| Matter of Abramoski v New York State Educ. Dept. |
| 2015 NY Slip Op 08880 [134 AD3d 1183] |
| December 3, 2015 |
| Appellate Division, Third Department |
[*1]
| In the Matter of Maureen Abramoski et al., Appellants,v New York State Education Department et al., Respondents, et al.,Respondents. |
Charny & Associates, Rhinebeck (Nathaniel K. Charny of counsel), forappellants.
Eric T. Schneiderman, Attorney General, Albany (Julie M. Sheridan of counsel), forNew York State Education Department and others, respondents.
McCarthy, J. Appeals (1) from a judgment of the Supreme Court (McNamara, J.),entered October 16, 2013 in Albany County, which dismissed that part of petitioners'application, in a combined proceeding pursuant to CPLR article 78 and plenary action, toreview a determination of respondent State Education Department excluding the cost ofpetitioners' post-retirement medical insurance in the close-down tuition rate of a specialact school district, and (2) from an order of said court, entered June 25, 2014 in AlbanyCounty, which, among other things, denied petitioners' motion to vacate the priorjudgment.
Petitioners are retired employees of West Park Union Free School District NumberTwo, Town of Esopus, Ulster County (hereinafter the District). The District is a specialact school district created by special legislation in 1973 for the purpose of educatingresidents of a facility for adolescent girls with emotional disabilities (seeEducation Law § 4001 [8]; L 1967, ch 566, as amended by L 1973, ch 744).In January 2011, due to a significant decline in enrollment, the residential treatmentfacility announced its closing. Because the District was permitted to serve students solelyfrom the residential facility, respondent Board of Education of West Park Union FreeSchool District (hereinafter the Board) resolved to begin the process of dissolving theDistrict.
[*2] The Board notified respondentState Education Department (hereinafter SED) of its decision to cease operation, andSED informed the Board of the District's closing date and of its various responsibilitiesduring the close-down period (see generally 8 NYCRR 200.7 [e]). Among otherthings, the Board was tasked with calculating the District's close-down costs, whichincluded the cost of educating students during the final year of operation and anyoutstanding financial obligations. During this process, a question arose as to whether thecosts of certain contractual obligations that the Board had to pay petitioners for theirpost-retirement health and dental insurance coverage for their respective lifetimes wouldbe included in the tuition rate for the close-down period. SED informed the Board thatthe cost of such lifetime insurance coverage for the District's retirees would not beincluded in the close-down tuition rate.
Petitioners thereafter commenced this combined CPLR article 78 proceeding andplenary action against SED, respondent Commissioner of Education, respondentUniversity of the State of New York, respondent Board of Regents of the University ofthe State of New York, and respondent President of the Civil Service Commission(hereinafter collectively referred to as the State respondents), as well as the Board and itsSuperintendent, seeking, among other things, review of SED's determination excludingthe costs related to petitioners' lifetime insurance benefits in the close-down tuition rate,an order directing the reinstatement of their post-retirement health insurance anddamages for breach of contract. The State respondents joined issue, but the Board and itsSuperintendent did not. Upon petitioners' motion, Supreme Court awarded petitioners adefault judgment on their contract causes of action against the Board and itsSuperintendent. Thereafter, the court dismissed petitioners' CPLR article 78 claimsagainst the State respondents and denied petitioners' subsequent motion to, among otherthings, vacate that judgment. Petitioners appeal from both the judgment dismissing theirCPLR article 78 claims and the order denying their motion to vacate. We affirm.
SED's determination that the close-down tuition rate did not include the Board's costsrelated to petitioners' lifetime insurance coverage was not arbitrary, capricious or affectedby an error of law. This Court's review of an administrative determination such as the oneat issue is limited to whether the determination was arbitrary and capricious, lacked arational basis or was affected by an error of law (see Matter of Murphy v New York State Div. of Hous. &Community Renewal, 21 NY3d 649, 652 [2013]; Matter of Board of Educ.of Monticello Cent. School Dist. v Commissioner of Educ., 91 NY2d 133, 139[1997]). "An action is arbitrary and capricious when it is taken without sound basis inreason or regard to the facts" (Matter of Peckham v Calogero, 12 NY3d 424, 431 [2009];see Matter of Beck-Nichols vBianco, 20 NY3d 540, 559 [2013]). Further, courts must apply deference to anagency's "interpretation of its own regulations in its area of expertise" (Matter ofPeckham v Calogero, 12 NY3d at 431; see Matter of Neighborhood CleanersAssn.-Intl. v New York State Dept. of Envtl. Conservation, 299 AD2d 790, 792[2002]).
As provided by 8 NYCRR 200.9 (g), during the close-down period of a special actschool district, tuition "[r]eimbursement shall be determined in accordance with [8NYCRR 200.9 (f) (1) and (2)]." As is relevant, 8 NYCRR 200.9 (f) (1) (i) provides thatthe tuition rate "shall include administration and direct care costs and the costs ofoperation and maintenance of instructional facilities." In addition, uncontested evidenceestablished that the calculation of tuition is used, at least in part, to assess the amount ofreimbursement to be paid by the public school district or social services districtresponsible for the student in the special act school district.
In concluding that petitioners' lifetime insurance benefits should not be considered inthe close-down tuition rate, SED interpreted 8 NYCRR 200.9 (f) (1) (i) to excludelong-term [*3]outstanding debt obligations that werelargely—if not entirely—unrelated to the costs of providing an education tothe students attending the District during the relevant tuition period. This interpretation isreasonable and is consistent with a statutory and regulatory scheme that evinces an intentto tailor tuition rates to those costs reasonably related to the special act school district'sprovision of services to students during the relevant tuition period (see generally8 NYCRR 200.7; see e.g. Education Law § 4401 [11]).
Indeed, the opposite conclusion that is furthered by petitioners—that aclose-down tuition rate should include all outstanding financial obligations of a specialact school district—would arbitrarily punish those entities that happened to haveplaced a student in a special act school district during that district's close-down period;instead of reimbursement rates tailored to the costs of providing education services, therates would be tailored to the costs of resolving all of the special act school district'sdebts. Such a reimbursement scheme is inconsistent with the clear intent of the statuteand regulation.
Finally, petitioners' contention that SED violated their constitutional rights to dueprocess and equal protection are without merit. SED was not a party to the contracts thatprovided petitioners their rights to insurance benefits. The fact that SED's determinationmay have incidentally affected petitioners' ability to collect their respective judgmentsagainst the Board and the Superintendent does not support their allegations ofconstitutional violations. To the extent not discussed herein, petitioners' remainingarguments are also without merit.
Lahtinen, J.P., Lynch and Devine, JJ., concur. Ordered that the judgment and orderare affirmed, without costs.