BOROUGH OF VICTORY GARDENS BETTY SIMMONS INDIVIDUALLY AND AS MAYOR OF VICTORY GARDENS v. STATE OF NEW JERSEY COMMISSIONER OF EDUCATION OF THE STATE OF NEW JERSEY THE DOVER SCHOOL DISTRICT (2011)

In this appeal, appellants, the Borough of Victory Gardens (Borough) and Betty Simmons, individually and in her capacity as Borough mayor, challenge the formula the Commissioner of Education (Commissioner) utilized to apportion the tax levy between the Victory Gardens School District (District) and the Dover School District (Dover) after the two districts merged.   We conclude the Borough and mayor lack standing to challenge the Commissioner's determination.   In addition, while we are satisfied that Simmons, as an individual taxpayer, has standing to challenge the Commissioner's determination, she failed to exhaust her administrative remedies.   We therefore dismiss the appeal in its entirety.

By way of background, the District is a non-operating school district, sending all its students to Dover and paying Dover the established tuition rates for each student.   The District has its own elected school board members and administrative staff.   The District submitted its proposed 2009-2010 budget to the Acting Morris County Executive Superintendent (ECS) in March 2009.   The proposed budget was shortly thereafter made available to the public pursuant to N.J.S.A. 18A:22-7.   Between March 22 and 29, the District conducted public hearings on the proposed budget and adopted it as proposed.   The budget included an $823,002 tax levy, which was the same amount of the tax levy budgeted for the 2008-2009 school year and less than the tax levy that had been approved in the 2007-2008 District budget.   The Borough voters approved the 2009-2010 budget in April and certified to the Morris County Board of Taxation the tax levy amount approved by the voters.

On June 30, 2009, the ECS submitted the “MORRIS COUNTY REPORT ON NON-OPERATING S[C]HOOL DISTRICT VICTORY GARDENS [BO]ROUGH” (Report).   The Report included budget information for the District and noted that the Borough's “financials indicate[ ] that despite consistently increasing its budget, it has managed to reduce[ ] its tax levy as a proportion of its appropriations (from 29.0 [percent] to 18.1 [percent] ) over the past three years.”   The Report attributed this reduction, partially, “to an increase in revenues due to an approximate 25 [percent] increase in state aid[,] an increase in budgeted surplus, and a decrease of five students in out-of-district special education placements over this three[-]year period.”   The Report also included the 2009-2010 budget approved by the voters that included the $823,000 actual tax levy amount.

Additionally, the Report included the ECS's recommendation that the District be eliminated as of July 1, 2009, and merged into Dover, with the general fund tax levy “apportioned to each [community]” in accordance with the figures contained in the Report.   The Commissioner adopted the recommendations contained in the Report.   In a letter also dated June 30, 2009, the Commissioner notified the District that she approved the plan to merge the District with Dover.   The Commissioner found the ECS's “plan adequately addresses the statutory requirements for the elimination of the non-operating district.”

The District filed its Notice of Appeal on August 14, 2009.   Four days later, its attorney submitted a letter, dated August 18, 2009, seeking reconsideration of the Commissioner's determination on the basis that the “tax levy figures used to calculate the apportionment were falsely inflated by virtue of an anomaly in the school funding formula.”   The Commissioner denied the request, finding that “the apportionment set forth in the June 30, 2009 [decision] is correct based on the requirements of N.J.S.A. 18A:7F-5 et seq.”

Appellants raise the following points for our consideration:

POINT I

APPELLATE COURTS SHOULD OVERTURN AN AGENCY DECISION WHEN THE DECISION IS ARBITRARY AND CAPRICIOUS AND NOT SUPPORTED BY SUBSTANTIAL CREDIBLE EVIDENCE IN THE RECORD AS A WHOLE.

POINT II

WHEN INTERPRETING A STATUTE, COURTS HAVE A DUTY TO CONSIDER OTHER STATUTES CONCERNING THE SAME MATTER AND TO RECONCILE THEM SO AS TO GIVE EFFECT TO BOTH EXPRESSIONS OF THE LEGISLATIVE INTENT.

POINT III

WHEN PREPARING A PLAN TO ELIMINATE NON-OPERATING SCHOOL DISTRICTS, THE EXECUTIVE COUNTY SUPERINTENDENT MUST CONSIDER THE DISTRICT'S FINANCIAL INFORMATION AND DISTRICT SPECIFIC ISSUES AND CONCERNS.

The question of standing is a matter of law as to which we exercise de novo review.  Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).   Standing addresses a litigant's right to maintain a cause of action before a judicial forum.   As set forth by our Supreme Court more than thirty years ago, standing assures:

the invocation and exercise of judicial power in a given case are appropriate.   Further, the relationship of plaintiffs to the subject matter of the litigation and to other parties must be such to generate confidence in the ability of the judicial process to get to the truth of the matter and in the integrity and soundness of the final adjudication.   Also, the standing doctrine serves to fulfill the paramount judicial responsibility of a court to seek just and expeditious determinations on the ultimate merits of deserving controversies.

[N.J. State Chamber of Commerce v. N.J. Election Law Enforcement Comm'n, 82 N.J. 57, 69 (1980).]

“Courts will not entertain matters in which plaintiffs do not have sufficient legal standing.”  N.J. Citizen Action v. Riviera Motel Corp., 296 N.J.Super. 402, 409 (App.Div.1997), appeal dismissed, 152 N.J. 361 (1998).   Standing requires “a sufficient stake in the outcome of the litigation, a real adverseness with respect to the subject matter, and a substantial likelihood that the party will suffer harm in the event of an unfavorable decision.”   In re Camden County, 170 N.J. 439, 449 (2002) (citing N.J. State Chamber of Commerce, supra, 82 N.J. at 67-69 (1980)).

We first address Simmons' standing as an individual taxpayer.  “So far as our own state doctrine is concerned, the standing of a taxpayer to attack ․ illegal official action has been long and firmly established.”   Crescent Park Tenants Ass'n v. Realty Equities Corp. of N.Y. & R.E. Matawan Corp., 58 N.J. 98, 102 (1971).   Thus, as a taxpayer, Simmons has standing to challenge the illegal official action alleged here, namely, a claim that the budget submitted to the Commissioner contained deliberately inflated figures as a result of actions by both the District and ECS. That, however, does not end the discussion.  N.J.S.A. 18A:6-9 expressly provides:

The commissioner shall have jurisdiction to hear and determine, without cost to the parties, all controversies and disputes arising under the school laws, excepting those governing higher education, or under the rules of the state board or of the commissioner.   For the purposes of this Title, controversies and disputes concerning the conduct of school elections shall not be deemed to arise under the school laws.

Simmons, at no time prior to the Commissioner's adoption of the ECS's recommendation, sought review by the Commissioner.   Rather, she simply joined in the present appeal.   Under these circumstances, she failed to exhaust her administrative remedies.   See Schults v. Bd. of Educ. of the Teaneck Twp. of Bergen County, 86 N.J.Super. 29, 41-46 (App.Div.1964) (upholding dismissal of plaintiff's complaint for failure to exhaust administrative remedies where taxpayers brought action to enforce the litigant's school desegregation concept in the Law Division rather than before the Commissioner), aff'd, 45 N.J. 2 (1965).   Having failed to exhaust available administrative remedies, Simmons' appeal, in her individual capacity, must be dismissed.

Turning to the question of standing as to the Borough and Simmons, in her official capacity as mayor, our Legislature has made clear that school districts are the interested parties in the resolution of budgetary disputes with the ECS and that it is the school district that is statutorily authorized to challenge budgetary disputes in accordance with the procedures and timeframes set forth by statute and regulation.   See N.J.S.A. 18A:7-8;  see also N.J.A.C. 6A:23A-9.6. We have previously recognized that a school district is a local governmental unit governed by the school district's board of education and not answerable to a municipal governing body except as expressly set forth by legislation.  Botkin v. Mayor & Borough Council of Westwood, 52 N.J.Super. 416, 425 (App.Div.) (“In New Jersey school districts of whatever classification, though coterminous with municipal boundaries except in cases of consolidated or regional districts, are, and have been for more than half a century, local governmental units, governed by a board of education.”), appeal dismissed, 28 N.J. 218 (1958).

Moreover, it is the local school board within a school district that serves as “the State's agent to discharge the State's constitutional duty to provide for a system of free public schools.”  Roman Catholic Diocese v. Borough of Ho-Ho-Kus, 42 N.J. 556, 561 (1964).  “The fact that the [B]orough is the collecting agent for [the District's] taxes does not give the slightest basis for intrusion in school affairs.”  Botkin, supra, 52 N.J.Super. at 426.   As the Court has made clear, “[p]rotecting public interests is important, but it does not take precedence over the need to prevent one governmental body from interfering with the actions of another public body.”  In re Camden County, supra, 170 N.J. at 447.

N.J.S.A. 18A:7-8 provides:

Any budgetary action of the executive county superintendent under this section may be appealed directly to the commissioner, who shall render a decision within 15 days of the receipt of the appeal.   If the commissioner fails to issue a decision within 15 days of the filing of an appeal, the budgetary action of the executive county superintendent shall be deemed approved.   The commissioner shall by regulation establish a procedure for such appeals.

N.J.A.C. 6A:23A-9.6(a) provides similar relief to school districts.

It is undisputed that the District did not appeal the budgetary action of the ECS. Thus, even accepting as true the allegation that the District was directed to inflate its tuition costs in order to conceal surplus funds, it inexplicably failed to avail itself of its appeal rights.   Hence, for standing purposes, there is no “real adverseness” concerning the tax apportionment formula approved by the Commissioner.  In re Camden County, supra, 170 N.J. at 449.

Further, appellants lack standing because they have failed to demonstrate that they have been harmed by the new tax apportionment formula.   Notably, the tax levy for 2009-2010 was the same amount budgeted for the 2008-2009 school year and less than the tax levy assessed for the 2007-2008 school year.

Finally, appellants do not assert that their constitutional rights or the constitutional rights of the taxpayers have suffered “a direct impairment.”   Stubaus v. Whitman, 339 N.J.Super. 38, 47 (App.Div.2001), certif. denied, 171 N.J. 442 (2002);  see also Trombetta v. Mayor & Comm'rs of Atlantic City, 181 N.J.Super. 203, 222 (Law Div.1981), aff'd, 187 N.J.Super.   351 (App.Div.1982).   Consequently, they do not have standing to assert the rights of third parties, namely, the Borough taxpayers.  Stubaus, supra, 339 N.J.Super. at 51.

Because we are satisfied that appellants lack standing to challenge the Commissioner's decision, it is unnecessary to address the merits of appellants' appeal.

The appeal is dismissed.

PER CURIAM