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The School District of Philadelphia v. Department of Education

April 3, 2012

THE SCHOOL DISTRICT OF PHILADELPHIA, PETITIONER
v.
DEPARTMENT OF EDUCATION,
RESPONDENT WALTER D. PALMER LEADERSHIP LEARNING PARTNERS CHARTER SCHOOL, PETITIONER
v.
DEPARTMENT OF EDUCATION,
RESPONDENT :



The opinion of the court was delivered by: Judge Covey

Argued: February 15, 2012

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge

OPINION BY JUDGE COVEY

The School District of Philadelphia (District) and Walter D. Palmer Leadership Learning Partners Charter School (Charter School) appeal the March 4, 2011 order of the Secretary of Education (Secretary), wherein, he determined that the enrollment cap was assented to by the Charter School for school year 2007-2008, but that the enrollment cap incorporated into the 2005 charter agreement was not valid as to school years 2008-2009, and 2009-2010; and directed the Department of Education (Department) to disburse $1,253,225.82 of the $1,678,579.18 that was withheld from

the District‟s Basic Education Subsidy for school years 2008-2009 and 2009-2010. Essentially, the issues before this Court are: (1) whether the Department has jurisdiction to decide a funding dispute; (2) whether the Secretary properly concluded that the enrollment cap was valid for the 2007-2008 school year; and (3) whether the Secretary properly concluded that the enrollment cap was invalid for school years 2008-2009 and 2009-2010. We affirm.

On November 12, 1999, the Charter School submitted an Application for Grant of a Charter (Application). In July 2000, the State Charter School Appeal Board granted the Charter School‟s appeal*fn1 and directed the District to grant the Application and sign the charter pursuant to Section 1720-A of the Charter School Law (CSL).*fn2 Because the Charter School‟s initial charter expired in 2005, it requested the District to renew it. On March 16, 2005, the School Reform

Commission (SRC)*fn3 adopted a resolution granting the Charter School‟s charter renewal request beginning September 1, 2005 and ending August 31, 2010. The resolution also contained a provision limiting the Charter School‟s enrollment to 675 students from grades kindergarten through eight (K-8). The 2005 charter referenced and incorporated the SRC resolution capping the student enrollment. The Charter School and the District signed the 2005 charter.

In May 2008, the Charter School requested an amendment to its charter to increase student enrollment by 40 students, and accommodate the addition of a kindergarten program for four-year-old students. The SRC took no action on this request. On August 19, 2009, the SRC adopted a resolution approving a change in the Charter School‟s name and authorizing the Charter School to serve grades K-11 for the 2009-2010 school year. However, the cap remained in place. For the 2007-2008 school year, the Charter School served grades K-9, and its average daily enrollment was 730.181 according to the Charter School‟s records, and 727.98 according to the District‟s records. The District provided funding for 675 students; 613.43 regular students, and 61.57 special education students. For the 2008-2009 school year, the Charter School served grades K-10, and its average daily enrollment was 733.827 according to the Charter School‟s records, and 731.89 according to the District‟s records. The District provided funding for 675 students; 608.29 regular students, and 66.71 special education students. For the 2009-2010 school year, the Charter School served grades K-11, and its average daily enrollment was 770 according to the Charter School‟s records, and 760.93 according to the District‟s records. The District provided funding for 675 students; 589.33 regular students, and 85.67 special education students.

On July 13, 2010, the Charter School requested by letter that the Department withhold from the District‟s subsidy allocation the amount of $1,678,579.18 for students it educated during school years 2007-2008, 2008-2009, and 2009-2010 above the enrollment cap contained in its charter. On September 10, 2010, the Department notified the District by letter that, pursuant to Section 1725- A(a)(5) of the CSL,*fn4 it withheld $1,678,579.18 from the District‟s next Basic

Education Subsidy, as requested by the Charter School. The Department also notified the District that it could challenge the withholding if it disagreed with the deduction. On September 13, 2010, the District by letter objected to the withholding and requested a hearing regarding the accuracy of the deduction. On December 2, 2010, the Department‟s hearing officer held an administrative hearing. On March 4, 2011, the Secretary filed an Opinion and an Order. The Order decreed that: (1) the Charter School assented to the cap on student enrollment for school years 2005-2006, 2006-2007, and 2007-2008, when it signed the charter agreement; (2) the Charter School is not entitled to payment for the education of students it enrolled above the cap for the 2007-2008 school year; (3) the cap is not valid for the school years 2008- 2009 and 2009-2010; (4) the Charter School is entitled to payment for the education of students it enrolled above the cap for school years 2008-2009 and 2009-2010; (5) the Charter School is entitled to $475,785.72 from the District for the education of 58.827 students for whom it has not received payment for during the 2008-2009 school year; and, (6) the charter school is entitled to $777,440.10 from the District for the 95 students for whom it has not received payment for during the 2009-2010 school year. Accordingly, the Order directed the Department to disburse to the Charter School, $1,253,225.82 of the $1,678,579.18 that was withheld from the District‟s Basic Education Subsidy for the school years 2008-2009 and 2009-2010, and to remit the balance of the withheld funds to the District in the amount of $425,353.36. The District and the Charter School appealed to this Court.*fn5

The District first argues that the Department did not have jurisdiction to decide an issue that involves an alleged violation of a charter agreement. Specifically, the District contends that the only procedure available to a charter school to contest the validity of an enrollment cap is to file a timely appeal to the appropriate Court of Common Pleas pursuant to the Local Agency Law.*fn6 The District further contends that the Department has no authority to withhold a subsidy or to pay a withheld subsidy to a charter school for students who are attending the school in violation of any of the charter‟s terms, in this case, the authorized grades and the enrollment cap. We disagree.

The appeal herein is from the Department‟s funding decision. Therefore, it is controlled by the CSL. The Charter School properly requested funding from the Department. The Department granted the request and notified the District giving the District the opportunity to challenge the disbursement, which it did. Accordingly, the Department held a hearing pursuant to the CSL from which the District appealed. As this Court has said, "[i]t has long been established that [w]here a remedy is provided by an act of assembly, the directions of the legislation must be strictly pursued and such remedy is exclusive.‟" Phillips v. State Tax Equalization Bd., 948 A.2d 889, 893 (Pa. Cmwlth. 2008) (quoting Lurie v. Republican Alliance, 412 Pa. 61, 63, 192 A.2d 367, 369 (1963)).

Section 1725-A of the CSL, entitled "[f]unding for charter schools[,]" provides in paragraph (a)(6):

Within thirty (30) days after the secretary makes the deduction described in clause (5), a school district may notify the secretary that the deduction made from State payments to the district under this subsection is inaccurate.

The secretary shall provide the school district with an opportunity to be heard concerning whether the charter school documented that its students were enrolled in the charter school, the period of time during which each student was enrolled, the school district of residence of each student and whether the amounts deducted from the school district were accurate.

Id. (emphasis added). Moreover, this Court specifically held that "the Section 1725- A(a)(6) hearing is intended to cover the accuracy of the Secretary‟s deduction of a subsidy, for any reason, where the school district fails to make the prescribed monthly payment to a charter school in the correct amount." Chester Cmty. Charter Sch. v. Dep't of Educ., 996 A.2d 68, 78 (Pa. Cmwlth. 2010) (emphasis added). Here, pursuant to Section 1725-A(a)(5) of the CSL, the Department notified the District of its withholding of funds, and pursuant to Section 1725-A(a)(6) of the CSL, the District requested a hearing. Accordingly, the Department had jurisdiction to hear this matter.

Next, the District argues that the Secretary properly concluded that the enrollment cap was valid for the 2007-2008 school year. The Charter School, however, argues that based on Act 61, he did not. We agree with the District.

At the time of the Charter School‟s renewal in 2005, only Section 1720- A of the CSL was in existence. Section 1720-A(a) of the CSL provides that the signing of a charter is nothing more than a "legal authorization for the establishment of a charter school." 24 P.S. § 17-1720-A(a). Thus, in the case before us, any conditions included in the charter were imposed upon the Charter School. This Court in Foreman v. Chester-Upland School District, 941 A.2d 108 (Pa. Cmwlth.), petition for allowance of appeal granted, 597 Pa. 235, 951 A.2d 264 (2008), opined that a charter is analogous to a regulatory permit where the government directs how one is to operate. The Charter School in the instant matter was granted its charter conditioned upon the terms set forth in the charter. The "written charter, when duly signed by the . . . charter school‟s board of trustees . . . shall be legally binding on both the local board of school directors of a school district and the charter school‟s board of trustees." 24 P.S. § 17-1720-A(a). Thus, when the Charter School signed the written charter with the inclusion of the conditions, it chose to become legally bound to the terms of the charter, including the enrollment cap.

Act 61 was not yet in existence at the time the Charter School renewed its charter. The Statutory Construction Act of 1972 (Statutory Construction Act)*fn7 provides that "[n]o statute shall be construed to be retroactive unless clearly and manifestly so intended by the General Assembly." 1 Pa.C.S. ยง 1926. Act 61, which mandates that the parties agree to an enrollment cap, has a specific prospective effective date of July 1, 2008. Thus, Act 61 does not apply to the 2007-2008 school year. Further, as Section 1921(b) of the Statutory Construction Act mandates that "[w]hen the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit[,]" the Charter School was ...


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