In re Renewal Application of TEAM Academy Charter School, ___ N.J. ___ (2021). Justice Patterson’s decision for a unanimous Supreme Court today addressed whether, when considering the expansion applications of seven Newark charter schools, the Commissioner of Education was required to consider the potential segregative effect and/or the fiscal impact of those expansions. The Commissioner did not do either of those things but still approved the expansions in 2016.
The Education Law Center (“ELC”) objected to the expansions. The Appellate Division, in an opinion reported at 459 N.J. Super. 111 (App. Div. 2019), upheld the Commissioner’s action. Today, applying the arbitrary, capricious, and unreasonable standard of review applicable to administrative agency actions, the Supreme Court affirmed that decision.
Justice Patterson explained that the Newark Public School District (“the District”) had provided comments or recommendations regarding the expansion applications, as permitted. [Disclosure: My firm, Lite DePalma Greenberg & Afanador, LLC, represents Newark Public Schools in various matters, but was not involved in this case]. But the District did not assert that the expansions would prevent or impede the provision of a “thorough and efficient” education, the level of education required by article VIII, section 4, paragraph 1 of the New Jersey Constitution.
A prior ruling of the Supreme Court, In re Englewood on the Palisades Charter School, 164 N.J. 316 (2000), stated that if a charter school’s “district of residence demonstrates with some specificity that the constitutional requirements of a thorough and efficient education would be jeopardized” by diversion of resources to a charter school, the Commissioner must “evaluate closely” the issue of fiscal harm. But since the District had not shown, or even claimed, that the expansions put at risk a thorough and efficient education in Newark, the need to evaluate fiscal harm was not triggered.
The ELC argued that because Newark was formerly one of the districts covered by the Abbott v. Burke series of educational lawsuits, and/or because Newark was under state supervision when the expansion applications were filed, fiscal harm should necessarily have been considered for those reasons. Justice Patterson disagreed.
The School Funding Reform Act of 2008, N.J.S.A. 18A:7F-43 et seq. (“SFRA”), “altered the charter school funding formula that was in effect when the Court decided Englewood, eliminating the Commissioner’s discretion with respect to the percentage of per-student funding that the district must transfer to a charter school, and limiting the fiscal impact of a student’s enrollment in a charter school.” That amended formula governed all districts, including Abbott districts. Given that, there was “no reason to exempt former Abbott districts from the general rule requiring a district to preliminarily demonstrate fiscal harm, or to impose on the Commissioner the burden to demonstrate the absence of such harm in every charter application in those districts.”
Nor did the fact that the District was state-controlled at the time of the expansion applications support ELC’s argument. For taken-over districts, the SFRA and its implementing regulations made the Commissioner the functional equivalent of a district superintendent, with the power to address charter school applications. Justice Patterson said that “[a]ny holding by this Court dispensing with the requirement of a preliminary showing of fiscal harm by State-operated districts would be inconsistent with the Legislature’s expectation that a State-appointed superintendent will effectively represent the a district’s interests with respect to charter schools.”
The Court did find that the Commissioner’s decisions regarding these charter schools were “deficient” because the Commissioner did not address the segregative effects of the schools’ applications as required by Englewood. “In future determinations of applications for approval of charter schools pursuant to N.J.S.A. 18A:36A-4.1 and -5 and N.J.A.C. 6A:11-2.1, applications for renewals of charters pursuant to N.J.S.A. 18A:36A-17 and N.J.A.C. 6A:11-2.3, and applications for amendments of charters pursuant to N.J.A.C. 6A:11-2.6, the Commissioner should address the impact of the charter school’s approval,renewal or amendment on racial segregation in the district of residence. The Commissioner should also address the impact of the charter school’s approval, renewal or amendment on the demographic composition of the district of residence with respect to two groups of students of particular concern to the Legislature, students with disabilities and students who are English language learners.”
But the Court declined to grant the ELC’s request to remand the matters to the Commissioner, as doing so “five years after the decisions would not serve the interests of Newark’s charter school students or their families.” If there were a remand, “the normal remedy available to the Commissioner would be a retroactive denial and unwinding of the expansion applications granted to the seven charter schools in 2016. The charter schools would have no alternative but to remove students from their enrollment and rescind commitments to students for the nexts chool year. Such a remedy would severely impact Newark’s charter school students and their families, and would subvert the Legislature’s policy to expand educational opportunities. It would also undermine the Commissioner’s intervening and future decisions on charter school expansion applications, which were premised on post-2016 enrollment data.”
The ELC asserted that it was not asking that the Court remove students from charter schools, but only “to instruct the Commissioner to prospectively deny or limit pending and future applications to expand Newark charter schools so that the schools’ collective enrollments return to pre-2016 levels.” The Court “decline[d] to play such an active role, in which the Court would interfere with educational determinations that are imbued with the expertise of the Commissioner and the Department’s staff.” Doing so also would not ” take into account developments in the intervening years.”
Justice Patterson concluded by saying “[a]s the Legislature prescribed, the Commissioner must decide pending and future applications by Newark charter schools to approve, renew,or amend their charters on a case-by-case basis, applying the factors that govern those applications.It is not for this Court to prospectively direct the Commissioner’s determinations. Accordingly, we leave undisturbed the Commissioner’s decisions granting the seven charter school applications at issue here.”