Appeal of KATHY SIDMORE from action of the Board of Education of the Belleville Henderson Central School District Members John W. Allen, David P. Bartlett, Roger E. Eastman, Kurt E. Gehrke, Laurie M. Goodwin, Adam J. Miner, Gary M. Ramsdell, Superintendent Rick T. Moore, Director of Business and Finance Karl J. Kofod, and Business Manager Brianne R. Kirchoff, regarding financial practices.

Decision No. 17,463

(July 25, 2018)

Office of Inter-Municipal Legal Services, attorneys for respondents, Dominic S. D’Imperio, Esq., of counsel

ELIA, Commissioner.--Petitioner appeals certain actions of members of the the Board of Education of the Belleville Henderson Central School District - John W. Allen, David P. Bartlett, Roger E. Eastman, Kurt E. Gehrke, Laurie M. Goodwin, Adam J. Miner, Gary M. Ramsdell, Superintendent Rick T. Moore, Director of Business and Finance Karl J. Kofod,[1] and Business Manager Brianne R. Kirchoff (“respondents”) relating to financial practices.  The appeal must be dismissed.

Although not clearly articulated, it appears that petitioner generally appeals respondents’ financial practices related to preparation of the 2017-2018 school district budget (“budget”), the issuance of the 2017-2018 “Panther Press Budget Newsletter” and the potential results of the 2017-2018 school district budget vote (“vote”).[2]   

For example, petitioner makes several allegations with respect to a lack of information contained in board of education meeting minutes, including but not limited to: “no treasurer’s reports have been approved this fiscal year,” “one statement of revenues and expenditures ... for July 1 to September 30, 2016 was presented on October 17, 2016...” and “no formal budget calendar adopted during fiscal year 2016-17 for use during budget preparations for fiscal year 2017-18.”  Petitioner also alleges that the district does not possess audit committee minutes despite appointing an audit committee at a meeting held on July 11, 2016, and that the district’s website does not include compensation information for the superintendent or building principal.  Finally, petitioner alleges that no detailed budget information was available at two public libraries located within the district.  While petitioner appears to express dissatisfaction that the aforementioned information is not available, however, she makes no allegations that respondents are violating any law or policy in that regard.  It appears that petitioner is using the allegations to support a general claim that respondents have violated their financial responsibilities with respect to the 2017-2018 budget.   

Petitioner also alleges that, at a meeting held on August 15, 2016, respondents authorized three budget transfers which moved money from contingent budget areas to noncontingent budget areas and that, at a meeting held on September 26, 2016, respondents authorized an installment purchase of school buses.  She alleges that these actions violate “General Municipal Law Section 36.”[3]

Petitioner makes several references to the Office of the New York State Comptroller’s report of the district’s financial condition issued in May 2016 (“Comptroller’s report”),[4] and actions taken by the district subsequent to such report specifically with respect to an “unused fund balance.” While petitioner appears to express dissatisfaction with respondents’ actions in response to the audit, she makes no allegations that respondents are violating any law or policy or are failing to implement the corrective action adopted in response to the audit.  Again, it appears that petitioner is using the allegations to support a general claim that respondents have violated their financial responsibilities with respect to the 2017-2018 budget.  For example, petitioner contends that she “recalculated the 2015-2016 fund balance” and “projected [the] unassigned fund balance for [the] current fiscal year.”  Petitioner alleges that the adjusted restricted 2016-2017 fund balance as reported, is incorrect.  She also alleges that the assigned appropriated fund balance for the 2016-2017 fiscal year and the projected assigned appropriated fund balance for the 2017-2018 fiscal year and the adjusted unrestricted fund balance for  the 2016-2017 fiscal year are incorrect.  Petitioner alleges:

If correct information were published, made available and understood by the public, [she] contends the results of the budget vote may be significantly different. 

Finally, petitioner argues that the superintendent, in the budget newsletter, stated:

[U]tilized [d]istrict funds to disseminate data, not based on fact but on fictitious information pleasing to the taxpayer for the reason BHCS tax rate is low ... compared to the rest of the North Country ....

Petitioner argues that “[m]aking comparisons to other school districts is not proper without considering all factors” and that “[e]ach school district is unique in its needs to provide a quality education for students.” Petitioner alleges that “this misrepresentation will sway opinion of [the] community to vote ‘yes’ on [the] proposed budget.”   

Petitioner does not seek to overturn the results of the vote; instead she requests an order directing respondents to:

[A]dhere to BHCS policy, Education Law, General Municipal Law, and Real Property Tax Law when conducting business, particularly when considering financial matters.... 

She also requests that respondents “discontinue use of school funds to disseminate information to the public promoting a favorable or negative opinion of any proposal” and that they “reduce the tax levy every fiscal year the unassigned fund balance exceeds its lawful limit.”

Respondents argue that the petition must be dismissed for improper service, failure to join necessary parties, lack of jurisdiction, and mootness. Respondents also argue that, to the extent petitioner alleges improper electioneering, she has failed to state a claim upon which relief can be granted.  Respondents further argue that, to the extent “the [p]etition could be construed as a preemptive attempt to challenge [the district’s] 2017 annual meeting and the budget propositions,” that claim seeks an advisory decision, is therefore not ripe for challenge and must be dismissed.  Respondents also argue that to the extent the petition challenges the district’s response and conduct with respect to the Comptroller’s report, and any actions related to the 2017-2018 budget that occurred on or prior to April 15, 2017, those claims must be dismissed as untimely.  Finally, respondents object to petitioner’s “accusatory, scandalous, and irrelevant assertions of opinion about the [d]istrict generally, and the [s]uperintendent of [s]chools specifically” and request that those assertions be struck from the record.

I will first address the procedural matters.  The purpose of a reply is to respond to new material or affirmative defenses set forth in an answer (8 NYCRR §§275.3 and 275.14).  A reply is not meant to buttress allegations in the petition or to belatedly add assertions that should have been in the petition (Appeal of Nappi, 57 Ed Dept Rep, Decision No. 17,300; Appeal of Caswell, 48 id. 472, Decision No. 15,920; Appeal of Hinson, 48 id. 437, Decision No. 15,908).  Therefore, while I have reviewed the reply, I have not considered those portions containing new allegations or exhibits that are not responsive to new material or affirmative defenses set forth in the answer.

A memorandum of law should consist of arguments of law (8 NYCRR §276.4).  It may not be used to add belated assertions or exhibits that are not part of the pleadings (Appeal of Johnson, 57 Ed Dept Rep, Decision No. 17,328; Appeal of Bruning and Coburn-Bruning, 48 id. 84, Decision No. 15,799).  In addition to a memorandum of law, respondents submit a “Supplemental Memorandum of Law” served on petitioner via mail on July 5, 2017.[5]  Additional affidavits, exhibits and other supporting papers may only be submitted with the prior permission of the Commissioner (8 NYCRR §276.5).  While this provision permits the submission of additional evidence, it cannot be used to add new claims against a respondent for which notice has not been provided (Appeal of Casey-Tomasi, 57 Ed Dept Rep, Decision No. 17,301; Appeals of Gonzalez, 48 id. 405, Decision No. 15,898).  I will not accept materials that raise new issues and introduce new exhibits that are not relevant to the claims originally raised in the appeal (Appeal of Casey-Tomasi, 57 Ed Dept Rep, Decision No. 17,301; Appeals of Gonzalez, 48 id. 405, Decision No. 15,898). In light of the fact that respondents served both the memorandum of law and the supplemental memorandum of law before the time limit for service of their memorandum of law expired and that the supplemental memorandum does not add any belated assertions or exhibits that are not part of the pleadings, I have accepted the documents (see Appeal of Gimbrone, 56 Ed Dept Rep, Decision No. 17,036).

Section 275.8(a) of the Commissioner’s regulations requires that the petition be personally served upon each named respondent.  If a school district is named as a respondent, service upon the school district shall be made personally by delivering a copy of the petition to the district clerk, to any trustee or any member of the board of education, to the superintendent of schools, or to a person in the office of the superintendent who has been designated by the board of education to accept service (8 NYCRR §275.8[a]; Appeal of B.H., 57 Ed Dept Rep, Decision No. 17,246; Appeal of Peterson, 48 id. 530, Decision No. 15,939).  Here, the caption does not name the school district or the board of education, but instead lists the individual board of education members, identifying them as “Board of Education of the Belleville Henderson Central School District Members.”  The record indicates that none of the named individual board member respondents were personally served, nor were respondents Moore, Kofod, and Kirchoff.  Therefore, the appeal must be dismissed as against all of the individual respondents for improper service (see Appeal of Zwanka, 56 Ed Dept Rep, Decision No. 17,051).

However, while petitioner failed to name the board of education as an entity, she did name the individual board members as members of the board.  Petitioner does not seek relief against any individual board member, but rather challenges the board of education’s financial practices.  Under such circumstances, in the absence of a showing of prejudice to the board of education, the Commissioner has declined to dismiss for failure to name the board of education and has determined that service upon the district clerk was sufficient to confer jurisdiction over the board (see Appeal of Sidmore, 57 Ed Dept Rep, Decision No 17,225; Appeal of Carrion, 50 id., Decision No. 16,228; Appeal of Lander, et al., 42 id. 201, Decision No. 14,822).  The board has had a fair opportunity to respond to the allegations in the petition and has not otherwise made any showing of prejudice resulting from petitioner’s failure to specifically name it as a respondent.  Therefore, I find that service upon the district clerk was sufficient to confer jurisdiction over the board.

To the extent petitioner appeals actions of respondent board that occurred at the board meetings held on August 15, 2016, and September 26, 2016, only petitioner’s claim that respondent board unlawfully approved a budget transfer for an installment purchase contract for a school bus without obtaining voter approval is timely.  Petitioner’s challenges to actions related to the 2015-2016 and 2016-2017 budgets, including the alleged retention of unassigned fund balance in respondent’s 2016-2017 budget in excess of the limit imposed by Real Property Tax Law §1318; an alleged unlawful budget transfer from contingent budget areas to noncontingent budget areas in August 2016; and the corrective actions taken by respondent board prior to April 2017 in response to the Comptroller’s report, are untimely.  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 Saxena, 57 Ed Dept Rep, Decision No. 17,239; Appeal of Lippolt, 48 id. 457, Decision No. 15,914).  This appeal was commenced by service of the petition on May 15, 2017, and thus, with one exception discussed below, all of petitioner’s claims relating to actions taken prior to April 15, 2017 are untimely.  Petitioner has not provided any excuse for the delay, and therefore, such claims must be dismissed as untimely (see Appeal of Delessio, 57 Ed Dept Rep, Decision No. 17,220). 

However, The continuing wrong doctrine applies when the ongoing action is itself an unlawful action that results in a continuous violation of the law, such as the unlawful employment of an unqualified individual (Appeal of Kippen, 48 Ed Dept Rep 469, Decision No. 15,919), unlawful appointments to a district’s shared decision-making team (Appeal of Sadue-Sokolow, 39 Ed Dept Rep 6, Decision No. 14,155), an improperly constituted professional development team (Appeal of Copenhagen Teachers’ Association, et al., 45 Ed Dept Rep 459, Decision No. 15,381) or certain ongoing expenditures under an austerity budget that did not comply with the law (Appeal of Aarseth, 32 Ed Dept Rep 506, Decision No. 12,901).  The doctrine does not apply where the specific action being challenged is a single discrete action, inaction or decision and the resulting effects are continuing but are not intrinsically unlawful (Application of Ayers, 48 Ed Dept Rep 350, Decision No. 15,883; Appeal of a Student with a Disability, 48 id. 146, Decision No. 15,821, judgment granted dismissing petition to review, April 8, 2009, Sup.Ct., Albany Co. [Zwack, J.]).

To the extent that petitioner claims that respondent board unlawfully authorized the purchase of a school bus through an installment purchase contract without obtaining voter approval as required by the General Municipal Law, such claim, if proven, involves ongoing expenditures without voter approval that are intrinsically unlawful and thus is a continuing wrong subject to appeal at any time (see Appeal of Russo, Jr., 47 Ed Dept Rep 506, Decision No. 15,744; Appeal of Aarseth, 32 id. 506, Decision No. 12,901; cf., Appeal of Bach, 32 id. 273, Decision No. 12,828 [appeal claiming irregularities relating to bond vote untimely when not commenced within 30 days of the bond vote]).  By its nature, an installment purchase contract involves periodic payments by the school district for the financing of equipment or machinery (General Municipal Law §109-b[1][b]), and if voter approval was not obtained, respondent board would be making periodic payments over the term of the contract without having obtained voter approval.

To the extent petitioner appeals the results of the 2017-2018 vote, the appeal is premature.  Although petitioner’s request for relief does not include a request to overturn the vote, the petition includes allegations such as “if correct information were published, made available and understood by the public ... the results of the budget vote may be significantly different” and “misrepresentation will sway opinion of [the] community to vote ‘yes’ on [the] proposed budget.”  The record indicates that the vote was held on May 16, 2017, after the date of service of the instant petition.  The Commissioner will not render an advisory opinion on an issue before it becomes justiciable (Appeal of Frey, 57 Ed Dept Rep, Decision No. 17,308; Appeal of B.R. and M.R., 48 id. 291, Decision No. 15,861).  Therefore, any claim seeking to challenge the results of the May 16, 2017 vote are premature and must be dismissed.

To the extent petitioner seeks an order directing respondent board to reduce the tax levy in the 2017-2018 school year and in every subsequent school year in which the unassigned fund balance exceeds the limit imposed by Real Property Tax Law (“RPTL”) §1318, the appeal must also be dismissed as premature.  Under RPTL §1318(1), at the conclusion of each fiscal year, a board of education must apply any unexpended surplus funds to reduce its tax levy for the upcoming school year.  Surplus funds are defined as "any operating funds in excess of four percent of the current school year budget, and shall not include funds properly retained under other sections of law" (RPTL §1318[1]).  Accordingly, funds properly retained in a reserve fund prior to the tax levy need not be used to reduce tax levy (see Appeal of Wille, 56 Ed Dept Rep, Decision No. 17,050; Appeals of Gorman, 43 id. 32, Decision No. 14,906).  This appeal was commenced prior to the conclusion of the 2016-2017 school year and prior to the issuance of a tax warrant and the levy of taxes in the 2017-2018 school year.  Thus, any actions by respondent board that might result in retention of unexpended surplus funds in violation of RPTL §1318(1) had not yet occurred at the time this appeal was brought, even for the retention of funds in the 2017-2018 budget, and petitioner’s claims relating thereto are premature.  

To the extent petitioner timely raises claims regarding respondent board’s financial practices related to preparation of the 2017-2018 budget and asserts that respondent board unlawfully approved a budget transfer for an installment purchase contract for a school bus without obtaining voter approval, she fails to meet her burden of proof.  In an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which petitioner seeks relief (8 NYCRR §275.10; Appeal of P.C. and K.C., 57 Ed Dept Rep, Decision No. 17,337; Appeal of Aversa, 48 id. 523, Decision No. 15,936; Appeal of Hansen, 48 id. 354, Decision No. 15,884).

The crux of petitioner’s claims regarding respondent board’s financial practices appears to be summarized in her allegation that:

[R]espondents cannot forecast ensuing year’s budget without some knowledge of present financial position; cannot know district’s fiscal status or potential operating surplus/deficit and effect on unassigned fund balance; lack of budget calendar leaves respondents unaware of progression of events leading up to adopting a budget to be presented to voters; preliminary presentation of budget not sufficient to present well-planned and executed budget; budget for 2017-2018 cannot include operation excess to the extent moneys [sic] can be transferred improperly to noncontingent accounts to spend down unneeded excess revenues....

However, it is petitioner's burden to establish that respondent board acted in contravention of the law or board policy.  Petitioner cites no specific law or board policy that respondent board is alleged to have violated and instead expresses general dissatisfaction with respondent board’s actions.  Petitioner alleges certain inaccuracies in the budget information provided to voters, particularly in the district’s property tax report card, but has not established that respondent board violated any law or board policy. As I previously determined, any claims relating to the impact of such allegedly inaccurate budget information on the budget vote or the allegedly unlawful retention of unexpended surplus funds in the 2017-2018 school year budget or thereafter are premature.  On this record, I find that petitioner has failed to establish a clear legal right to an order that respondent board adhere to district policy, the Education Law, General Municipal Law or Real Property Tax Law “when conducting business, particularly when considering financial matters” as requested in the petition.  

Petitioner also complains that the superintendent  improperly included in the district’s budget newsletter a comparison of the tax rate under the proposed 2017-2018 budget with the tax rates of “[m]ost school districts in the North Country.”  She also complains about the superintendent’s assertion that the district “remains one of the least taxed districts in the state.”  As relief in this regard, she seeks an order that respondent board “discontinue use of school funds to disseminate information to the public promoting a favorable or negative opinion of any proposal.”

A board of education may use public resources to present objective, factual information to the voters concerning a vote or election (Education Law §1716; Phillips v. Maurer, et al., 67 NY2d 672; Appeal of Flippen, 57 Ed Dept Rep, Decision No. 17,296; Appeal of Caswell, 48 id. 472, Decision No. 15,920).  However, while a board of education may disseminate information “reasonably necessary” to educate and inform voters, its use of district resources to distribute materials designed to “exhort the electorate to cast their ballots in support of a particular position advocated by the board” violates the constitutional prohibition against using public funds to promote a partisan position (Phillips v. Maurer, et al., 67 NY2d 672; Stern, et al. v. Kramarsky, et al., 84 Misc 2d 447; Appeal of Flippen, 57 Ed Dept Rep, Decision No. 17,296; Appeal of Caswell, 48 id. 472, Decision No. 15,920).

The superintendent’s comparison of the district’s tax rate with those of other school districts in the region or in the State was objective and factual in nature, and petitioner has not proven that such a comparison constitutes impermissible advocacy in support of the budget.  In support of her contention, petitioner submits a list of school tax and equalization rates for 2016-2017 for school districts served by the Jefferson-Lewis-Hamilton-Herkimer-Oneida BOCES, and it is unclear whether this list was self-compiled or obtained from another source.  Even assuming the accuracy of the list, however, it actually shows that respondents’ district had a tax rate lower than most school districts in the BOCES in 2016-2017.  Petitioner argues that the comparison of tax rates is misleading because other factors are at play, notably that many of the listed districts with high tax rates have equalization rates below 100, and if they had equalization rates closer to 100, their effective tax rates would be closer to that of respondents’ school district.  Be that as it may, petitioner has not met her burden of proving that the superintendent’s comparison of tax rates involved impermissible advocacy and was not objective or factual information.  She also has not proven that such comparison was inaccurate or misleading.  Moreover, though a claim that respondents misled voters may be properly brought to challenge the results of a budget vote, any such claim is also premature here, for the reasons discussed above, and is thus not ripe for review in this appeal.  Therefore, I find that petitioner has not established a clear legal right to an order that respondent board discontinue the use of public funds for impermissible advocacy on the budget.  

Finally, petitioner alleges that a budget transfer approved by respondent board on September 26, 2016 from an account relating to the purchase of a school bus to an account for the installment purchase of a school bus was unlawful because the voters had approved the purchase of the school bus, but had not approved an installment purchase contract.  This is denied by respondents, and on this record, petitioner has not proven that respondent board violated General Municipal Law §109-b(5) by not obtaining voter approval. Petitioner acknowledges that the voters approved the purchase of the school bus in 2016-2017, but has provided no evidence concerning the proposition that was approved by the voters and has not proven that voter approval of the installment purchase contract was never obtained. 

In light of this disposition, I need not address the parties’ remaining contentions.

THE APPEAL IS DISMISSED.

END OF FILE