FIRST REPORT - BREAKING UPSET: APPELLATE COURT AGREES THAT LAKEWOOD SCHOOL DISTRICT HAS "SIGNIFICANT DISPROPORTIONALITY" REGARDING SPECIAL EDUCATION

Michael Inzelbuch is having a rough morning.

The New Jersey Department of Education has alleged that the Lakewood School District's risk ratios for special education identification and placements were "significantly disproportionate."

One category which is allegedly significantly disproportionate is the number of white students placed in separate education settings as compared to the number of total white students in the district overall.

As a result, in accordance with federal guidelines, the state advised Lakewood that it would be required to allocate 15% of its IDEA funding - $1,442,938 - "to address the underlying causes of the disproportionality."

The Lakewood Board of Education fought back hard, all the way to the Appellate Division.

In a massive upset, Appellate Division Judges Whipple, Enright and Paganelli today affirmed the Commissioner of Education's decision.

The federal Individuals With Disabilities Act (IDEA) Act provides states (including New Jersey) with grants which they must allocate to local educational agencies (LEAs) with the goal of ensuring the provision of a “free and appropriate public education” for students with disabilities.

In order for LEAs to receive federal assistance, the IDEA requires that States determine if “significant disproportionality based on race and ethnicity” is present within (1) the identification of children with disabilities; (2) the placement in particular educational settings of such children; and (3) disciplinary actions against those students in any LEA within a state.

“Disproportionality” refers to the phenomenon that occurs when there are more individuals from a particular group who are experiencing a given situation than one would expect based on that group’s representation in the general population.

Disproportionality is considered “significant” in this context when overrepresentation of a group exceeds a risk ratio threshold.

Under the IDEA, state departments of education must calculate and determine whether districts are significantly disproportionate. If a state finds any significant disproportionality in an LEA, it must require the LEA to reserve “the maximum amount of funds . . . to provide comprehensive coordinated early intervening services [(CCEIS)] to serve children” in the LEA.

I.e. The big catch here is that while the federal law requires states to require LEA which are found to have a significant disproportionality in the risk ratio threshold to set aside 15% of its IDEA funds for the implementation of CCEIS, the actual risk ratio threshold is set by each individual state.

An even bigger catch here is that the state are supposed to set their risk ratio threshold after meeting with stakeholders. State officials invited Lakewood School District officials to two meetings on the topic. The Lakewood officials did not bother to show up. Hence, the State adopted their risk ratio threshold without any input from Lakewood.

Anyways, in determining the particular data to use, the regulations specifically state that data pertaining to children “enrolled in an LEA” or “within an LEA” are to be used in conducting these calculations.

In New Jersey, the data used to calculate an LEA’s risk ratio is collected through two web-based systems: NJ SMART Reporting, and Student Safety Data System (SSDS). Both systems are maintained by NJDOE, but the actual information on the systems comes directly from the LEAs.

Based on the data provided by the Lakewood Board of Education through NJ SMART and SSDS, NJDOE determined in 2020 that Lakewood’s risk ratios for special education identification and placements were significantly disproportionate. That meant that for the previous three years, Lakewood’s risk ratios exceeded the State threshold in four categories: white students with autism, white students with intellectual disability, white students with all eligibilities, and white students placed in separate education settings. 

In other words, the amount of white students within each respective category, as compared to the number of total white students in the district overall, was significantly disproportionate to the number of all students within each respective category.

IMPORTANTLY - Consistent with the IDEA, NJDOE reached its calculations using the student population enrolled in the district’s public schools, but did not include those students enrolled in non-public schools. 

NJDOE also calculated risk ratios for disciplinary removals, which it must do for children with disabilities ages six through twenty-one, not including children in private schools. To determine if an LEA is significantly disproportionate for disciplinary removals, NJDOE reviews five categories, all of which can have their own finding of significant disproportionality: out-of-school suspensions and expulsions of ten days or fewer; out-of-school suspensions and expulsions more than ten days; in-school suspensions of ten days or fewer; in-school suspensions more than ten days; and disciplinary removals in total. The first four disciplinary risk ratios are calculated using the number of students who faced those disciplinary actions. However, the fifth is calculated based on the total disciplinary removals, as the category’s name suggests.

Lakewood’s data indicated that a significantly disproportionate number of total disciplinary removals occurred among Black special education students. 

IMPORTANTLY - Again, consistent with the IDEA, NJDOE reached its calculations regarding significant disproportionality as to disciplinary removals using the student population enrolled in its public schools, but did not include those students enrolled in non-public schools.

On April 6, 2020, NJDOE notified Lakewood that the Department had calculated the District’s risk ratios and found that it was significantly disproportionate in five categories. The Department further advised Lakewood that it would be required to allocate 15% of its IDEA Part B funding - $1,442,938 - for CCEIS to address the underlying causes of the disproportionality.

On July 1, 2020, Lakewood filed a petition with NJDOE’s Office of Controversies and Disputes, challenging the Department’s significant disproportionality determination, and argued that the Department’s findings should have included non-public students. 

The matter was transferred to the Office of Administrative Law (OAL) as a contested case. Oral argument took place on May 19, 2021.

On July 20, 2021, the Administrative Law Judge (ALJ) dismissed the petition, concluding that NJDOE had complied with the regulations and requirements of the IDEA as they were written, and that the Department was not required to include non-public students in their calculations.

The ALJ noted that the dispute did not pertain to the accuracy of the data, but rather “whether students placed in private schools should be considered in computing the ratio to determine disproportionality.” He found that the Department’s decision to exclude nonpublic students in the computation of the risk ratio was not arbitrary and capricious, noting that there was no requirement that a state consider such students. He also observed that while Lakewood contends that the reason for disproportionality is the large portion of students residing in Lakewood that attend nonpublic schools, “[u]ncovering the factor(s) causing the discrepancy is the purpose of the CCEIS fund allocation.”

On October 18, 2021, the Commissioner issued her decision agreeing with the ALJ, and dismissed Lakewood’s petition. 

The Commissioner explained that NJDOE “was not obligated to deviate from its chosen calculation methodology to address Lakewood’s private school population[,]” and that it “complied with the federal regulations and requirements of the IDEA as they are written[.]”

The Lakewood Board of Education appealed this decision to the New Jersey Appellate Division.

The Board argued:

The N.J. Department of Education acted arbitrarily and capriciously and violated Lakewood’s substantive due process rights in finding Lakewood to have significantly disproportionate identification, placement and discipline of students with disabilities based on race.

The NJDOE portrays Lakewood as seeking special treatment, but that is simply not true. Rather, Lakewood seeks to have the NJDOE perform reliable and accurate calculations. The NJDOE calculations are misleading and for some students wrong, leading to material and severe consequences because the NJDOE required Lakewood to reallocate over $1.4 million of its limited 2020-21 special education grant to address problems that do not actually exist. Moreover, this annual problem will repeat indefinitely unless the NJDOE changes its methodologies.

The state's analysis as to whether or not a LEA is substantially disproportionate must be based on accurate data and appropriate measurement, butthe NJDOE has forsaken accuracy for uniformity and expediency. 

Relevant to four categories involving white students, the NJDOE counted only public-school students and entirely ignored nonpublic students, despite the federal regulation’s silence on this subject. As applied to Lakewood, that decision is arbitrary and capricious and unjustifiable. 

While this decision may not affect the accuracy of NJDOE’s calculations for other New Jersey school districts, it clearly impacts Lakewood because Lakewood’s student demographics are unique. 

More than 85% of its 45,000 students attend nonpublic schools, whereas every other New Jersey school district has 85% or more of its students in public schools. Further, Lakewood’s public-school students are comprised mostly of Hispanic and black students, but they are not representative of the entire resident student population. There are fewer than 400 white students in Lakewood public schools, compared to over 39,000 white nonpublic students residing in Lakewood. Consequently, the NJDOE’s public-school only analysis inaccurately assessed disproportionality and found white students to be overidentified in four categories. Had the NJDOE reasonably considered all resident students, there would be no disproportionality finding involving white students. While the NJDOE knows its Lakewood calculations are neither accurate nor representative of Lakewood student residents, it refuses to make simple changes to address these deficiencies.

The school district is supposed to identify the causes of the alleged disproportionalities and then use CCEIS monies to address and remedy those causes. The NJDOE then reviews and monitors the district’s use of those monies, ensuring they are used to address the causes of the disproportionality. 

The “causes” of the disproportionality findings in Lakewood are clear and undisputed. With respect to the four categories of identification and placement for white students, the “cause” is the decisions by Lakewood parents to send their children to Orthodox Jewish schools. Given that the NJDOE only counted public school students, had these parents instead chosen those public schools, there would not have been a finding of significant disproportionality. No amount of CCEIS funding can be appropriately spent to convince these parents to have their children transfer to the public school system. With respect to racial and ethnic demographics, Lakewood’s nonpublic school population is predominantly white, with virtually all of Lakewood’s minority students attending public schools. This circumstance is based on Lakewood’s large population of Orthodox Jewish parents who choose to send their children to non-public religious schools.

Had the NJDOE considered all students residing in Lakewood, there would have been no instances of significant disproportionality involving white students.

With respect to the NJDOE’s one finding of disproportionate total removals of black students, the NJDOE’s actions are even more unjustifiable because the data it used is full of errors and it applied the wrong methodology, both of which falsely inflated the calculations. First, the NJDOE data contains numerous factual errors. After correcting for all of the NJDOE’s errors, only six black Lakewood students with eight removals remained, which was below the minimum threshold of 10 students the NJDOE set to perform this calculation. The NJDOE refuses to correct the data, first blaming Lakewood for data entry mistakes it neither made nor had control over, and then claiming any change would be irrelevant to findings for white students. This recalcitrance ignores Lakewood’s repeated message that correcting this record is of the utmost importance and value.

Second, the NJDOE wrongfully counted total disciplinary incidents of students removed more than once, as opposed to the number of nonduplicative removed students. Notably, the NJDOE calculated the four other disciplinary removal categories based on a student – not incident - count, as the IDEA regulation requires, and the NJDOE cited no basis for this one exception.

The NJDOE refuses to make simple changes to its methodologies and data to make its calculations true and accurate and, therefore, meaningful. As a result, Lakewood must use $1.4 million of federal special education monies to address 1) irremediable problems that will repeat indefinitely due to NJDOE’s incorrect methodology; and 2) problems that do not actually exist. The NJDOE’s refusal is unjustified, arbitrary and capricious, violating Lakewood’s substantive due process rights. The Commissioner’s decision finding otherwise should be reversed.

The Board of Education is represented by Attorneys Edward J. Dauber and Michael H. Freeman, Esq. of Greenberg Dauber Epstein and Tucker, and Michael I. Inzelbuch, Esq.

The New Jersey Department of Education is represented by Assistant Attorney General Donna Arons and Deputy Attorneys General Michal Czarnecki and Christopher Weber.

Judges Whipple, Enright and Paganelli today issued a written ruling affirming the Commissioner's decision.

Notably, the judges highlighted that "Lakewood has a demographic situation unique in the State and possibly in the nation, inasmuch as the non-public school population is six times that of the public school population. Nationally, and in the rest of New Jersey, the percentage of students enrolled in non-public schools is 11% or 12%, but in Lakewood it is 88%."

However, the judges also conceded:

Our review of an agency decision is limited. Circus Liquors, Inc. v. Middletown Twp. Our review is focused on: (1) whether the agency followed the law; (2) whether the agency's decision is supported by substantial evidence in the record; and (3) whether in applying the law to the facts, the agency reached a supportable conclusion. See City of Jersey City v. Jersey City Police Officers Benev. Ass'n. Absent a "clear showing" that the agency's decision is "arbitrary, capricious, or unreasonable, or that it lacks fair support in the record," an agency's final decision should be upheld, "regardless of whether a reviewing court would have reached a different conclusion in the first instance." Circus Liquors.

DOE's approach follows the plain letter of the regulation, because the purpose of the disproportionality calculation is to identify where districts are treating certain public-school students differently based on their characteristics. See 34 C.F.R. § 300.646(a) (requiring states receiving IDEA Part B funds "to determine if significant disproportionality based on race and ethnicity is occurring in the . . . LEAs of the State"). Significantly, public school districts do not determine the special education placements for students parentally placed in private schools. In our view, it is consistent with the IDEA for the DOE to calculate risk ratios based solely on children enrolled in the LEA and excluding non-public students. Thus, when DOE calculated Lakewood's risk ratios without considering its parent chosen, private school students, DOE properly found there was significant disproportionality in Lakewood because the district exceeded the risk ratio threshold of 3.0 in four special education identification or placement categories. In doing so, DOE followed the law and properly calculated those risk ratios using data from students enrolled in the LEA—while excluding from its calculations consideration of students enrolled by their parents in private, non-public schools. The USDOE has stated districts were not required to include non-public students in disproportionality calculations.

The commissioner agreed, finding "no such requirement in the applicable law[,]" and that 34 C.F.R. § 300.647 "repeatedly refers to students 'enrolled in the LEA' or 'within the LEA,' supporting the [DOE's] decision to include only public school students in the disproportionality calculations.

Lakewood argues the only root cause for its disproportionality is its demographics and it is pointless to require Lakewood to use IDEA funds to examine that further. Although demographics may be a contributing factor, without further investigation, we conclude it would be arbitrary and capricious to presume it is the only factor.

We are not persuaded the DOE's decision to perform Lakewood's disproportionality calculations based only on the students enrolled in public schools was arbitrary, capricious, or unreasonable. Lakewood argues the Department's calculations of disproportionality were "skewed, unrepresentative, and unreliable" only "because the public school and non[-]public school populations are markedly different" than other districts.

The judges also noted that "Lakewood has not raised on appeal any challenge to the Commissioner's ruling on its procedural due process claim, therefore that issue is waived and will not be considered by this court."

Township officials are reviewing this decision.

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