Appeal from the Order of the Secretary of Education in case of In the Matter of Ashbourne School et al. v. Department of Education, Commonwealth of Pennsylvania, dated April 11, 1978.
John D. Killian, with him Killian & Gephart, for petitioners.
John A. Alzamora, Assistant Attorney General, with him Patricia A. Donovan, Deputy Attorney General, Chief Counsel, for respondent.
Robert L. Franklin and Franklin, Grodinsky, Boonin, for amicus curiae, Arnold Melnick, D.O.
President Judge Bowman and Judges Wilkinson, Jr., Mencer, Rogers, Blatt, DiSalle and MacPhail. Judges Crumlish, Jr. and Craig did not participate. Opinion by Judge DiSalle.
[ 43 Pa. Commw. Page 595]
We have before us a petition for review filed on behalf of twelve private schools (Petitioners) previously approved by the Department of Education of the Commonwealth of Pennsylvania (Department) for the special education of state tuition reimbursable exceptional children.*fn1 In their challenge to the adjudication of the Secretary of Education (Secretary), dated April 11, 1978, Petitioners assign several allegations of error. Chief among these is the allegation that the Secretary erred in ordering that monies owing by the Commonwealth to these schools for the 1975-76 and 1976-77 school years be paid on a pro rata basis. In order to fully grasp Petitioners' various contentions, a brief examination of the legislative history of the Act of December 15, 1975 (Act 144), P.L. 484, which amended Section 1376 of the Public School Code of 1949, Act of March 10, 1949, P.L. 30, as amended, 24 P.S. § 13-1376, and the operative facts giving rise to the present controversy must be undertaken.
Section 1376, both before and after the adoption of Act 144, placed 25% of the cost of tuition for a Pennsylvania resident approved reimbursed student on the school district of the child's residence and 75% on the Commonwealth. Act 144, however, amended Section
[ 43 Pa. Commw. Page 5961376]
in the following significant ways: (1.) higher maximum tuition rates were established; (2.) approved schools were prohibited from imposing any charge on the students and/or the parents; (3.) the Department was authorized to audit the approved schools' expenditures to determine the reasonableness of their charges; and, (4.) a determination of reasonable charges, if below the statutory maximum, would be considered an adjudication within the meaning of the Administrative Agency Law, Act of June 4, 1945, P.L. 1388, as amended, formerly 71 P.S. § 1710.1 et seq.*fn2 Also important for present purposes is the fact that Act 144, which was passed on December 15, 1975, was made retroactive to the beginning of the 1975-76 school year.
The Department conducted audits during the early months of 1977. Petitioners, availing themselves of the new tuition rates, as was their right, submitted financial data to the Department with claims which exceeded the pre-Act 144 rates. Not having sufficient monies to satisfy these higher claims, due in part to the legislature's failure to appropriate additional funds to meet the new tuition rates,*fn3 the Department notified the approved private schools that the appropriation had been depleted and that for all practical purposes there should be no expectation of further payment.
At the request of Petitioners, hearings commenced on May 3, 1977, before a Hearing Examiner appointed by the Secretary, to determine the overall status of ...