IN RE PETITION FOR AUTHORIZATION

854 A.2d 327

181 N.J. 161

In the Matter of the PETITION FOR AUTHORIZATION TO CONDUCT A REFERENDUM ON THE WITHDRAWAL OF NORTH HALEDON SCHOOL DISTRICT FROM THE PASSAIC COUNTY MANCHESTER REGIONAL HIGH SCHOOL District.

North Haledon Board of Education and Borough of North Haledon, Plaintiffs-Appellants, v. Passaic County Manchester Regional High School District, Defendant-Respondent, and Ronni Nochimson, Passaic County Clerk; William Librera, Commissioner of Education; and Maria Nuccetelli, Passaic County Superintendent of Schools, Defendants.

Supreme Court of New Jersey.

Argued January 5, 2004.

Decided August 11, 2004.

Vito A. Gagliardi, Jr., Morristown, argued the cause for appellants (Porzio, Bromberg & Newman, attorneys; Mr. Gagliardi and Thomas O. Johnston, on the briefs).

Rodney T. Hara, Fairlawn, argued the cause for respondent Passaic County Manchester Regional High School District Board of Education (Fogarty & Hara, attorneys; Mr. Hara and Janet L. Parmelee, on the briefs).

Allan P. Dzwilewski, Florham Park, argued the cause for respondents Haledon Board of Education, Borough of Haledon, Prospect Park Board of Education and Borough of Prospect Park (Schwartz Simon Edelstein Celso & Kessler, attorneys; Lenore B. Laracuente, on the briefs).

Michelle Lyn Miller, Senior Deputy Attorney General, argued the cause for respondent Board of Review (Peter C. Harvey, Attorney General of New Jersey, attorney; Nancy Kaplen, Assistant Attorney General, of counsel; Ms. Miller and Allison Colsey Eck, Deputy Attorney General, on the briefs).

Chief Justice PORITZ delivered the opinion of the Court.

In this consolidated action, appellants below¹ challenged a decision of a Board of Review, duly constituted pursuant to N.J.S.A. 18A:13-56, that authorized a referendum to determine whether the Borough of North Haledon should be allowed to withdraw from the Passaic County Manchester Regional High School District. The crux of their argument was that the Board failed properly to assess the impact of withdrawal on the racial makeup of the student body at the high school operated by the Regional District. The Appellate Division held that a nine percent decrease in the white student population was not a "negligible impact" and reversed the Board of Review. In the Matter of the Petition for Authorization to Conduct a Referendum on the Withdrawal of N. Haledon Sch. Dist. from the Passaic County Manchester Reg'l High Sch. Dist. (North Haledon II), 363 N.J.Super. 130, 139, 831 A.2d 555 (2003). We granted certification, 177 N.J. 573, 832 A.2d 323 (2003), and now affirm and modify the judgment of the Appellate Division.

I

In 1955, the Boroughs of North Haledon, Haledon, and Prospect Park commissioned a study to examine the feasibility of building a limited purpose regional high school. Two years later in 1957, the voters approved formation of the Passaic County Manchester Regional High School District (Regional District) to provide secondary education for students from the three boroughs. As a result, Manchester Regional High School (Manchester Regional) opened its doors in July 1960 on a campus located in Haledon Borough. North Haledon, Haledon, and Prospect Park (collectively, the constituent districts) continued to maintain their own pre-kindergarten through eighth grade school systems.

Tension among the constituent districts has been building for some time. In fact, the impetus for North Haledon's effort to withdraw from the Regional District can be traced to a 1975 amendment to N.J.S.A. 18A:13-23, the statute prescribing the method of apportioning regional school district costs among constituent districts. L. 1975, c. 67, § 29. From the time of the formation in 1957 until 1975, the operating costs were apportioned on a per pupil basis. The 1975 amendment, however, required regional districts to apportion all school costs based on the equalized valuation of the property situated in each district, with the consequence that a larger percentage of a regional district's costs was shifted to municipalities with higher property values. In the Regional District, the constituent municipality most affected by that shift was North Haledon. Because North Haledon has a higher property tax base than either Haledon or Prospect Park, its share of the operating costs increased dramatically and disproportionately compared to the other two districts.

The Legislature amended N.J.S.A. 18A:13-23 again in 1993 to allow the operating costs of a regional district to be apportioned on a per pupil basis, equalized valuation basis, or some combination of the two. L. 1993, c. 67, § 1. In response, North Haledon pursued a referendum that would, if passed, return the Regional District to a per pupil apportionment scheme. Subsequently, on April 18, 1995, a majority of the voters in the Regional District approved a return to the per pupil method; the statute, however, requires approval both by an overall majority district-wide, and "by the voters of each municipality." N.J.S.A. 18A:13-23 (emphasis added). The question failed to garner majorities in Haledon and Prospect Park and was therefore deemed rejected. Although North Haledon's subsequent challenge to the referendum result was unsuccessful, the litigation revealed that there had been a substantial impact on North Haledon because of the 1975 shift to an equalized valuation scheme. Borough of N. Haledon v. Bd. of Educ. of Manchester Reg'l High Sch. Dist. (North Haledon I), 305 N.J.Super. 19, 24, 701 A.2d 925 (App.Div.1997),certif. denied,152 N.J. 363, 704 A.2d 1298 (1998). By 1994, North Haledon was responsible for over half the district's operating costs, or just over $12,700 per pupil, even though the Borough provided only slightly more than twenty-eight percent of the student body at Manchester Regional. Id. at 24 n. 2, 701 A.2d 925. By contrast, Haledon and Prospect Park were paying only $5,708 and $3,875 per pupil respectively. Ibid.

An ad hoc committee was formed in 1998 by the North Haledon Borough Council to assess what action could be taken to remedy that growing disparity. After examining the possibilities of withdrawing from or dissolving the Regional District, the committee ultimately recommended that North Haledon pursue withdrawal. Because a petition to dissolve a regional district can only be approved when a majority of the constituent districts join in that effort, N.J.S.A. 18A:13-51, and because Haledon and Prospect Park had no interest in dissolution, withdrawal appeared the only feasible remedy.

On the committee's recommendation, the North Haledon Borough Council and North Haledon Board of Education initiated the withdrawal process by passing resolutions requesting Passaic County Superintendent of Schools, Dr. Maria Nuccetelli, to investigate the advisability of the withdrawal of North Haledon from the Regional District. N.J.S.A. 18A:13-51 to -52; see In re Distribution of Liquid Assets Upon Dissolution of the Union County Reg'l High Sch. Dist. No. 1 (Union County II), 168 N.J. 1, 4, 773 A.2d 6 (2001) (discussing purpose of superintendent's advisability report). An advisability report is intended to give the constituent municipalities and the local and regional boards "financial, educational and other information ... to form an intelligent judgment as to the advisability of the proposed withdrawal ... and the effect thereof upon the educational and financial condition of the withdrawing district and the regional district." N.J.S.A. 18A:13-52. Even if the superintendent recommends against withdrawal, the withdrawing district remains free to petition the Commissioner of the Department of Education (Commissioner) pursuant to N.J.S.A. 18A:13-54.

Dr. Nuccetelli issued her Investigation and Report (Report) in October 2001. The Report, the contents of which are prescribed by regulation, N.J.A.C. 6:3-7.2, analyzed the potential impacts a North Haledon withdrawal would have on Manchester Regional and concluded that the "disadvantages [of withdrawal] would outweigh the advantages for the students remaining in [the Regional District] and for the constituent boards of education and municipalities." Undeterred, North Haledon formally petitioned the Commissioner on November 8, 2001, for permission to submit the issue of withdrawal to the voters. The Regional Board, Haledon, and Prospect Park each filed timely answers in opposition to North Haledon's petition later that month.

Pursuant to N.J.S.A. 18A:13-56, the Commissioner submitted North Haledon's petition and the answers to the Board of Review (Board). The Board consists of four members, the Commissioner, who acts as chairman, a member of the State Board of Education, the State Treasurer, and the Director of the Division of Local Government Services in the Department of Community Affairs, who are authorized by statute to decide whether the question of withdrawal should be put to the voters. N.J.S.A. 18A:13-56. Three public hearings were conducted by the Board on North Haledon's petition: at the first, members of the community were invited to submit comments for the record; at the second and third, the Board formally considered the withdrawal issue.

Among other things, and in addition to the public comments, the Board had before it the North Haledon petition, including a detailed feasibility study prepared for North Haledon, the Superintendent's Report and subsequent Addendum,² and the answers of the Regional Board, Haledon, and Prospect Park. Together, that data provided a comprehensive educational and financial overview of the Regional District and its constituent municipalities. In light of North Haledon's claims, and the decision of the Appellate Division in this matter, North Haledon II, supra, 363 N.J.Super. at 139-43, 831 A.2d 555, we focus here on the information related to the impact of withdrawal on racial and ethnic balance in Manchester Regional and the economic benefits North Haledon anticipates on withdrawal. The...