DISASTROUS BLOW: APPELLATE DIVISION RULES AGAINST FAIRER SCHOOL FUNDING FOR LAKEWOOD

"As for the administration of transportation services, the Commissioner found: "there [was] not sufficient separation between Lakewood as a contracting agency and the Lakewood Student Transportation Authority (LSTA) as a vendor"; full time employees worked for both Lakewood and the LSTA," the Appellate Division ruling states.

FIRST REPORT - BREAKING NEWS

In a disastrous turn of events, the New Jersey Appellate Division on Monday morning issued a ruling denying Lakewood's fight for fairer school funding - a fight R' Aron (Arthur) Lang has tirelessly devoted countless hours for over a decade, FAA News has learned.

Mr. Lang's long time 2 arguments are; 1) Lakewood's students are not receiving a constitutionally sound education (known as a Thorough and Efficient education, or T&E), and; 2) the fault of this lies squarely in the fact that New Jersey's School Funding Formula (SFRA) is unconstitutional as applied to Lakewood's unique demographic situation (which has many nonpublic students who need transportation but whom are not counted towards funding).

Succeeding on both of these arguments is key to be able to force State officials to finally provide fairer funding to Lakewood.

R' Aron has already succeeded in the Appellate Division on his first argument in March 2023.

Today, however, the Court issued a ruling dismissing his second argument.

Judges Smith, Chase, and Vanek wrote:

"While we have concerns about the ongoing constitutional deprivation suffered by the public school students of Lakewood, we affirm the Commissioner's final administrative decision because we conclude the SFRA is constitutional as applied to Lakewood and that the Commissioner fully complied with our directive in Alcantara v. Allen-McMillan (Alcantara I), 475 N.J. Super. 58 (App. Div. 2023). 

"Petitioners insist that they have demonstrated a "clear nexus" between the undisputed denial of T&E to Lakewood public school students and the "flawed application of SFRA" to the District's finances. They contend that this demonstrated nexus requires us to compel the other branches of government to "take all necessary and appropriate steps to remedy the constitutional deficiencies identified in this case . . . ." This sought-after order, petitioners argue, should compel the respondents to take a series of immediate steps to right the District's finances, including, but not limited to: forgiveness of outstanding state loans; reimbursement of District monies spent to comply with certain unfunded DOE mandates; increases in the annual state aid payments; and passage of legislation designed to ensure Lakewood receives adequate education funding similar to the Abbott districts throughout the state. We consider the argument.

"The vast record shows Lakewood has received all the SFRA funding that it has qualified for. Instead, petitioners here argue that "[t]he State's failure to adjust SFRA based on the admittedly unique characteristics of [a school district's] student population and on 'up-to-date measure' of [a school district's] realistic 'ability to pay' is at the heart of the SFRA's unconstitutionality as applied to Lakewood." Stated another way, petitioners do not argue that the SFRA is unconstitutional as applied to Lakewood because the Legislature underfunded it. Petitioners posit that the statute is unconstitutional as applied to Lakewood because the fully funded SFRA doesn't account for how the District chooses to raise local revenue, allocate its budget or spend its money. Petitioners, in effect, ask us to declare the SFRA unconstitutional because it doesn't yield enough state aid to cover the shortfalls caused by Lakewood's budget and spending choices, particularly in the areas of transportation and special education.  

"These choices, the record shows, have drained resources away from Lakewood's public school students, and are consistently at odds with cost-saving recommendations made by respondents. This is a distinction with a difference, and we decline petitioners' invitation to apply the Abbott XXI analysis to this unique record," the written ruling asserts.

The ruling here relies on the following determinations made by the Education Commissioner:

The record "demonstrate[d] severe deficiencies in Lakewood's fiscal management, including its failure to keep track of expenditures, records, and data and questionable spending practices." The Commissioner supported this finding with the testimony of an Office of Legislative Services auditor who "found financial transactions that were not consistent with government auditing standards, a lack of control environment leading to a lack of stability, lax reconciliation procedures, a lack of supporting documentation, Board approval of contracts without review, and other questionable expenses."

 

Additionally, the Commissioner noted a lack of "[a]ttention to administrative and financial detail" by District management.

 

The Commissioner also reported "significant data discrepancy and reporting issues[,]" failures to "approv[e] vendors before payment[,]" the failure of the District to provide many nonpublic students with a student identification number, and poorly organized and administered public bidding processes and procedures. The Commissioner ultimately found that Lakewood's fiscal mismanagement led to its "inefficient use of funds."

 

Turning to transportation and special education costs, the Commissioner initially found that "Lakewood [did] not take[] reasonable steps to control its special education and transportation costs despite receiving advice to do so" from a 2009 needs assessment and a 2014 audit. 

 

Regarding transportation costs, the Commissioner identified issues such as Lakewood's (former) courtesy busing policy, its use of gendered buses and tiering bell times, and its failure to increase route sharing or stagger school schedules.

 

As for the administration of transportation services, the Commissioner found:  "there [was] not sufficient separation between Lakewood as a contracting agency and the Lakewood Student Transportation Authority (LSTA) as a vendor"; full time employees worked for both Lakewood and the LSTA; the District chose not to take opportunities to bid tiered routes rather than individual routes; buses were running "four to eight routes a day" and "being used on multiple routes"; and some students were billed for busing at higher costs when "transported by the District rather than the LSTA." 

Acknowledging Lakewood's higher nonpublic school transportation costs, the Commissioner ultimately found that funding from the State, coupled with increases to the local tax levy, would be sufficient to provide T&E to Lakewood students.

 

Regarding special education costs, the Commissioner found that Lakewood failed to utilize the cost-saving strategies for special education that the DOE's 2009 needs assessment recommended. The Commissioner also found Lakewood could apply for "additional aid[] based on an unusually high rate of low-incidence disabilities." The Commissioner also found the District fell short in its efforts to educate Lakewood special education children in-house. The Commissioner found that instructing such children in-house would save the District money and perhaps make it eligible for more state aid.

"That said, we are mindful that there are Lakewood school children who suffer from an ongoing constitutional deprivation. This stark truth, evident in the record, is undisputed by the parties. Indeed, it is petitioners' foundational claim, and respondents, charged with a constitutional obligation to ensure that all New Jersey school children receive a thorough and efficient education, do not disagree. While we conclude that Lakewood's failure to provide a thorough and efficient education for its public school students is not due, in significant part, to the SFRA, the search for an equitable, effective and efficient solution to the plight of these children must not end here," the ruling concludes.

R' Aaron has vowed to continue his fight to the New Jersey Supreme Court.

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