Monarch Acad. Balt. Campus, Inc. v. Balt. City Bd. of Sch. Comm'rs

• Decision Date: 02 February 2017
• Docket Number: 404, Sept. Term, 2016
• Citation: 153 A.3d 859,231 Md.App. 594
• Parties: MONARCH ACADEMY BALTIMORE CAMPUS, INC., et al. v. BALTIMORE CITY BOARD OF SCHOOL COMMISSIONERS
• Court: Court of Special Appeals of Maryland

231 Md.App. 594

153 A.3d 859

MONARCH ACADEMY BALTIMORE CAMPUS, INC., et al.

v.BALTIMORE CITY BOARD OF SCHOOL COMMISSIONERS

404, Sept. Term, 2016

Court of Special Appeals of Maryland.

Filed: February 2, 2017

Francis W. DuBois (Christopher S. Gunderson, Venable, LLP on the brief) all of Baltimore, MD, for Appellant.

Steven F. Barley (Hogan Lovells US LLP of Baltimore, MD, Maree F. Sneed, Michele E. Gutrick, Hogan Lovells US LLP of Washington, D.C.) all on the brief, for Appellee.

Graeff, Berger, Shaw Geter, JJ.

Graeff, J.

This appeal arises from complaints filed in the Circuit Court for Baltimore City by appellants, charter schools in Baltimore City (the "Charter Schools"), against the Baltimore City Board of School Commissioners (the "City Board"), appellee.¹ The complaints alleged a breach of contract by appellee in failing to provide funding to the charter schools that was commensurate with the amount disbursed to other public schools and in failing to provide budget and financial information. After counterclaims were filed, the circuit court issued an order that stayed the proceedings in the circuit court "pending administrative review of the parties' dispute by the State Board of Education" (the "State Board").

On appeal, the Charter Schools present a single question for our review, which we have rephrased, as follows:

Did the circuit court err in staying the proceedings pending administrative review on the ground that the State Board has primary jurisdiction over the issues raised in the complaint?

For the reasons set forth below, we conclude that the circuit court's order is not an appealable order, and therefore, we shall dismiss this appeal.

BACKGROUND

A decision to dismiss an appeal typically will not require a detailed discussion of background facts and law. In this case, however, the nature of the issues presented to the circuit court, including the connection between the authority of the State Board with respect to school budgets and the issues presented in the Charter Schools' breach of contract claim, requires some background discussion.

State Board's Authority Over Public Schools

Maryland Code (2014) § 2–205 of the Education Article ("ED") sets forth the "broad" and "comprehensive" authority of the State Board. See Bd. of Educ. for Dorchester County v. Hubbard , 305 Md. 774, 787–88, 506 A.2d 625 (1986). It "exercise[s] general control and supervision over the public schools and educational interests in this State," ED § 2–205(g)(2), determines the "educational policies of this State," ED § 2–205(b), and it "shall decide all controversies and disputes under" the Education Article. ED § 2–205(e)(2).

The Court of Appeals has stated that ED § 2–205 provides the State Board with "visitatorial power of such comprehensive character as to invest the State Board ‘with the last word on any matter concerning educational policy or the administration of the system of public education.’ " Hubbard , 305 Md. at 788, 506 A.2d 625 (quoting Bd. of Educ. o f Prince George's County v. Waeldner , 298 Md. 354, 360, 470 A.2d 332 (1984) ). Accord Baltimore City Bd. of Sch. Commr's v. City Neighbors Charter Sch. , 400 Md. 324, 343, 929 A.2d 113 (2007) (State Board has the "paramount role" "in interpreting the public education law."). Although that visitatorial power is not unlimited, " ‘the paramount role of the State Board of Education in interpreting the public education law sets it apart from most administrative agencies,’ " Patterson Park Pub. Charter Sch., Inc. v. Baltimore Teachers Union , 399 Md. 174, 195, 923 A.2d 60 (2007) (quoting Hubbard , 305 Md. at 790–91, 506 A.2d 625 ), and " ‘decisions of the State Board of Education are entitled to greater deference than those of most other administrative agencies.’ " Id. at 197, 923 A.2d 60.

Charter School Funding

Charter schools have been described as "semi-autonomous public schools that operate under a contract with a State or local school board." City Neighbors , 400 Md. at 328, 929 A.2d 113. "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." Id.

In 2003, the General Assembly created the Maryland Public Charter School Program by enacting Title 9 to the Education Article. Id. at 329, 929 A.2d 113. The purpose of the charter school system is to "establish an alternative means within the existing public school system in order to provide innovative learning opportunities and creative educational approaches to improve the education of students." ED § 9–101(b). Because charter schools are public schools, they generally are subject to the "provisions of law and regulation governing other public schools." ED § 9–102(11).

The General Assembly, in "trying to fashion a formula for public funding" for charter schools, opted not to set a "specific formula," but rather, it determined that funding for charter schools should be in an amount "commensurate" with the amount disbursed to other public schools. City Neighbors , 400 Md. at 354–55, 929 A.2d 113. Accordingly, the statute provides:

A county board shall 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(a).

The Court of Appeals has explained that this funding provision "necessarily left some room for interpretation—what was commensurate and how was the amount disbursed to other public schools to be determined when no amounts were actually disbursed to public schools?" City Neighbors , 400 Md. at 355, 929 A.2d 113. The Court stated that, by providing for funding in this manner, the legislature "must have envisioned that" the State Board, "the body it has consistently vested with the ultimate administrative authority to interpret, explain, and apply the public education laws—would have the primary authority to interpret, and the ultimate authority to implement, that provision." Id.

Commensurate Funding Cases

In May 2005, the State Board issued opinions addressing several charter school funding cases. Id. at 335–36, 929 A.2d 113.² The State Board concluded that the phrase "commensurate with the amount disbursed to other public schools in the local jurisdiction" meant that a public charter school would receive funding in an "amount proportionate to the amount of funds expended for elementary, middle, and secondary level students in the other public schools in the same system."

Id. at 336, 929 A.2d 113. That included "funding for services for which students in the public charter schools are eligible such as free and reduced price meals, prekindergarten, special education, English language learners, Perkins, Title I, and transportation." Id.

Noting that there was "no statewide formula or methodology for determining how local school systems fund their schools," the State Board decided on an "average per-pupil amount," which is then multiplied by the student enrollment of the school. Id. at 336–37, 929 A.2d 113. The formula to determine the average per-pupil amount was the "[t]otal annual school system operating budget," excluding debt service and adult education, divided by the "September 30 enrollment count for the previous year." Id. at 337, 929 A.2d 113 & n.5. This amount was then reduced by 2% for reasonable administrative costs of performing school system central office functions. Id. at 337, 929 A.2d 113.³ The Court determined that the Board's use of an average per pupil funding approach "had the virtues of both simplicity and flexibility," given that, at that time, there was not an enrollment history at the schools "upon which to base a more refined enrollment-driven allocation of funds." Id. at 355–56, 929 A.2d 113. Once that type of history existed, however, the Board could revisit the issue. Id. at 356, 929 A.2d 113.

The Board again addressed charter school funding in Monocacy Montessori Communities, Inc. v. Frederick County Board of Education , MSBE Op. No. 06–17, p. 3 (May 24, 2006). As this Court explained in Frederick Classical Charter School, Inc. v. Frederick County Board of Education , 227 Md.App. 439, 446, 134 A.3d 376, cert. granted , 448 Md. 724, 141 A.3d 135 (2016), the Board in Monocacy determined that "a school system could use a different formula so long as it resulted in a ‘bottom line amount of money’ " that the Board could conclude amounted to the school system providing "proportionate/commensurate funds to the charter school."

More recently, in Frederick Classical , the Board again addressed funding issues relating to a charter school. This Court upheld the Board's determination that the charter school was not entitled to funding for transportation costs when, pursuant to its charter agreement, the school did not "participate in the public school transportation program," but rather, the families of the students provided transportation. Id. at 459, 134 A.3d 376. The Board determined that a charter school is not entitled to receive funds for services it does not provide, and if it did, it would receive "more than its share of commensurate county funds." Id. at 453, 134 A.3d 376.

Proceedings in the Present Case

In 2015, a number of Baltimore City's public charter schools filed breach of contract complaints against the City Board.⁴ The complaints alleged that, for the 2015–2016 school year, there would be 34 charter schools in Baltimore City, "with a combined enrollment of approximately 13,724 students, or more than 15% of Baltimore City's public school enrollment." The Charter Schools asserted that the Charter School Agreement (the "Contract") that they entered into with the City Board, addressed, among other things, funding of the schools and the City Board's obligation to provide financial transparency in the funding process. Specifically, the Contract provided the following:

6.1 OPERATING FUNDS. The

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