Boyertown Area School District et.al v. Department of Education, 797 A.2d 421 (Pa. Comwlth., 2002)

Facts of the Case

On August 30, 2001, the Secretary of Education, Charles B Zogby, sent a letter to the Boyertown Area School District informing the school district that the Pennsylvania Department of Education (PDE) would withhold funds from the school district because the school district had failed to make the required payment of $22,935.04 to the T.E.A.C.H. Charter School (The Einstein Academy Charter School) for the month of August, 2001. These withheld educational subsidies were being sent directly to T.E.A.C.H. Charter School by the PDE. The letter included the statement: "Please note that this decision is not an adjudication."

On September 20, 2001, Boyertown Area School District filed a petition for relief requesting a hearing before the PDE to resolve the disputed issues dealing with the facts and with the law regarding the decision to withhold funds. On October 1, 2001, The PDE rejected the petition by the school district. On the same day Boyertown Area School District filed its petition for review with the Pennsylvania Commonwealth Court. Eight other school districts also filed petitions for review that challenged the actions of the Secretary and the PDE in withholding payments of subsidies on the basis of the alleged failure of the districts to make the required payments to "cyber" charter schools.

Decision of the Court

On May 2, 2002, PA Commonwealth Court vacated the actions of the PDE in withholding funds from the Boyertown Area School District and the eight other school districts without giving the districts the opportunity to challenge the deductions. The court ordered the PDE to provide an expedited opportunity for the school districts to be heard to challenge the withheld subsidies.

Basis for the Decision

The court established that charters are granted or denied by the local school boards according to the Charter School Law CSL) enacted in 1997. School districts must pay the charter school for each student from their district who attends the charter school. (Section 1725-A of the Charter School Law, 24 P.S. §1725-A(a)(5)) This section of the CSL also states that if the school district does not pay the charter school, the Secretary shall deduct this amount from the state subsidy payments made to the district. The issue raised before the court was if the actions of the Secretary when he authorized the deduction of the payment to the school district, which was based solely on the documentation submitted by the charter school, was a ministerial act (i.e. a duty prescribed by law) or an adjudication (i.e. a quasi-judicial decision). If it was a ministerial act, it required no notice or right to be heard. If it was an adjudication, it had to meet the requirements of Administrative Agency Law.

The court decided that the withholding of payments by the Secretary was an adjudication under 2Pa.C.S. §101. Schools are given a property right under several sections of Article 25 of the School Code, 24 P.S. §§2501-2599. Since school districts are entitled to their part of the state funding, school districts have a property interest whenever state funds are withheld. Administrative Agency Law (2 Pa. C.S. §504) must be followed because the court viewed the actions of the Secretary as an adjudication. This law requires reasonable notice and an opportunity to be heard. Therefore, the districts are entitled to a hearing before the subsidies are withheld.

Prepared by Yvonne M. Monahan, June 2002