January 24, 2018

A school board member who acts on the advice of counsel will not be found to have engaged in a willful violation or neglect of duty

A school board member who acts on the advice of counsel will not be found to have engaged in a willful violation or neglect of duty
Application for the removal of certain school officials, Decisions of the Commissioner of Education, Decision No. 17,307

Monique McCray, Doris Dodson and Kelly Valentin [Petitioners] submitted an appeal to the Commissioner of Education seeking for the removal of certain  members of the Board of Education of the Central Islip Union Free School District, the removal of Dr. Craig Carr as Superintendent [collectively Respondents] involving was school constructions project substantially completed by May 2004.

At the result of Central Islip's failure to timely file final cost reports concerning the construction projects to the State Education Department [SED], SED, except for one project, discontinued the apportioned payments and sought to recoup the state aid apportionments in the amount $13,619,929 in "overpayments" over the course of three years by annual deductions from Central Islip's general State aid payments.

Central Islip then initiated an Article 78 in Supreme Court, contending that it was "entitled" to the overpayment claimed by SED. Supreme Court granted Central Islip's request for a temporary restraining order, which resulted in a payment from SED to Central Islip in the amount of approximately $7.5 million during the 2011-2012 school year. Governor Andrew Cuomo, however, had then signed Chapter 57 of the Laws of 2012 excusing "the actions and omissions of any school district which failed to file timely final cost reports for otherwise eligible school construction projects so long as the reports were filed by December 31, 2012.” If the school district filed by this deadline, Chapter 57 required SED to pay apportioned aid to the district in full except for a late filing penalty.[1] 

In March 2014, the Office of the New York State Comptroller [Comptroller] issued a report of examination entitled “Central Islip Union Free School District Financial Management” which covered the period from July 1, 2012 to June 30, 2013. The Comptroller concluded that district officials had “underestimated revenues and overestimated expenditures in the School Board-adopted budgets for fiscal years 2008-09 through 2012-13 ....”  The Comptroller also noted that, after Central Islip learned of the potential $13.6 million liability to SED in February 2010, “the entire amount needed was accumulated in unexpended surplus funds by the end of the 2010-11 fiscal year, due to the operating surplus incurred that year.”  Although district officials had “hoped that funds for this contingent liability could be placed in a reserve and excluded when calculating the statutory limit,” the Comptroller opined that “there is no statutory authority to establish a reserve for this liability.”

Petitioners in this appeal to the Commissioner contended that the Respondents willfully violated the Real Property Tax Law [RPTL] §1318 by retaining funds greater than four percent of the next fiscal year’s budget for the 2010-2011, 2011-2012 and 2012-2013 fiscal years and that during this period although the community was experiencing economic decline and high home foreclosure rates, district officials increased the tax levy, generating operating surpluses in excess of $25 million from 2008-2009 through 2012-2013.

The Petitioners also argued that Respondents had "a responsibility ... to bring information to the community about matters that affect their legal obligation to pay taxes” and “were obligated to be truthful and ethical and not jeopardize the community’s trust.” 

McCray and Dodson were alleged to have “raised questions about the [d]istrict’s practices of deliberately creating excess funds by under estimating revenue and over estimating expenditures” at an April 8, 2013 board meeting, and Respondents “acknowledge[d]” that there were “no internal controls to measure whether budget expenditures are efficient and increases are warranted.”  Petitioners request that Respondents be removed from their respective offices.

The Commissioner first address what she characterized as a "preliminary matter," Respondents claim that she would be "unable to issue an impartial decision in this matter because ... the application concerns an ongoing dispute between SED and respondent board."

The Commissioner, noting that Education Law §306 provides for an application to the Commissioner of Education when a petitioner seeks the removal of a board member or school officer, said that although "recusal may be necessary in an adjudicatory proceeding before the Commissioner under certain circumstances," she found that no such circumstances existed in this case.  In particular, the Commissioner said that she did not find that the lawsuit, which has concluded, "compromises [her] impartiality or otherwise requires [her] recusal in this case.

After addressing a number of procedural issues, the Commissioner addressed the Petitioners' appeal and found that [a]lthough the application must be denied as untimely, it would also be denied on the merits."

The Commissioner explained that RPTL §1318(1) provides that at the conclusion of each fiscal year, a board of education must apply any unexpended surplus funds to reduce its tax levy for the upcoming school year.  Surplus funds are defined as “any operating funds in excess of four percent of the current school year budget, and shall not include funds properly retained under other sections of law.” The Commissioner then observed that it has been "repeatedly held that, at the end of each school year, all unexpended operating funds in excess of the statutorily permitted four percent of the amount of the budget for the upcoming school year must be applied to reduce the tax levy."

As to Petitioners' seeking the removal of a member of the board of education or a school officer, Education Law §306 so permits "when it is proven to the satisfaction of the Commissioner that the board member or school officer has engaged in a willful violation or neglect of duty under the Education Law or has willfully disobeyed a decision, order, rule or regulation of the Board of Regents or Commissioner of Education." Further, said the Commissioner, to be considered willful, "the board member or officer’s actions must have been intentional and with a wrongful purpose."

Observing that in an appeal to the Commissioner, the petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which petitioner seeks relief, the Commissioner decided that while Petitioners in this appeal have alleged and proved violations of the RPTL, which Respondents have in fact admitted, "the actions of which [P]etitioners complain do not rise to the level of a willful violation or neglect of duty under the Education Law."

In the words of the Commissioner, "[P]etitioners have produced no evidence that any [R]espondent acted with a wrongful purpose" nor have Petitioners contested Respondents' contention that "that they took the actions which resulted in the accumulation of unexpended surplus funds during the disputed timeframe after receiving the advice of counsel."

Citing a number of Decisions of the Commissioner of Education, including Application of Goldin, 39 Ed Dept Rep 14, Decision No. 14,158, the Commissioner opined that "It is well-settled that a board member who acts on the advice of counsel will not be found to have engaged in a willful violation or neglect of duty that would justify removal under Education Law §306" and denied the Petitioners' application.

Addressing one final administrative matter, the Commissioner granted the Respondents'  have request for Certificates of Good Faith pursuant to Education Law §3811(1) thereby authorizing the School Board to indemnify them for legal fees and expenses incurred in defending a proceeding arising out of the exercise of his or her powers or performance of duties as a board member or other title listed in §3811(1).  

As it is appropriate to issue such certification unless it is established on the record that the requesting respondent acted in bad faith, the Commissioner concluded that as there has been no finding that any respondent acted in bad faith, she so certified "solely for the purpose of Education Law §3811(1) that ... Philips, Devine, Softy and Carbajal are entitled to receive the requested certificate [and] to the extent such a certificate is necessary, that [R]respondent Carr, who was the superintendent at the time of the events giving rise to this application, is also entitled to receive the requested certificate."

The decision is posted on the Internet at:

[1] Following passage of this legislation, Supreme Court dismissed the board’s lawsuit as moot on January 30, 2013, which was affirmed by the Appellate Division on October 30, 2014 (see Bd. of Educ. of Cent. Islip Union Free Sch. Dist. v. Steiner, 121 AD3d 1473).


Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the decisions summarized here. Accordingly, these summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
NYPPL Blogger Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
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