School Committee v. Bergin-Andrews

• Decision Date: 14 December 2009
• Docket Number: No. 2008-291-Appeal.,No. 2008-289-Appeal.,2008-289-Appeal.,2008-291-Appeal.
• Parties: SCHOOL COMMITTEE of the City of Cranston, et al. v. Michelle BERGIN-ANDREWS et al. City of Cranston v. School Committee of the City of Cranston et al.
• Court: Rhode Island Supreme Court

984 A.2d 629

SCHOOL COMMITTEE of the City of Cranston, et al. v. Michelle BERGIN-ANDREWS et al.

City of Cranston v. School Committee of the City of Cranston et al.

No. 2008-289-Appeal.

No. 2008-291-Appeal.

Supreme Court of Rhode Island.

December 14, 2009.

Kevin J. McAllister, Esq., Providence, for Plaintiff.

Matthew T. Oliveiro, Esq. for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, JJ., and WILLIAMS, C.J. (ret.).

OPINION

Chief Justice SUTTELL, for the Court.

This appeal arises from a morass of budgetary woe in the City of Cranston. The plaintiffs, the School Committee of the City of Cranston, and Superintendent of Schools, Peter L. Nero (hereinafter collectively referred to as the school committee), appeal from a judgment in favor of the defendants, the members of the Cranston City Council, Mayor Allan Fung, and Director of Finance Robert F. Strom (hereinafter collectively referred to as the city).¹ The school committee sought additional appropriations for the Cranston School Department for fiscal year (FY) 2007-2008 in what is commonly referred to as a "Caruolo action." The school committee also appeals from a judgment in favor of the city in the city's separate action for declaratory, injunctive, and mandamus relief. The two actions were consolidated in the Superior Court and also have been consolidated for the purposes of this appeal.

The school committee contends that the trial justice erred in concluding that the school committee did not meet the statutory prerequisites for filing a Caruolo action pursuant to G.L.1956 § 16-2-21.4; it also alleges a bevy of other errors. For the reasons discussed in this opinion, we affirm the judgment of the Superior Court.

I Facts and Procedural History

The school committee's FY 2007-2008 financial travails can be traced to the spring of the previous school year. On February 28, 2007, the school committee requested from the city a budget of $129,865,082 for FY 2007-2008. The city council made an appropriation to the school department of $126,395,975 for FY 2007-2008 on May 9, 2007. The school committee then amended its budget to conform to this appropriation on June 19, 2007. At trial, Thomas Sweeney, Jr., a consultant retained by the school committee in April 2007, noted that the school department was already projecting a deficit for FY 2007-2008 at the time he was retained.

When subsequent school aid from the state proved lower than expected in July 2007, the city council further reduced its appropriation to the school department to $125,328,548. However, the school committee failed to amend its budget to reflect the reduced appropriation. Instead, the school committee apparently attempted to account for the discrepancy when it included a "budget reconciliation" item of $1,651,202 in its November 2007 revised budget. Even before the insertion of this budget reconciliation item, Mr. Sweeney was estimating a projected deficit of $3.5 million for FY 2007-2008 as early as September 2007. By December 6, 2007, the projected budget deficit totaled $3,888,190.

On November 30, 2007, the superintendent instituted a purchasing freeze. According to Mr. Sweeney, however, it is doubtful that many savings were realized as a result of this freeze because most of the expenditures for FY 2007-2008 already had been made, and the freeze was not stringently enforced.

By December 2007, the school committee was contemplating an action against the city pursuant to § 16-2-21.4—commonly referred to as the Caruolo Act. In a Caruolo action, a school committee may file a complaint in the Superior Court to seek additional appropriations for the school department if it believes it cannot adequately run the schools with the previously authorized appropriation.

On December 26, 2007, the superintendent sent a letter to the commissioner of the Rhode Island Department of Elementary and Secondary Education, purportedly seeking alternatives or waivers with regard to certain legal and regulatory requirements, in an attempt to garner approximately $4 million in budget savings. Such requests are required before a Caruolo action may be brought. The superintendent's proposals included requesting additional state funding for special and vocational education programs, as well as elimination of all non-special education student transportation and increasing special education class size. The commissioner denied the superintendent's requests on January 15, 2008.

On January 22, 2008, the school committee sent a letter to the city council requesting a supplemental appropriation of $3,839,190. The school committee indicated that if the city council did not respond within fifteen days, the school committee would "assume that [its] response is in the negative, and [the school committee] will proceed accordingly." The city council did not specifically respond to the school committee's request within fifteen days, although the school committee and the city met on a number of occasions over the next few months in an effort to resolve the budget problems.

In April 2008, the school committee made a presentation to the city council on the school department budget deficit. At this meeting, the school committee said that the school budget deficit was then projected to be approximately $4.9 million for FY 2007-2008. The city council then passed a resolution asking the mayor to seek a writ of mandamus requiring the school department to operate within its appropriated budget for the school year in accordance with state law. Thereafter, the school committee filed the instant Caruolo action against the city on May 13, 2008.

Around this same time, the school committee submitted its budget for FY 2008-2009 to the city council. The school committee requested $132,810,730 for FY 2008-2009, including $93,884,319 in direct city appropriations. At some point after May 15, 2008, the city council level-funded the school committee for the coming school year, appropriating $125,340,048. In response, the school committee adopted a revised budget on June 16, 2008. This "revised" budget included a "budget reconciliation" item, however, similar to the one previously used in the FY 2007-2008 budget—except that this item now eliminated a $4,931,704 operating deficit. At trial, Joseph Balducci, the chief financial officer of the Cranston School Department, testified that the $4.9 million represented the reduction in expenditures to be realized as a result of the instant Caruolo action.

In June 2008, the city filed an answer and a counterclaim asking the Superior Court to order the school committee to file corrective action plans for the FY 2007-2008 budget and to refrain from certain expenditures.² The city subsequently filed a separate action against the school committee requesting the same relief as the counterclaim.

On June 23, 2008, upon the request of the mayor, the city council passed a resolution directing the city finance director to create a deficit reduction/loan account, into which the city council appropriated approximately $4,138,000. This sum was intended for payment of outstanding school committee contractual obligations and invoices for FY 2007-2008. The city did not consider this loan to be an additional appropriation to the school department, nor did it agree to factor the sum into the city's "maintenance of effort" for the next year under G.L.1956 § 16-7-23.

Thereafter, the city moved to consolidate the separate actions. On July 10, 2008, the trial justice granted the motion to consolidate, noting that evidence should be submitted for both actions and that the parties should identify specifically which lines of questioning were directed exclusively to the city's counterclaim and complaint. She indicated that she would "save for another day" the issue of whether additional evidence might be needed for the city's action. An order implementing the trial justice's decision was not entered until July 21, 2008, in the midst of the bench trial. The order stated that both actions involved "common questions of law and fact, such that it would further the interests of judicial economy to have the two cases tried and decided together." The order further stated that at the close of testimony, the trial justice would hear argument on whether additional testimony was necessary on the city's complaint and counterclaims. The order also indicated that the trial justice "may decide the merits of the Caruolo action first and reserves the right to bifurcate for decision the legal issues raised in [the city's] counterclaims and the [c]ity's [c]omplaint."

Shortly after trial commenced, the school committee filed an emergency motion for a writ of mandamus to compel the city to authorize the payment of certain FY 2007-2008 expenses, to be paid out of the FY 2008-2009 appropriation or out of the FY 2007-2008 cash reserves. On July 21, 2008, the trial justice issued a writ of mandamus requiring the city to release $559,143 from the FY 2007-2008 cash reserves. The trial justice did not authorize any expenditures to be made out of the FY 2008-2009 appropriation for the payment of FY 2007-2008 expenses, and noted that the authorized payments "would not be deemed an admission by the [d]efendants for any purpose in the instant action."

A Trial Testimony

A bench trial was held in July 2008. The first witness, Mr. Sweeney, an education consultant for the school committee, testified that he was hired in April 2007 with the understanding that the school committee might have to file a Caruolo action for FY 2007-2008. He was hired to perform an in-house audit to examine all the school department's programs, which audit eventually could be used to support a Caruolo action. Mr. Sweeney opined that all the school department expenses made in FY 2007-2008 (except for two programs³) were required by law or pursuant to the basic education program (BEP) set by the Rhode Island Board of Regents for Elementary and Secondary...