Decision No. 13,243

(August 16, 1994)

SOBOL,Commissioner.--Petitioner seeks the removal of respondents for alleged violations of law. The application must be denied.

Petitioner, a resident taxpayer, complains about several actions taken by the superintendent and members of the Board of Education of the Liberty Central School District (the "board"). The majority of petitioner's complaints arise out of a collective bargaining agreement ("agreement") negotiated between the Board and the Liberty Administrators' Association ("LAA"). Negotiations for the agreement began in May 1992. Board members Edward Carrington, Margaret Curtis, Alan Deutsch, Assistant Superintendent Anthony Pagnucco and Superintendent Richard Beruk conducted negotiations on behalf of the board. During negotiations, an impasse was declared and the parties went to mediation in the summer of 1992. Finally, an agreement was reached for the years 1991-92, 1992-93 and 1993-94. The agreement was ratified by the LAA and then funded by the board at a meeting held on January 11, 1993. At that meeting, petitioner opposed the agreement.

With regard to the agreement, petitioner alleges that the board acted in excess of its authority by funding a contract with unconscionable salary increases, unauthorized sick leave and severance pay. Petitioner also alleges that the board violated the State Constitution by providing for illegal "gifts" of public funds. Lastly, petitioner alleges that the board members acted in bad faith and did not exercise due diligence in negotiating the agreement.

In addition, petitioner contends that the board members have violated their fiduciary duty by permitting sums in excess of 2% to be held within the unreserved fund balance. Petitioner also alleges unspecified conflicts of interest in violation of General Municipal Law '801.

Respondents maintain that the petition should be dismissed against respondent Richard P. Beruk since he is superintendent of schools, not a member of the board. Respondents also maintain that the petition should be dismissed because it fails to state a cause of action. In response to the allegations in the petition, respondents contend that the agreement was bargained for in good faith and in the proper discharge of the board's duties. Respondents deny that the board acted in excess of its authority or approved illegal "gifts". In addition, respondents contend that the board properly withheld monies in excess of 2% of the fund balance to establish a tax certiorari reserve fund. Lastly, respondents deny any conflicts of interest.

Before reviewing the merits of this appeal, it is necessary to address two procedural issues. First, petitioner sets forth new allegations and exhibits in her reply and memorandum of law. The purpose of a reply is to respond to procedural defenses or new material contained in an answer (8 NYCRR 275.3, 275.14). A reply is not meant to buttress allegations contained in the petition or add assertions or exhibits that should have been in the petition (Appeal of Taber, et al., 32 Ed Dept Rep 346; Appeal of Mermelstein, et al., 30 id. 119). This is particularly true in an application for removal, where specific notice of the charges is critical (8 NYCRR '277.1; Application of Sabuda, et al., 31 Ed Dept Rep 461; Application of Robert, 30 id. 378). Likewise, a memorandum of law may not be used to belatedly add assertions or exhibits which should have been included in the petition (Appeal of Johnson, 26 Ed Dept Rep 42; Matter of Bd. of Ed., Broadalbin C.S.D., 24 id. 51; Matter of a Handicapped Child, 24 id. 41). Therefore, those portions of the reply and memorandum of law that raise new issues and the accompanying exhibits will not be considered in this appeal.

Second, respondents argue that the petition should be dismissed against Richard P. Beruk since he is the superintendent and not a member of the board. Education Law '306 empowers the Commissioner of Education to remove a superintendent as well as a board member. Therefore, to the extent the superintendent was involved in negotiating the agreement and petitioner alleges that the agreement was not negotiated in good faith, I will not dismiss the appeal against him merely because he is not a member of the board.

Education Law '306 authorizes the Commissioner of Education to remove a member of the board of education or superintendent for a wilful violation or neglect of duty under the law (Education Law '306[1]; Application of Sabuda, et al., supra; Matter of Legatos, 23 Ed Dept Rep 10). To be considered wilful, respondents' actions must have been done intentionally and with a wrongful purpose (Matter of Board of Cooperative Educational Services, et al., 32 Ed Dept Rep 519; Application of Griffin, 31 id. 221; Application of Gellatly, 30 id. 10). In an appeal before the Commissioner of Education, the petitioner has the burden of proof of establishing the facts upon which he seeks relief (8 NYCRR 275.10; Appeal of Verity, 31 Ed Dept Rep 485; Appeal of Singh, 30 id. 284).

On the record before me, petitioner has failed to demonstrate that respondents wilfully violated any duty under the law by funding the agreement. The provisions in the agreement for salary increases, sick leave and severance pay were the result of collective bargaining negotiations between the board and the LAA. Boards of education are granted powers sufficiently broad to include the power to negotiate contracts for their supervisory personnel (Education Law ''1709 and 1804). Moreover, pursuant to Civil Service Law ''202, 203 and 204, a school board is required to negotiate in good faith with a recognized or certified labor organization. An item is proper for inclusion in a collective bargaining agreement as a term and condition of employment unless it is otherwise prohibited by statute (Bd. of Educ., U.F.S.D. No. 3, Town of Huntington v. Associated Teachers of Huntington, Inc., 30 NY2d 122).

There does not appear to be any statutory prohibition against the items included in the agreement. The payment to an employee for unused accumulated sick leave has been found to be a term or condition of employment which is not prohibited by statute (Matter of Teachers Assn. C.H.S.D. No. 3 v. Bd. of Educ., C.H.S.D. No. 3, Nassau Co., 34 AD2d 351). In addition, the payment of a retirement incentive during or at the conclusion of the last year of an employee's service has also been found to be a term or condition of employment which is not prohibited by statute (Bd. of Educ., U.F.S.D. No. 3, Town of Huntington v. Associated Teachers of Huntington, Inc., supra). Furthermore, the establishment of a "sick leave bank" is a term and condition of employment subject to negotiation (Syracuse Teachers Assn., Inc. v. Bd. of Educ., Syracuse City School Dist., 42 AD2d 73, aff'd 35 NY2d 743).

Moreover, contrary to petitioner's assertions, a contractual provision allowing cash payment to an employee for unused accumulated sick leave does not constitute an illegal "gift" of public funds. The Court in Matter of Teachers Assn. C.H.S.D. No. 3 v. Bd. of Educ. C.H.S.D. No. 3, Nassau Co., supra, specifically rejected the notion that such a provision violates the gift and loan provisions of Article VIII, '1 of the State Constitution. That decision also rejected the contention that the omission of express authorization for the conversion of unused accumulated sick leave in '92 of the General Municipal Law constitutes a prohibition against the board of education providing for such conversion in a collective bargaining agreement.

In addition, petitioner has failed to demonstrate that respondents wilfully violated any duty under the law in negotiating the agreement. As discussed above, there does not appear to be any statutory prohibition against the inclusion of any of the disputed items in the collective bargaining agreement. Moreover, although the negotiations were protracted, it does not appear that they were conducted in bad faith. The length of the negotiations appears to be due in part to the fact that this was the first agreement between the board and the LAA. When an impasse was reached, the parties went to mediation and the negotiations were concluded in part upon the suggestions of a mediator. In sum, petitioner offers no proof that respondents either negotiated or approved the agreement with a purpose or intent to disregard a lawful duty or to violate a legal requirement.

With respect to petitioner's claim that respondents permitted the accumulation of surplus funds in excess of 2% of the current year's budget, I do not find that respondents intentionally violated the law. Real Property Tax Law '1318(1) prohibits school districts from retaining year end surpluses in unlimited amounts (Appeal of Market, et al., 31 Ed Dept Rep 481; Matter of Terpenning, 21 id. 666). Pursuant to '1318, school districts must apply all unexpended surplus funds from a previous year in an amount over 2% of the current year's budget to the determination of the district's tax levy (Appeal of Market, et al., supra).

In the present case, respondents admit that the board temporarily retained monies in excess of the statutorily permissible 2% fund balance for the purpose of establishing a tax certiorari reserve fund. A school district may establish a tax certiorari reserve fund without voter approval pursuant to Education Law '3651(1-a). However, if surplus funds are to be used, the reserve fund should be established before the tax levy. A school district cannot hold surplus funds indefinitely in anticipation of establishing a reserve fund.

In this case, respondents allege that they retained the funds upon advice of the State Education Department and its accountants. For the reasons set forth above, I find it unlikely that the State Education Department advised respondents to hold monies in excess of the statutorily permissible 2% fund balance after the tax levy. Furthermore, petitioner offers no evidence to refute respondents' assertion. Respondents may have simply misunderstood the advice they were provided. In addition, although petitioner submitted two letters from the district's accountants regarding the amount of the district's unreserved excess fund balance, neither letter addresses the establishment of a tax certiorari reserve fund. Therefore, these letters do not necessarily refute respondents' claims that the district's accountants advised them to retain the funds in question to establish a tax certiorari reserve fund. Furthermore, the letter from the district's accountants dated September 23, 1992 states that the board had already taken the steps necessary to comply with the law by appropriating a portion of the unreserved excess fund balance to reduce the real property tax levy. For these reasons, therefore, I find that respondents did not intentionally violate the law. Although I do not find a wilful violation, I admonish respondents to abide by the requirements of Real Property Tax Law '1318(1) henceforth.

Petitioner has offered no evidence in her petition to support her allegations of conflicts of interest. Therefore, petitioner has failed to establish that respondents violated the law or otherwise neglected their duties.

THE APPLICATION IS DENIED.

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