Frederick Classical Charter Sch., Inc. v. Frederick Cnty. Bd. of Educ.

• Decision Date: 31 March 2016
• Docket Number: No. 42, Sept. Term, 2015.,42, Sept. Term, 2015.
• Citation: 134 A.3d 376,227 Md.App. 439
• Parties: FREDERICK CLASSICAL CHARTER SCHOOL, INC. v. FREDERICK COUNTY BOARD OF EDUCATION.
• Court: Court of Special Appeals of Maryland

227 Md.App. 439

134 A.3d 376

FREDERICK CLASSICAL CHARTER SCHOOL, INC.

v.FREDERICK COUNTY BOARD OF EDUCATION.

No. 42, Sept. Term, 2015.

Court of Special Appeals of Maryland.

March 31, 2016.

F. William DuBois (Jessica M. Raba, Venable, LLP, on the brief), Baltimore, MD, for Appellant.

Andrew W. Nussbaum (Nussbaum Law, LLC, on the brief), Charksville, MD, for Appellee.

Panel: GRAEFF, REED, and ROBERT A. ZARNOCH (Retired, Specially Assigned), JJ.

ROBERT A. ZARNOCH (Retired, Specially Assigned), J."The movement to create charter schools, either by converting existing schools or by starting new ones, began in the 1990s from a growing concern that the public schools, at least in some areas, were not living up to legitimate public expectations, and the movement took root and spread quickly." Baltimore City Bd. of Sch. Com'rs v. City Neighbors Charter Sch., 400 Md. 324, 328, 929 A.2d 113 (2007). This movement has not been without controversy. In particular, the methodology for disbursing public funds for charter school use has been an area of unique difficulty for policy makers. After six years of discussion and debate, see id. at 348–56, 929 A.2d 113, the General Assembly passed the Public Charter School Act of 2003. Laws of 2003, ch. 358. The Act provided that funding for charter schools would be "commensurate with the amount disbursed to other public schools in the local jurisdiction." Md.Code (1978, 2014 Repl. Vol.), Education Article ("Educ.") § 9–109(a).

Following the approval of its charter application, in 2013, Frederick Classical Charter School, Inc. ("Frederick Classical"), appellant, protested that the Frederick County Board of Education ("FCPS"), appellee, violated Educ. § 9–109 by failing to include transportation funds in its fiscal year 2014 funding allocation even though Frederick Classical was not providing transportation for its students. This decision was upheld by both the State Board of Education (the "State Board") and the Circuit Court for Frederick County.

Frederick Classical appealed to this Court and presents the following question for our review, which we have rephrased:

Did the State Board err in finding that the Local Board provided full funding despite the fact that it did not include transportation funding in Frederick Classical's funding allocation?

We hold that the State Board did not err in upholding the decision of FCPS not to include transportation funding for Frederick Classical because FCPS complied with State Board of Education rulings and state education law. We affirm the decision of the circuit court.

BACKGROUND

A. Charter School and Transportation Funding

This case concerns a dispute about local board of education funding for a charter school—specifically whether the local board was required to provide funding for transportation services that neither it nor the charter school provided. We begin with background on charter schools and transportation funding in Maryland.

"[E]ach county board shall arrange for the transportation of students to and from consolidated schools."¹ Educ. § 4–120(b). However, local school boards are not required to provide transportation to all students who attend public schools. See, e.g., Educ. § 7–801(b)(1) ("At its own expense, a county governing body may provide transportation for public school students in addition to the transportation provided by the State" (Emphasis added)); § 7–805 (specifying conditions under which a school bus may be used to transport any student who lives within the mileage limit). The state distributes grants to the county boards to provide transportation services for public school students and disabled children, pursuant to the formula set out in Educ. § 5–205.² This section sets restrictions on this funding, requiring that any excess funds be applied to the following fiscal year and that a county board may not transfer student transportation funding to any other category. Educ. § 5–205(a).

Charter schools are "semi-autonomous public schools that operate under a contract with a state or local school board. The contract, or charter, defines how the school will be structured, staffed, managed, and funded, what programs will be offered, and how the school will operate and account for its activities." City Neighbors Charter Sch., 400 Md. at 328, 929 A.2d 113. As the Court of Appeals has noted, the principal objective of those who desired to create charter schools "was to develop and implement innovative and more effective educational programs, and, to do that, they needed and demanded freedom from some of the structural, operational, fiscal, and pedagogical controls that governed the traditional public school system." City Neighbors Charter Sch., 400 Md. at 329, 929 A.2d 113. In view of this goal, the State Board of Education has held that the funding mix of each fund source to the local board of education need not be duplicated at the charter school level. City Neighbors Charter Sch. v. Balt. City Bd. of Sch. Comm'rs, MSBE Op. No. 05–17 (2005) ("City Neighbors").

Recounting the development of its interpretation of funding allocation for charter schools, the State Board, in its opinion below, stated:

The Charter School Program, which became law in 2003, requires that a local board "disburse to a public charter school an amount of county, State, and federal money for elementary, middle, and secondary students that is commensurate with the amount disbursed to other public schools in the local jurisdiction." Md.Code, Educ. § 9–109.

On May 26, 2005, this Board issued three revised opinions explaining the meaning of the terms "commensurate" and "disbursed" in accordance with its power to interpret State education law. This Board stated that the word "commensurate" meant "proportionate" and that "disbursed" meant "expended." City Neighbors Charter Sch. v. Baltimore City Bd. of Sch. Comm'rs, MSBE Op. No. 05–17 (2005). This Board further stated that commensurate funding "includes funding for services for which students in the public charter schools are eligible such as free and reduced price meals, pre-kindergarten, special education, English-language learners, Perkins, Title I, and transportation." Id.

In order to assist local school systems, this Board provided a formula designed to result in a proportionate amount. Id. The formula takes the annual school system operating budget (including all federal, State, and local funding) divided by the September 30 enrollment count for the previous year minus two percent for reasonable central office functions to arrive at the [per pupil allocation ("PPA") ]. Id. In addition, the charter school may be responsible for reimbursing the school system for the cost of any services that the county provides. Id. [The State Board's opinion in City Neighbors was upheld by the Court of Appeals in Baltimore City Bd. of Sch. Com'rs v. City Neighbors Charter Sch., 400 Md. 324, 929 A.2d 113 (2007).]

A year later, in Monocacy Montessori Communities, Inc. v. Frederick County Bd. of Educ., MSBE Op. No. 06–17 (2006), this Board considered whether a different formula created by FCPS was consistent with State law and the State Board's previous opinions.

* * *

[W]e explained that a school system could use a different formula so long as it resulted in a "bottom line amount of money such that this Board could conclude that the school system was providing proportionate/commensurate funds to the charter school." Id. We disagreed that the amount of funding must be "equal" because an equal PPA allocation would not take into account the value of in-kind services provided by FCPS. Id.

We next analyzed in Monocacy the formula applied by FCPS. A major difference in the FCPS formula was that it broke down the unrestricted budget in each of fifteen categories. Under the formula, no money was allocated for transportation because the charter school had agreed that it would provide for the transportation needs of its students. We noted that transportation dollars had been a part of the State Board's standard formula, but that the charter school would not be entitled to these funds if it had agreed to forgo them. After analyzing the FCPS formula in full and comparing it to our own formula, this Board concluded that FCPS needed to pay an additional $12 per pupil in order to meet the commensurate funding requirement. Id.

In other words, in MMCI, the State Board determined that a local board may use an alternative funding formula, as long as that formula resulted in a per pupil allocation that was similar to the allocation set out in City Neighbors. Keeping in mind the State Board's interpretation of Educ. § 9–109 set out above, we now turn to the facts of this case.

B. Current Proceedings

On April 6, 2011, the Frederick County School Board approved Frederick Classical's application for the formation of a charter school. The Local Board and Frederick Classical subsequently entered into a contract, the charter, that described the relationship between Frederick Classical and FCPS. With regard to school funding, the charter states that:

[i]n accordance with ED § 9–109^{[3 ]} and further clarified in corresponding State Board Rulings, the [Local] Board shall disburse to [the School] an amount of county, state, and federal money for elementary, middle, and secondary students that is commensurate with the amount disbursed to other public schools in the local jurisdiction.

With regard to transportation of students, Section H of the charter states:

Transportation shall be the responsibility of [Frederick Classical] families with the following exceptions:

1. Students who live along an established bus route that passes the School facility; and

2. Special education students with transportation on their IEP's.

If [Frederick Classical] subsequently determines to provide transportation during the term of this Charter, it may contract with an approved provider for transportation services within provisions allowable under the negotiated agreement.

On June 26, 2013, FCPS provided ...