Frederick Classical Charter Sch., Inc. v. Frederick Cnty. Bd. of Educ.
| Decision Date | 14 July 2017 |
| Docket Number | No. 25,25 |
| Parties | FREDERICK CLASSICAL CHARTER SCHOOL, INC. v. FREDERICK COUNTY BOARD OF EDUCATION |
| Court | Court of Special Appeals of Maryland |
EDUCATION LAW — STANDARD OF REVIEW APPLIED BY THE STATE BOARD OF EDUCATION TO DECISIONS OF A LOCAL SCHOOL BOARD
State Board of Education was required to apply an "independent judgment" standard of review to a decision of a local school board that transportation funding should not be included in a per-pupil commensurate funding allocation to a public charter school when the local school board decision involved only the "explanation and interpretation of the public school laws and State Board regulations" and not a local policy or a local dispute.
EDUCATION LAW — STATUTORY CONSTRUCTION — MARYLAND CODE, EDUCATION ARTICLE § 9-109 — CHARTER SCHOOL FUNDING
State Board of Education erred in ruling that a public charter school was not entitled to transportation funding in a per-pupil commensurate funding allocation. Although the controlling statute for public charter school funding, Maryland Code, Education Article § 9-109, was ambiguous, and the legislature had intended for the State Board to interpret the statute, the State Board's conclusion was contrary both to its own precedent, on which it expressly relied in reaching its conclusion, as well as the statutory purpose and legislative history of the Maryland Public Charter School Program statute, Maryland Code, Education Article §§ 9-101 et seq.
EDUCATION LAW — STATUTORY CONSTRUCTION — MARYLAND CODE, EDUCATION ARTICLE § 9-109 — CHARTER SCHOOL FUNDING
State Board of Education is not required to adhere to its previous interpretation of Maryland Code, Education Article § 9-109 expressed in its prior adjudicatory rulings resolving funding disputes between charter schools and local school boards, as clarified by the Court of Appeals in the instant case and in Baltimore City Board of School Commissioners v. City Neighbors Charter School, 400 Md. 324 (2007). The State Board may change its interpretation either in an adjudicatory proceeding or through formal notice-and-comment rulemaking.
However, because the State Board's statements in its prior adjudicatory rulings interpreting Maryland Code, Education Article § 9-109 are the only publicly available interpretation of the statute, and charter school operators and staff, children attending charter schools and their parents, and local school boards all have substantial reliance interests in the existing State Board interpretation, if the State Board elects to apply a new interpretation of the statute through an adjudicatory approach, it must offer a rational explanation for such a change in its written decision. That rational explanation must include how its new interpretation or approach is in keeping with the plain language and, where ambiguous, the legislative history and statutory purpose of Maryland Code, Education Article § 9-109 and the Maryland Public Charter Schools Program statute as a whole, Maryland Code, Education Article §§ 9-101 et seq., and account for the substantial reliance interests of charter school operators, staff and students, prospective charter school applicants, and local school boards.
CONTRACTS — CONTRACT INTERPRETATION
Charter agreement contract between charter school and local school board plainly did not include an agreement that charter school would forego or waive transportation funding. Consequently, State Board of Education erred in concluding that charter school was not entitled to the inclusion of transportation funds in its per-pupil commensurate funding allocation based upon the charter agreement.
Circuit Court for Frederick County
Case No. 10-C-14-001818
Opinion by Getty, J.
When the Maryland General Assembly passed a state enabling statute in 2003 to create a charter school program, it expressed its intent for the program in the statutory findings that charter schools "provide innovative learning opportunities and creative educational approaches to improve the education of students." 2003 Md. Laws, ch. 358. See also Md. Code, Educ. ("ED") 9-101. However, the enabling statute created a statutory scheme under which such schools would be "public" schools overseen by the school board of the local jurisdiction. See ED § 9-102. Moreover, the General Assembly did not create a separate funding stream for these public charter schools but instead provided that charter funding would come from other people's money, i.e., the local school board's budget. See ED § 9-109. The autonomy of a public charter school is further limited by the statute's other provisions that give local school boards the "chartering authority" to approve applications to form a public charter school, and by a requirement that, for those counties that have entered into a collective bargaining agreement with a teacher's union, only members of the union that is a party to that agreement can be assigned as staff for a public charter school. See ED §§ 9-103; 9-104; 9-108(b).
Under this statutory organization, there is a natural and inherent conflict with the local school board's role in supervising charter schools and approving charter school applications and its own self-interest; to the extent that the local school board authorizesthe creation or expansion of a charter school, there is a concomitant reduction in funds available for the education of the non-charter students in the local public system. This tension in the funding stream for public charter schools has left dissatisfied minds on both sides and has led to appeals from local school board funding decisions that have come before Maryland's appellate courts. See, e.g., Balt. City Bd. of Sch. Comm'rs v. City Neighbors Charter Sch., 400 Md. 324 (2007); Frederick Classical Charter Sch., Inc. v. Frederick Cty. Bd. of Educ., 227 Md. App. 439 (2016); Monarch Acad. Balt. Campus, Inc. v. Balt. City Bd. of Sch. Comm'rs, 231 Md. App. 594, cert. granted sub nom., Monarch Acad. Balt. Campus v. Balt. City Bd. of Sch. Comm'rs, 452 Md. 523 (2017).
This case involves a dispute between Frederick Classical Charter School, Inc. ("Frederick Classical"), the Petitioner, a charter school located in Frederick, Maryland and the Frederick County Board of Education ("the Local Board"), the Respondent. The parties' dispute focuses on whether the Local Board's annual funding allocation to Frederick Classical in its first year of operation satisfied ED § 9-109. Under that statute, a local school board is required to 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." ED § 9-109.
In this case, Frederick Classical was not satisfied with its annual commensurate funding allocation as determined by the Local Board because it did not include a proportional share of funds which the Local Board had budgeted for student transportation. The funds withheld amounted to $544.26 per-pupil and $135,926.22 in the first year of theschool's operation, and more in subsequent years. Frederick Classical challenged the allocation, first in a letter to the Local Board and, when the Local Board summarily refused to amend the allocation, in an appeal to the State Board.
In reviewing Frederick Classical's appeal, the State Board regarded the issue as one of local policy, and thus applied a deferential standard of review, in which it assumed that the Local Board's decision to withhold transportation funds was "prima facie correct" unless proven to be "arbitrary, unreasonable, or illegal." See Md. Code Regs. ("COMAR") 13A.01.05.05(A)-(C). On the merits, the State Board determined that "it does not appear that [Frederick Classical] provides any transportation services" to its students. The State Board concluded that, under ED § 9-109 and its own precedent, "a charter school is not automatically entitled to funds for services it does not provide," and that "if [Frederick Classical] received funds for services it did not provide, it would be receiving more than its commensurate share of [ ] funds."
The State Board also focused on language in the charter agreement between Frederick Classical and the Local Board, which stated that transportation of students "shall be the responsibility of [Frederick Classical] families," with certain narrowly defined exceptions. The State Board interpreted that provision to mean that Frederick Classical had "agreed it is not entitled to [transportation] funds by virtue of having parents take on the responsibility for transportation." For those reasons, the State Board upheld the Local Board's decision to withhold transportation funding from Frederick Classical's annual funding allocation.
Frederick Classical petitioned for judicial review of the State Board's declaratory ruling before the Circuit Court for Frederick County, which upheld the State Board's ruling. Then, Frederick Classical appealed to the Court of Special Appeals which, in a reported opinion, likewise affirmed the State Board's decision. Frederick Classical Charter Sch., Inc. v. Frederick Cty. Bd. of Educ., 227 Md. App. 439 (2016). Frederick Classical thereafter petitioned this Court for a writ of certiorari, which we granted on July 11, 2016. 448 Md. 724 (2016).
We hold that the State Board erred by applying the deferential standard of review for decisions of a local school board on a matter involving a local policy or a local dispute, as defined in COMAR 13A.01.05.05(A)-(C), instead of the "independent judgment" standard for the "explanation and interpretation of the public...
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