* Subsequent History: Matter of Kelly Services, Inc. v Univ. of State of N.Y.; Supreme Court, Albany County; Judgment dismissed petition to review; May 22, 2007. *

Appeal of KIM E. WOODAREK from action of the Board of Education of the Ellicottville Central School District, Patricia Haynes, as Superintendent, and Kelly Services, Inc., regarding a contract for substitute teaching services.

Decision No. 15,422

(July 7, 2006)

James R. Sandner, Esq., attorney for petitioner, James D. Bilik, Esq., of counsel

Hodgson Russ LLP, attorneys for respondents, David A. Farmelo and Jeffrey J. Weiss, Esqs., of counsel

Brown Raysman Millstein Felder & Steiner, LLP, co-counsel only for respondent Kelly Services, Inc., Steven Weiss, Esq., of counsel

MILLS, Commissioner.--Petitioner is a resident taxpayer of the Ellicottville Central School District, and is President of the Ellicottville Teachers Association.  She brings this appeal against the district’s board of education (“respondent board” or “board”), Patricia Haynes, its Superintendent (“Superintendent”), and Kelly Services, Inc. (“Kelly”), to annul a contract between the board and Kelly, and to annul the alleged delegation of substitute teaching instruction to Kelly.  The appeal must be sustained.

On or about April 27, 2005, the board and Kelly entered into a contract that the parties agree is, in substance, identical to that which was at issue in Appeal of Sweeney (44 Ed Dept Rep 176, Decision No. 15,139).  In Sweeney at pp. 176-177, the contract between Kelly and the Board of Cooperative Educational Services for the Second Supervisory District of Erie, Chautauqua and Cattaraugus Counties (“BOCES”) was described:

The contract provides that Kelly will recruit, interview, select, hire and assign employees to render per diem substitute teaching services for BOCES.  It further provides that Kelly will ensure that each per diem substitute meets any applicable teacher certification and criminal background check requirements, pay the per diem substitutes’ wages and benefits, and maintain their personnel and pay records.  The contract further provides that the substitute teachers shall remain Kelly’s employees and shall not be employees of the BOCES.

In Sweeney, I held that BOCES did not have authority to enter into such a contract (p. 177):

I find that BOCES does not have the authority to contract with Kelly for instructional services.  I have repeatedly held that a board of education lacks authority to provide instructional services through an independent contractor (Appeal of McKenna, 42 Ed Dept Rep 54, Decision No. 14,774; Matter of Friedman, 19 Ed Dept Rep 522, Decision No. 10,236).

The decision was also based on Education Law §1950(4), (p. 178):

. . ., [A] BOCES is a creature of statute and has no inherent powers and possesses only those powers expressly delegated by statute.  Education Law §1950(4) enumerates the powers and duties of a BOCES.  Specifically, paragraph h provides the entities with which a BOCES may contract and the limited purposes of such contracts.  The contract at issue here is not authorized by this statute.  Therefore, I conclude that BOCES acted without legal authority when it contracted for substitute teaching services.

The Sweeney decision was upheld by Supreme Court (Kelly Services, Inc. v. University of the State of New York, et al., and Board of Cooperative Educational Services for the Second Supervisory District of Erie, Chautauqua and Cattaraugus Counties, et al. v. University of the State of New York, et al.; Sup. Ct., Albany Co., Special Term; Ceresia, J.; November 28, 2005).  The case has been appealed to the Appellate Division, Third Department.

Petitioner contends that respondent board has no authority to enter into such a contract because it constitutes an illegal contracting out of instructional services, and an illegal expenditure of district funds.  Petitioner further argues that the contract violates §80-5.4(b) of the Commissioner’s regulations with respect to substitute teachers, and is a violation of sound educational policy.

Respondents, who have filed a joint answer, contend that, because Education Law §1950(4) does not apply to a central school district, a central school district may enter into such a contract pursuant to Education Law §§1804(1) and 1709(33), which provide that a board of education shall have the power and duty:

To have in all respects the superintendence, management and control of the educational affairs of the district, and, therefore, shall have all the powers reasonably necessary to exercise powers granted expressly or by implication and to discharge duties imposed expressly or by implication by this chapter or other statutes.

Respondents also assert several affirmative defenses, including lack of standing on the part of petitioner and untimeliness.

I decline to dismiss the appeal for lack of standing for the same reasons stated in Appeal of Sweeney (44 Ed Dept Rep 176, Decision No. 15,139, at p. 177).  I also decline to dismiss for untimeliness, because petitioner has alleged ongoing actions and payments by respondent board which she claims are contrary to law (Appeal of Copenhagen Teachers’ Association, 45 Ed Dept Rep ____, Decision No. 15,381; Appeal of Town of Smithtown, 28 id. 337, Decision No. 12,128), and are therefore subject to challenge at any time.

As in Appeal of McKenna, et al. (42 Ed Dept Rep 54, Decision No. 14,774), this appeal presents a fundamental question with respect to the power of a board of education to contract with outside parties.  As I said in McKenna:

With respect to the legal authority of the board of education to enter into this contract, the parties have a fundamental disagreement as to the inherent authority of school districts. Respondent board of education takes the position in its brief that it “should be permitted to enter into the kind of contract at issue in this case so long as the contract does not violate any specific provisions of the Education Law or any other statutes.”  Petitioners, on the other hand, argue that “there exists no general authority for a board of education to contract with an independent contractor for instructional services,” citing Matter of Friedman, 19 Ed Dept Rep 522, Decision No. 10,236.

Petitioner argues that respondent board has no inherent power to provide instructional services to its students by contracting with an outside, for-profit entity.  She cites Appeal of Sweeney (44 Ed Dept Rep 176, Decision No. 15,139), Appeal of McKenna, et al. (42 id. 54, Decision No. 14,774, contract for alternative instructional program provided by a for-profit contractor annulled), and Matter of Friedman (19 id. 522, Decision No. 10,236, contract for provision of instructional services by outside entity is unauthorized and is contrary to sound educational policy).  Petitioner also cites §80-5.4(b), which states: “The responsibility for the employment of appropriately qualified substitutes rests with the chief school officer.”

Respondents argue that Kelly is not providing instructional services under the contract, but is enabling the district to find eligible substitutes in a more efficient manner than the district has been able to do on its own.  They liken Kelly’s role to that of an employment agency or search firm, and cite Richter v. Board of Education (71 Misc 2d 571, authorizing certain employment contracts), Appeal of Tsu (39 Ed Dept Rep 84, Decision No. 14,181, where a claim of improperly contracting with a search firm was held untimely), and Opinion of the State Comptroller 69-868 (25 Op. Comptroller 350, stating that a school district may use, and pay for, the services of an employment agency to recruit an accountant).

Respondents contend that there is no statutory authority prohibiting the contract at issue here.  They argue that, once Kelly has sent a per diem substitute to the district, although the contract states that the substitute remains an employee of Kelly, the substitute in essence becomes a district employee for the day, because the district, not Kelly, supplies the curriculum to be taught; directs and supervises the substitute’s work; and can terminate the substitute if it chooses, without giving any reason.  They argue that the superintendent retains the same full authority over substitutes supplied by Kelly as she had over substitutes employed directly by the district before the contract became effective, and that the superintendent retains the full control contemplated by §80-5.4(b).

Both sides present cogent arguments on behalf of their positions, but on careful review of the record, I conclude that the appeal must be sustained.  While respondents argue that Kelly’s role is limited to finding an acceptable substitute for a day, the conclusion is inescapable that Kelly’s employees are in fact providing instructional services to the district’s students.  Prior decisions have clearly stated that a board of education lacks authority to contract with an independent contractor to provide instructional or educational services (Appeal of Barker, et al., 45 Ed Dept Rep _____, Decision No. 15,375; Appeal of McKenna, et al., 42 id. 54, Decision No. 14,774; Matter of Friedman, 19 id. 522, Decision No. 10,236).  In this case, the contract provides that Kelly will “assign its employees to Customer to work as per diem substitute teachers . . .” and “Kelly guarantees that the employees it assigns to Customer will satisfactorily perform the services ordered by Customer.” (Emphasis added.)

I cannot agree with respondents’ argument that Kelly is acting essentially as an employment agency or search firm.  When a district employs a search firm, it is contemplated that the district will hire the candidate offered by the search firm, and that the candidate will have no further relationship, as employee or otherwise, with the search firm.  Here, Kelly continues at all times to be the employer of the substitute, as is emphasized throughout the contract, and the district never becomes the employer as long as the substitute continues to serve in such capacity.

I also cannot agree with the argument that the per diem substitute sent by Kelly becomes the employee of the district for the day.  By terms of the contract, the work of the substitute is limited and restricted in several ways by the contract between Kelly and the district.  For example, the contract provides that the substitute will not have sole custody of a single student, will not be solely responsible for supervision of more than one classroom at a time, and will not possess or administer any student medications.  The contract provides that the substitute may not be required to operate any vehicle.  The contract further provides that the substitute will be used only in the capacity for which he or she was requested, that the district may not substantially change any assigned duties without Kelly’s prior notice and consent, that the substitute may not be given any duties outside the district’s premises without Kelly’s prior notice and consent, and that the district “agrees to comply with any restrictions of which Kelly advises Customer regarding the responsibilities Customer assigns to Kelly employees.”

While respondents argue that the above restrictions are insignificant, I find that they are significant enough to conclude that a Kelly substitute is not fully under the control of the superintendent.  For example, if a district requested a substitute for a full day, but later found that the substitute was not needed in a classroom during the afternoon, it could not assign the substitute to drive to the home of a suspended or homebound student to provide tutoring services, without obtaining Kelly’s prior consent with respect to the use of a vehicle, the change of duties, or the performance of duties off its premises.  Presumably it could do so in the case of a substitute it employed and paid directly for a day.

I am mindful that this record does not involve creation of new positions (see e.g., Appeal of McKenna, et al., 42 Ed Dept Rep 54, Decision No. 14,774) nor the termination of services of a permanent employee (cf., Matter of Friedman, 19 id. 522, Decision No. 10,236; Appeal of Davis, 39 id. 273, Decision No. 14,235; Appeal of Davis, 39 id. 270, Decision No. 14,234).  Nevertheless, I conclude that a school district, as a creature of statute, lacks the power to use the employees of others to fill teaching positions that have been certified in the State’s unclassified service (Appeal of Rosenkranz, 37 id. 330, Decision No. 13,872; Appeal of Bode, 33 id. 260, Decision No. 13,043).

In view of this disposition, I need not consider the parties’ remaining contentions.

THE APPEAL IS SUSTAINED.

IT IS ORDERED that the contract between the Ellicottville Central School District and Kelly Services, Inc., is hereby annulled.

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