The opinion of the court was delivered by: Dan Pellegrini, President Judge
Argued: December 12, 2012
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge
PRESIDENT JUDGE PELLEGRINI
This appeal involves what level of funding the Abington School District (District) is entitled to for the education of two special education students at Approved Private Schools (APS) under Section 1376 of the Public School Code of 1949 (Code)*fn1 where there are no preapproved "slots" at those schools and the budget appropriation for that purpose has been exhausted.
Before we address the specifics of this case, some background is needed. Generally, school districts are responsible for educating all students residing within their respective boundaries. See Sections 1302 and 1372 of the Code, 24 P.S. §§13-1302, 1372. One of the goals of the Department of Education (Department) is to provide all exceptional children in the Commonwealth with an appropriate educational program. Veschi v. Northwestern Lehigh School District, 772 A.2d 469, 473 (Pa. Cmwlth. 2001). The primary responsibility for identifying all exceptional children and developing educational programs to meet their needs rests with the local school district. Id. While school districts are obligated to provide and maintain the special education classes or schools necessary to educate exceptional students, if it is not feasible for a school district to do so, it must secure such education and training outside the public schools of the school district or in special institutions. 24 P.S. §13-1372(3). Regardless of whether a school district provides educational services to its special education students or secures such education outside of the school district's schools, the school district remains financially responsible for the costs associated with the education of those students. See 24 P.S. §13-1372(5) (providing that school districts are responsible for reimbursing the Commonwealth when the Commonwealth provides education to the school district's special education students); Section 1308 of the Code, 24 P.S. §13-1308 (providing that a school district of residence is responsible for educational costs associated with students attending residential schools located within the boundary of another school district).
There are limited supplemental funds appropriated to aid school districts by sharing the cost of educating special education students placed in APSs. One example of such supplemental funding is that available under Section 1376 of the Code. After being amended by Act 70 of 2004, Section 1376 of the Code now provides for a specific process for distributing this limited supplemental funding to APSs. The process for distributing funds begins with the statutory calculation which determines the portion of the APS appropriation that will be distributed to each APS. 24 P.S. §13-1376(a.2)(1). After an APS has been notified of its portion of the allocation, the APS submits budget information to the Department, which includes its proposed tuition rate and projected full-time equivalent enrollment number. 24 P.S. §13-1376(c.4). The Department then reviews the APS budget information and determines an approved tuition rate and approved full-time equivalent enrollment number. 24 P.S. §13-1376(c.5). The funds are then distributed to APSs in 12 equal monthly payments. 24 P.S. §13-1376(a.2)(3). When a student is placed at an APS and has been approved by the Department to receive Commonwealth funding, the Commonwealth pays 60% of the tuition and the school district of residence pays the remaining 40%. When there are no Department-funded slots available, though, the school district has to pay the entire cost of educating special education students out of its own budget.
With that background, the dispute in this case arose after the individualized education program (IEP) teams for W.R. and E.G, two special education students who reside in the District, determined that they required educational services at APSs, and the District enrolled them in the Devereux School and the Melmark School, respectively, during the 2009-2010 school year. Since W.R. and E.G. enrolled at the APSs, the District has paid for their full tuition and maintenance costs, with the exception of $13,883.59 in contingency funds received from the Bureau of Special Education (Bureau) for the 2010-2011 school year. There is no dispute that their placement in those schools is appropriate. The District requested payment*fn2 for what it contends is the Commonwealth's share of those costs under Section 1376. The Bureau denied the District's requests because the APSs lacked a Department-funded 4010 placement slot for the students and there were no funds available to fund the request in the state budget for the 2009-2010 fiscal year.*fn3
The District appealed the Bureau's denial letter to the Secretary, contending, inter alia, that the Department is required to make funding determinations for special education students under Section 1376 of the Code based on the appropriateness of a student's placement at an APS, not on the availability of Department-funded 4010 slots. Therefore, the District argued, the Department must reimburse it for 60% of W.R. and E.G.'s approved tuition costs as required by Section 1376, regardless of whether doing so would exceed the APS appropriation. In his Decision and Order,*fn4 the Secretary concluded that the Bureau's denial of the District's requests for funding was consistent with Section 1376 of the Code, stating:
The design of section 1376 warrants the Bureau's practice of limiting approvals to an annual number of placement slots at each APS that are established by an annual budgeting process, not by student need. These students were never approved by their respective APSs in slots that were eligible for reimbursement under Section 1376 and were not approved by the Bureau. Funding of such placements would cause the Department to exceed its appropriation for APSs, which is prohibited under the Pennsylvania Constitution.
(Secretary's April 25, 2012 Decision and Order at 3). The Secretary further explained:
There can be no dispute that the resources of the APS program are limited and that the [Department] is constitutionally and statutorily barred from spending more than appropriated amounts for the APS program. Contrary to the District's argument that the "approval" referred to in section 1376 means the approval of the appropriateness of an APS placement, section 1376 in the whole deals with the state's funding of these placements. Thus, there is little merit in the District's contention that if a placement is appropriate, the Bureau must ipso facto approve the funding of the placement.
Id. at 17. This appeal by the District followed.*fn5
On appeal, the District again contends that the Department can only make funding determinations under Section 1376 of the Code based on the appropriateness of a student's placement at an APS, not on the availability of Department-funded slots.*fn6 If the funding needs exceed the APS appropriation for appropriate students, the District argues that the Department, under Section 1376 of the Code, must apportion the available monies on a pro rata basis among all APSs. In support of that position, the District cites to Section 1376(c.5), which it contends obligates an APS to reduce its tuition rate if it accepts more students than have been approved by the Department, rather than impose the costs of ...