Original jurisdiction in cases of Philadelphia Intermediate Unit 26 et al. v. Commonwealth of Pennsylvania, Department of Education et al.
John M. Elliott, with him Lawrence D. Berger and Gary R. Leadbetter, Dilworth, Paxson, Kalish and Levy, and Eugene F. Brazil and Robert T. Lear, for petitioners.
Lenora M. Smith, Assistant Counsel, with her John A. Alzamora, Assistant Counsel, and Mary Kay Kisthardt, Deputy Attorney General, for respondents.
President Judge Crumlish and Judges Rogers, Blatt, MacPhail and Palladino. Judges Mencer, Williams, Jr. and Craig did not participate. Opinion by Judge Blatt.
[ 60 Pa. Commw. Page 548]
This matter involves three consolidated petitions for review*fn1 filed by the Philadelphia County Intermediate Unit No. 26 and the School District of Philadelphia (petitioners) which challenge the refusal of the Department of Education (Department) and the other respondents*fn2 to approve the petitioners' budget for special education classes or to reimburse the petitioners for certain expenses incurred in providing such classes. Before us now are the respondents' preliminary objections to these petitions for review.
Section 1372 of the Public School Code of 1949 (Public School Code), Act of March 10, 1949, P.L. 30,
[ 60 Pa. Commw. Page 549]
expense of training an exceptional child. See 24 P.S. § 25-2509. An intermediate unit, unlike a school district, has no taxing power; it must therefore be funded by the Commonwealth. Each school district is responsible, however, for the normal educational costs of exceptional children from that district, and so the school districts pay that portion of the intermediate unit expenses which would correspond to the costs of educating an equivalent number of normal students and the Commonwealth provides the additional funds needed by the intermediate units. As a bookkeeping practice, the Department offsets the total excess costs which it owes to the school districts against the amounts which the districts must contribute to the intermediate unit.
In 1974, the Department instituted an allocation system by which it established a fixed-dollar amount, representing the combined special education budgets of each intermediate unit and its member districts, and each year thereafter this allocation was increased by approximately seven percent; in the past, however, the Department has approved budgets that have exceeded those allocations. Previously, it fully paid the budgets of the intermediate units in the two payments in August and January and then it distributed the remainder of the allocation to the school districts, again in August/January installments. At the end of each school year, the Department customarily recouped the allocated but unexpended funds from the school districts which had such funds remaining and distributed that surplus to other districts which had exceeded their allocations.
The controversy now before us concerns a recent decision of the Department not to approve any combined special education budgets for the 1980-81 school year which exceeded the allocation for the intermediate unit concerned and its member school district. The
[ 60 Pa. Commw. Page 551]
budgets submitted by the petitioners for the 1980-81 school year exceeded their allocation, and the Department informed them by letter of September 12, ...