Acquiring tenure in the position by tenure by "operation of law," sometimes referred to as tenure by estoppel or tenure by acquiesce

Acquiring tenure in a position by "operation of law," sometimes referred to as  tenure by estoppel or tenure by acquiesce
Matter of Mogilski v Westbury Union Free Sch. Dist., 2018 NY Slip Op 01063, Appellate Division, Second Department

Should the appointing authority fail, or neglect, to timely notify a probationer that he or she is to be terminated for failure to satisfactorily complete his or her probationary period  on or before the end of the individual's probationary period, the employee is deemed to have obtained tenure by "operation of law," sometimes referred to as  tenure by estoppel or tenure by acquiesce.

In Mogilski v Westbury Union Free School District the Appellate Division determined that Mogilski had obtained tenure in his position by "operation of law."

Westbury Union Free School District [District] appointed Anthony Mogilski as a Supervisor of School Facilities and Operations on September 21, 2015 subject to Mogilski's satisfactory completion of a 26-week probationary period scheduled to end March 21 next following.  On February 2, 2016, the District informed Mogilski that his probationary period was being extended for 12 days due to school closings for holidays, which, said the District, extended his probationary period through April 6, 2016.

The District's request for the extension was approved by the Nassau County Civil Service Commission [Commission] and on March 28 the School Board of Education adopted a resolution terminating Mogilski's employment "effective the last day of his probationary period, which is March 29, 2016 ...." A termination of employment letter was delivered to Mogilski on March 29.

On March 29, however, the District was informed by the Commission that it had incorrectly "authorized the extension" of Mogilski's probationary period for 12 days when the extension should have been 6 days, thereby resulting Mogilski'sprobationary period "officially" ending on March 29 rather than April 6.

Mogilskifiled an Article 78 petition seeking a court order reinstating him to his former position in which he alleged that the District exceeded its jurisdiction, and acted arbitrarily,  capriciously, and irrationally in extending his probationary period. He contended that the Commission's rules with respect to a probationer's term being extended for authorized or unauthorized absences on "workdays" does not authorize such an extension for school closings on holidays.*

Although Supreme Court denied Mogilski's petition, holding it was not an abuse of discretion for the District to treat absences resulting from "holiday" school closings the same as absences for sick leave, vacation, jury duty, and other authorized or  unauthorized absences for purposes of extending a probationer's term, the Appellate Division disagreed and reversed Supreme Court's ruling.

The Appellate Division explained that the relevant Commission rule indicated that "it is proper to extend a probationary term by the number of 'workdays' an employee is 'absent' or 'workdays' an employee missed due to sick leave, vacation, or jury duty" and that this court had previously ruled "it is rational to interpret 'workdays' to include 'all of those days when [Mogilski's] presence would normally have been required.'" However, said the court, a school closing due to a holiday "is not a day when [Mogilski's]would have required" to work and the extension of his probationary period in consideration of the school being closed due to a holiday was improper.

The court directed the District to reinstate Mogilski to his position of Supervisor of School Facilities and Operations with back pay and all benefits of his employment.

* 4 NYCRR 4.5(g), addressing absence during probationary term with respect to employees of the State as the employer, in pertinent part, provides that "Any periods of authorized or unauthorized absence aggregating up to 10 workdays during the probationary term, or aggregating up to 20 workdays if the probationary term or maximum term exceeds 26 weeks, may, in the discretion of the appointing authority, be considered as time served in the probationary term ... Any such periods of absence not so considered by the appointing authority as time served in the probationary term, and any periods of absence in excess of periods considered by the appointing authority as time served in the probationary term pursuant to this subdivision, shall not be counted as time served in the probationary term. The minimum and maximum periods of the probationary term of any employee shall be extended by the number of workdays of his absence which, pursuant to this subdivision, are not counted as time served in the probationary term."

Many local civil service commissions and personnel officers have adopted a similar rule.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01063.htm

A resolution increasing a NYSHIP participating employer's contribution for health insurance premiums is temporary absent a manifest intent to create a permanent right

A resolution increasing a NYSHIP participating employer's contribution for health insurance premiums is temporary absent a manifest intent to create a permanent right

Bruckman v New York State Thruway Auth., 2018 NY Slip Op 01526, Appellate Division, Third Department

The complainants [Petitioners] in this CPLR Article 78 action are retired employees of New York State Thruway Authority [NYSTA]. NYSTA, a participating employer in the New York State Health Insurance Program [NYSHIP] as set out in Article 11 of the Civil Service Law, provides health insurance benefits to its employees and retirees.

A participating NYSHIP employer must pay at least 50% of the cost of the premium for individual coverage and not less than thirty-five% of the cost of premium or subscription charges for the coverage of dependents of such employees and retired employees. A participating NYSHIP employer, however, may elect to pay higher rates of contribution towards the employees' health insurance premiums for employees, retired employees, and the dependents of employees and retired employees. Further, a participating employer may elect to pay a higher or lower rate of contribution for its retired employees or their dependents, or both, than that paid by the State for its retired employees or their dependents, or both.

NYSTA's policy governing payment of health insurance premiums for retirees, last amended in 1976, provided that retirees would not be required to make any contribution toward the cost of individual coverage and each Petitioner received individual health coverage at no cost pursuant to the policy as it then existed upon his or her retirement.

In November 2015, NYSTA amended this the policy to require that retirees who had been retired for less than 25 years, and whose health insurance premium contribution rates were not subject to the provisions of a collective bargaining agreement negotiated pursuant to Article 14 of the Civil Service Law, commonly referred to as the Taylor Law, were to contribute six percent of the cost of the premiums for their individual coverage effective April 1, 2016.* As Petitioners served in positions designated "managerial or confidential" within the meaning of the Taylor Law, neither their employment nor their retirement was subject to the provisions of a collective bargaining agreement.

In March 2016, Petitioners commenced this Article 78 action seeking to, among other things, have the court annul NYSTA's decision to modify the contribution amount Petitioners had to pay for health insurance, contending that the revised policy breached "their vested right to receive individual health insurance coverage in retirement at no cost" and that the NYSTA's adoption of the revised policy was arbitrary and capricious.

Supreme Court dismissed the petition and Petitioners appealed.

Essentially Petitioners argued that the NYSTA policy that was in effect when each of them retired constituted "a unilateral offer by NYSTA to provide them with lifetime individual health insurance coverage in retirement at no cost," and that their right to such coverage vested and became an enforceable contract upon retirement.

Citing Aeneas McDonald Police Benevolent Assn. v City of Geneva, 92 NY2d 326, the Appellate Division disagreed with Petitioners, holding that "A municipal resolution is, in general, a unilateral action that is temporary in nature and, thus, it does not create any vested contractual rights."  The court explained that it is presumed that such resolutions do not "create private contractual or vested rights but merely declare a policy to be pursued until the legislative body shall ordain otherwise" and "[p]rivate contractual rights are created by municipal resolution only where the language of the resolution and the attendant circumstances clearly manifest the intent to create such rights."

Noting that there was nothing in the language of NYSTA's 1976 policy that would create private contractual rights, the decision pointed out that the rules and regulations governing NYSHIP specifically provide that a participating employer "that increases its rate of contribution toward the cost of health insurance benefits may thereafter decrease its rate of contribution to the statutory minimum."

* In Lippman v Board of Educ. of Sewanhaka Cent. High School Dist., 66 NY2d 313,  the Court of Appeals held that health insurance upon retirement is not a retirement benefit subject to the provisions of Article V, §7 of the State Constitution [Membership in retirement systems; benefits not to be diminished nor impaired].

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01526.htm

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][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:

http://www.counsel.nysed.gov/Decisions/volume57/d17307

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[1][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).