May 15, 2023 renewal determination. CSEE alleges that respondents, when renewing the charter, continued to insist on the 50/50 rule for enrollment of in-district and out-of-district students, and that CSEE capitulated to the policy so that it would not be forced to close its doors. In its petition, CSEE re-asserts its claim that the Board and SED, in forcing it to agree to the 50/50 enrollment policy to obtain its May 15, 2023 charter renewal, exceeded their authority and violated the in-district preference provision of Education Law § 2854 (2) (b). As a result, the petition alleges, CSEE has incurred substantial expenses for certain enrolled in-district students, for increased transportation costs for out-of-district students, and for costs associated with recruiting out-of-district students and out-of-district advertising.
Again, the Board and SED moved to dismiss the petition pre-answer, on grounds that CSEE's claims are barred by res judicata, the statute of limitations, laches and estoppel; for failure to state a claim; and for failure to join the Yonkers City School District as a necessary party. By decision and order dated February 13, 2024, the Court denied respondents' pre-answer motion. Respondents then filed and served their answer and supporting documents, maintaining, among other things, that the 50/50 enrollment ratio accords with the statute.
Analysis
" 'Where... the question is one of pure statutory interpretation,'" the Court 'need not accord any deference to the agency's determination and can undertake its function of statutory construction'" (Matter of DeVera v Elia, 32 N.Y.3d 423, 434 [2018], quoting Matter of Albano v Board of Trustees of NY City Fire Dept., Art. II Pension Fund, 98 N.Y.2d 548, 553 [2002]). "This concept applies equally in the realm of the Education Law" (id.; see Matter of Madison-Oneida Bd. of Coop. Educ. Servs. v Mills, 4 N.Y.3d 51, 59 [2004] ["(I)n the instant case, this Court is faced with the interpretation of statutes and pure questions of law and no deference is accorded the (Commissioner's) determination."]).
" 'As the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof'" (Matter of DeVera v Elia, 32 N.Y.3d at 435, quoting Majewski v Broadalbin-Perth Cent. School Dist., 91 N.Y.2d 577, 583, [1998]). Further, "'[t]he language of a statute is generally construed according to its natural and most obvious sense... in accordance with its ordinary and accepted meaning'" (id. quoting Samiento v World Yacht Inc., 10 N.Y.3d 70, 78, [2008]]).
Here, the Court is asked to analyze the relevant statute to determine whether the Board of Regents and Education Commissioner can require CSEE to adopt a 50/50 enrollment ratio for in-district and out-of-district students. The issue is one of pure statutory interpretation, and agency deference is unwarranted. The statute, Education Law § 2854 (2) (b) reads, in relevant part:
(b) Any child who is qualified under the laws of this state for admission to a public school is qualified for admission to a charter school. Applications for admission to a charter school shall be submitted on a uniform application form created by the department and shall be made available by a charter school in languages predominately spoken in the community in which such charter school is located. The school shall enroll each eligible student who submits a timely application by the first day of April each year, unless the number of applications exceeds the capacity of the grade level or building. In such cases, students shall be accepted from among applicants by a random selection process, provided, however, that an enrollment preference shall be provided to pupils returning to the charter school in the second or any subsequent year of operation and pupils residing in the school district in which the charter school is located, and siblings of pupils already enrolled in the charter school. Preference may also be provided to children of employees of the charter school or charter management organization, provided that such children of employees may constitute no more than fifteen percent of the charter school's total enrollment....(emphasis added). There is no dispute that the use of the word "shall" in the italicized language above "makes what follows mandatory" (see Matter of DeVera v Elia, 32 N.Y.3d at 435). But the parties disagree over the meaning of the word "preference."
Petitioner argues that the statute requires that in-district applicants, returning students, and siblings shall receive an absolute enrollment preference over any out-of-district applicant, and that out-of-district applicants may be enrolled only if the capacity for the grade level or building exceeds the number of in-district applicants, returning students, and siblings. Petitioner maintains that nothing in the statute permits the Board and SED to force it to become a "regional" charter school by requiring half of the seats to be reserved for out-of-district students.
Respondents argue that "ensuring that 50% of all new and open seats at CSEE go solely and explicitly to Yonkers-resident students is still, per se, a preference compared to resident students... of any other school district." When pressed at oral argument, respondents' counsel stated that the focus is not on the numerical percentage, but on the concept that there is a set-aside specifically for Yonkers students-under their argument, a set-aside percentage of 40% or 80% would be equally valid. Respondents' counsel conceded, however, that at some point, for example a 10% set-aside for Yonkers students, might become less supportable.
In short, petitioner argues that the word "preference" means absolute priority for in-district students in the selection process; respondents argue that it means some advantage for in-district students in the selection process. In the Court's view, respondents' view is contrary to the most natural reading of the specific language of section 2854 (2) (b) itself, and is in discord with the overall context and structure of the Charter Schools statute, which contemplates and focuses on the relationship of the charter school to the school district and community where the charter school is located.
Looking to the text of section 2854 (2) (b), the provision requires a random selection process only when "the number of applications exceeds the capacity of the grade level or building." It does not peg such process to when in-district applicants exceed 50 percent of new and open seats. And it is particularly difficult to square respondents' 50 percent cap for in-district students with the express preference for returning in-district students and siblings who can be eliminated from the random selection process in favor of out-of-district applicants in order to fulfill the mandated 50 percent set-aside for out-of-district students. In effect, respondents' mandated ratio obviates the statutory preference for in-district students for 50 percent of new and open seats; in fact, it gives a preference to out-of-district students over in-district students, returning students, and siblings for those seats. This preference for out-of-district students is directly contrary to the express language of section 2854 (b) (2).
The Charter Schools statute expressly provides for preferences, in name or function, elsewhere in the statute, but nowhere does it expressly address preferences for admission of students who do not reside in the district or community where the charter school is located. Section 2854 (2) (b) authorizes a preference for children of employees of the charter school or charter management organization for up to 15 percent of the charter school's total enrollment. And while the statute prohibits charter schools from adopting discriminatory enrollment policies, it expressly preserves charter schools' ability to adopt certain other enrollment policies that deviate from purely random selection. Thus, section 2854 (2) (a) provides that "[a]dmission of students shall not be limited on the basis of intellectual ability, measures of achievement or aptitude, athletic ability, disability, race, creed, gender, national origin, religion, or ancestry." But it preserves the ability to establish charter schools that provide "single sex" educational opportunities, and "expanded learning opportunities for students at-risk of academic failure or students with disabilities and English language learners" (id.). And it encourages charter schools to "demonstrate good faith efforts to attract and retain a comparable or greater enrollment of students with disabilities, English language learners, and students who are eligible applicants for the free and reduced price lunch program when compared to the enrollment figures for such students in the school district in which the charter school is located" (id.). Where the legislature wanted to permit preferences or require efforts to attract or retain specific sub-groups of students, it said so. Nothing in the statute specifically mandates or authorizes preferences and outreach efforts to out-of-district students.
Moreover, the Charter Schools statute contemplates a direct relationship between the charter school and the local school district where it is located. Respondents' interpretation is untenable because it results in a disconnect with provisions of the statute that peg charter school admissions and enrollment to the demographics of the school district and community where the charter school is located. Thus the "legislative design" of the Charter Schools statute "undercuts" respondents' argument (Matter of DeVera v Elia, 32 N.Y.3d at 438).
The statute expressly provides for charter school boundaries that are coterminous with the school district where it is located: "A charter school shall be deemed an independent and autonomous public school, except as otherwise provided in this article, and a political subdivision having boundaries coterminous with the school district or community school district in which the charter school is located" (Education Law § 2853 [c]). The notice and public hearing requirements similarly evince the connection to the local school district contemplated under the Charter Schools Act. In particular, for each "significant stage in the chartering process," notice is required "to the school district in which the charter school is located and to public and nonpublic schools in the same geographic area as the proposed charter school" (Education Law § 2857 [1]). And, significantly, prior to the "issuance, revision, or renewal of a charter, the school district in which the charter school is located shall hold a public hearing"-"which shall be held within the community potentially impacted by the proposed charter school" (id.). Indeed, where "a [charter] revision involves the relocation of a charter school to a different school district, the proposed new school district shall also hold such hearing" (id.). These notice and hearing provisions focus on the school district in which a charter school is located.
And as quoted above, section 2854 (2) (a) pegs efforts to enroll at risk students, students with disabilities, economically disadvantaged students, and English language learners to comparable enrollment figures "in the school district in which the charter school is located." Relatedly, applications for charter renewal must address the means by which the charter school will meet or exceed enrollment and retention targets for students with disabilities, economically disadvantaged students, and English language learners that are comparable to "the enrollment figures of such categories of students attending the public schools within the school district... in which the charter school is located" (Education Law § 2851 [4] [e] [1]). Application forms "shall be made available by a charter school in languages predominately spoken in the community in which such charter school is located" (Education Law § 2854 [2] [b]). Respondents' mandate of a substantial percentage of out-of-district charter school enrollment, effectively creating a "regional" charter school, poses a disconnect with the statute's local-school-district-centric provisions.
Indeed, CSEE alleges that it is suffering from the incongruities of the 50/50 mandate with the statute. Aside from its allegation that it is unable to honor the statutory preference for returning students and siblings where the 50 percent cap is exceeded, it asserts that it must incur substantial excess costs for out-reach programs to encourage enough out-of-district students to fill the 50 percent quota. And it must absorb extra costs for transporting out-of-district students.
The Court acknowledges that there may be good and compelling policy reasons to authorize or encourage "regional" charter schools designed to draw students from multiple school districts. But any mandate requiring a charter school to set aside a substantial number of seats for an out-of-district student population is at odds with the current statute, with its charter school enrollment preferences for in-district students and related provisions keying enrollment policies to local school district demographics. The legislature may, of course, choose to authorize implementation of a regional charter school policy through legislative amendment, but the current statute does not appear to contemplate implementation of such policy.
For the reasons stated above, the Court concludes that respondents' insistence on the 50/50 in-district/out-of-district enrollment ratio is based on an erroneous reading of the statute; it is therefore arbitrary and capricious and contrary to law.
Petitioner's Claims Are Not Barred by Waiver or Estoppel
The Court rejects respondents' assertion that CSEE should be barred by the doctrines of estoppel and waiver because it acceded to their demand for the 50/50 enrollment mandate in exchange for obtaining approval of CSEE's application to expand from a K through 8 to a K through 12 school. That bargain-to the extent it was a bargain-was made when respondent authorized CSEE's expansion upon recharter in 2018. As this Court stated in its February 24, 2024 decision denying respondents' motion to dismiss this petition challenging the 2023 recharter approval on statute of limitations grounds, each renewal determination stands on its own.
Moreover, respondents appear to have employed here a strategy similar to the one described in Matter of DeVera v Elia, where the Court of Appeals held that DOE unlawfully conditioned charter approval on agreement to programmatic requirements not authorized by statute:
Rather than rejecting proposals, DOE has consistently accepted charter school applicants but has conditioned those awards on the execution of a contract that contains unlawful terms, as applied to charter schools. Charter schools are thus placed in a no-win situation: accept those contractual terms, or decline them without recourse to apply directly to SED Nothing in the Universal Pre-K Law or Legacy Pre-K Law, however, gives school districts unilateral authority to impose curricular and programmatic requirements on charter schools-by contract or otherwise.(32 N.Y.3d at 437-438).
Here CSEE contends that respondents forced it to accept the 50/50 enrollment rule on pain of non-renewal, which would have shut down its operations entirely, leaving hundreds of students unable to continue their education at the relatively high-performing CSEE. Specifically, CSEE documented communications showing that when it proposed submitting its five-year renewal application for the current term in April 2022, which deviated from the 50/50 enrollment policy, SED indicated it would not put forward such revised application to the Board or recommend approval. Nor do respondents dispute CSEE's allegation that it submitted its 2023 charter renewal application with the 50/50 rule because respondents had advised it that any renewal application eschewing the 50/50 rule would be denied. Accordingly, respondents' defenses of waiver and estoppel are unavailing.
Remedy
The Court's ruling that respondents' insistence on the 50/50 enrollment mandate is contrary to law has real world consequences that warrant further discussion. Respondents argue that "petitioner is not entitled to removal of the 50/50 enrollment split without reconsideration of the 2018 revision request." As they point out, where an agency is found to have acted arbitrarily and capriciously or contrary to law, the Court is not empowered to substitute its judgment for that of the agency. And, they argue, the authorization for CSEE to expand to include grades 9 through 12 in exchange for the 50/50 enrollment mandate involved trade-offs that they should have the opportunity to revisit. The Court agrees that it needs to tread carefully here.
Respondents, and CSEE itself, are certainly in a better position than the Court to understand the "facts on the ground" and make judgements as to how to move forward with implementing this decision through the remainder of the 2023-2028 recharter period. The Court suggests that the parties be duly sensitive to the disruption and reliance interests of all involved. Presumably, students have already been enrolled for the 2024-2025 school year, and prudence would seem to weigh in favor of allowing those students to continue on this path while issues arising from this decision are sorted out. Respondents may choose to pursue immediate reconsideration of the 2023 charter renewal (not the 2018 renewal as they argue), or they may choose to negotiate a revised enrollment policy sensitive to disruption and reliance interests which can carry them through the remainder of the current renewal term and revisit all relevant issues if and when CSEE seeks renewal in 2028.
While, under this decision, respondents may not continue to enforce the 50/50 enrollment policy that was approved simultaneously with CSEE's charter renewal, the Court otherwise declines to dictate how the parties shall proceed.
Based on the foregoing, it is hereby
Ordered that the petition is granted; and it is further
Adjudged that the requirement that 50% of all new students in all grades must come from outside the Yonkers School District is arbitrary and capricious and contrary to Education Law § 2854 (2) (b).
This constitutes the Decision, Order, and Judgment of the Court, the original of which is being uploaded to NYSCEF for electronic entry by the Albany County Clerk. Upon such entry, counsel for petitioner shall promptly serve notice of entry on all other parties entitled to such notice.