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decided: October 16, 1985.


Appeal from the Order of the Secretary of Education in case of Ashbourne Educational Services, Inc. t/a Ashbourne School v. Commonwealth of Pennsylvania, Department of Education, Approved Private School Audit Hearing No. FY 1980-81 Audit.


Larry Haft, with him, Lawrence J. Beaser, of Counsel: Blank, Rome, Comisky & McCauley, for petitioner.

John A. Alzamora, for respondent.

Judges MacPhail and Colins, and Senior Judge Blatt, sitting as a panel of three. Opinion by Judge Colins. Judge Rogers did not participate in the decision in this case.

Author: Colins

[ 92 Pa. Commw. Page 273]

Ashbourne Educational Services, Inc. (Ashbourne) appeals from an order of the Secretary of Education (Secretary) which dismissed its exceptions to a decision of a Department of Education (Department) hearing examiner and adopted the examiner's findings of fact and conclusions of law.

Ashbourne is a profit-making, licensed private day school approved by the Department for the receipt of state funding for the special education of children suffering from severe social and/or emotional problems, brain damage, and other debilitating conditions, pursuant to the Public School Code of 1949.*fn1 These

[ 92 Pa. Commw. Page 274]

    children are placed at Ashbourne also with Department approval.

Ashbourne, like the other forty approved private schools in Pennsylvania, is audited by the Department on an annual basis in order to determine the validity of claims for Department reimbursement of expenses incurred in providing special education.*fn2 Prior to the audit, however, the Department provides advanced payments based upon its estimate of the school's needs. Following each audit, the Department informs the school whether the expense claims have been allowed or disallowed for reimbursement and what final reimbursement the school is entitled to receive. If the Department's advanced payments exceed the reimbursable amount allowed in the audit the Department makes adjustments to payments made in the year the audit is completed.

The Department's audit of Ashbourne's claims for reimbursement for its 1980-81 fiscal year allowed $1,062,370.34. This amount was less than that claimed and received by Ashbourne as advanced payments, and the Department adjusted the school's 1981-82 payments to correct this.

Ashbourne appealed the Department's determination and a five-session administrative hearing was held between September 14, 1982, and October 22, 1982, before a hearing examiner appointed by the Secretary. The examiner, in a report issued January 28, 1983, sustained the 1980-81 Department disallowances in contest. After a review of exceptions filed, the Secretary issued an August 2, 1984, opinion and order adopting the report of the hearing examiner. This appeal followed.

[ 92 Pa. Commw. Page 275]

On appeal, Ashbourne claims that this Court should reverse the decision below because the Secretary, after reviewing the decision of the hearing examiner, adopted the examiner's findings and conclusions without change. We disagree.

The scope of review of this Court in reviewing decisions of an administrative agency is limited to a determination of whether the decision was in accordance with law, the findings of fact were supported by substantial evidence, or constitutional rights were violated. Stoffan v. Department of Public Welfare, 31 Pa. Commonwealth Ct. 203, 375 A.2d 894 (1977). We are bound by the agency's findings if supported by the evidence on the record and applicable law. Therefore, the Secretary's findings will be upheld by this Court as long as they are supported by the evidence on the record. This is true even though these findings are the result of an adoption by the Secretary of a hearing examiner's recommendations. While the Secretary is not bound by the hearing examiner's report and recommendations, see Fitz v. Intermediate Unit No. 29, 43 Pa. Commonwealth Ct. 370, 403 A.2d 138 (1979), nowhere in the law is it suggested that the Secretary has the authority or mandatory duty to completely disregard the report. Such a system would make the function of the hearing examiner a mere formality and a needless ...

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