In the Matter of Highbridge Broadway, LLC, Appellant,v.Assessor of the City of Schenectady, Respondent, Schenectady City School District, Respondent.BriefN.Y.March 22, 2016 Appellate Division Docket No. 518851 Schenectady County Index No. 2008-1701 Court of Appeals State of New York HIGHBRIDGE BROADWAY, LLC, Petitioner-Appellant, -against- THE ASSESSOR OF THE CITY OF SCHENECTADY, NEW YORK, Respondent, SCHENECTADY CITY SCHOOL DISTRICT, Non-Party Respondent, BRIEF AMICUS CURIAE OF THE NEW YORK STATE SCHOOL BOARDS ASSOCIATION, INC. Case No. APL-2015-00158 JAY WORONA, ESQ. SHUBH NIGAM MCTAGUE, ESQ. Attorneys for Amicus Curiae New York State School Boards Association 24 Century Hill Drive, Suite 200 Latham, New York 12110-2125 Tel.: (518) 783-0200 TIMOTHY G. KREMER EXECUTIVE DIRECTOR December 22, 2015 1 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ..................................................................................... 2 INTEREST OF THE AMICUS CURIAE ................................................................... 5 STATEMENT OF THE ISSUE ................................................................................. 9 STATEMENT OF FACTS ...................................................................................... 10 INTRODUCTION ................................................................................................... 11 ARGUMENT ........................................................................................................... 15 THE COURT BELOW PROPERLY DETERMINED THAT A COURT MAY NOT ORDER A SCHOOL DISTRICT TO REIMBURSE A TAXPAYER ALLEGED EXCESS SCHOOL TAXES PAID FOR YEARS FOR WHICH THE TAXPAYER FAILED TO COMMENCE A TIMELY CHALLENGE TO THE REAL PROPERTY TAX ASSESSMENT WHICH SUPPORTED THE LEVY OF SUCH TAXES. CONCLUSION ........................................................................................................ 20 2 TABLE OF AUTHORITIES Cases Page Campaign for Fiscal Equity, Inc. v. State of New York, 86 N.Y.2d 307 (1995); 100 N.Y.2d 893 (2003); 8 N.Y.3d 14 (2006) ............... 17, 18 Matter of Sterling Estates, Inc. v. Bd. of Assessors of the County of Nassau, 66 N.Y.2d 122 (1985) ........................................................................................ 12, 15 Matter of Westchester Joint Water Works v. Assessor of City of Rye, 37 Misc.3d 238 (Sup. Ct., Westchester Co. 2012) .................................................. 18 Statutory and Regulatory Authorities 8 NYCRR § 170.9 .................................................................................................... 19 22 NYCRR § 202.59(d)(2) ...................................................................................... 15 20 USC §§ 1400 et seq. ............................................................................................ 16 20 USC §§ 6301 et seq. ............................................................................................ 16 L. 1996, Ch. 474 § 112 ............................................................................................ 19 N.Y. Const. Art. XI, § 1 ..................................................................................... 11, 16 N.Y. Educ. Law Art. 73 ........................................................................................... 16 N.Y. Educ. Law § 305(26) ....................................................................................... 19 N.Y. Educ. Law § 1608 ..................................................................................... 16, 19 N.Y. Educ. Law § 1608(3) ....................................................................................... 19 N.Y. Educ. Law § 1716 ..................................................................................... 16, 19 N.Y. Educ. Law § 1716(3) ....................................................................................... 19 N.Y. Educ. Law § 1804(4) ....................................................................................... 19 3 TABLE OF AUTHORITIES (cont’d) Statutory and Regulatory Authorities Page N.Y. Educ. Law § 1908 ........................................................................................... 16 N.Y. Educ. Law § 2022 ........................................................................................... 16 N.Y. Educ. Law § 2022(5) ....................................................................................... 19 N.Y. Educ. Law § 2023 ........................................................................................... 16 N.Y. Educ. Law § 2023(1) ....................................................................................... 19 N.Y. Educ. Law § 2023(4)(a) .................................................................................. 19 N.Y. Educ. Law § 2023-a ........................................................................................ 16 N.Y. Educ. Law § 2023-a(2) .................................................................................... 19 N.Y. Educ. Law § 2023-a(7) .................................................................................... 19 N.Y. Educ. Law § 2023-a(8) .................................................................................... 19 N.Y. Educ. Law § 2601-a .................................................................................. 16, 19 N.Y. Educ. Law § 2601-a(3) .................................................................................... 19 N.Y. Educ. Law § 2601-a(4) .................................................................................... 19 N.Y. Educ. Law § 2601-a(5) .................................................................................... 19 N.Y. Educ. Law § 3651(1-a) .................................................................................... 13 4 Administrative Decisions and Guidance Appeal of Giardina, 46 Ed. Dept. Rep. 524, Dec. No. 15,583 (2007) ................................................... 18 Opn. 98-16, Office of the State Comptroller (1998) ............................................ 18 5 INTEREST OF THE AMICUS CURIAE The New York State School Boards Association, Inc. (“NYSSBA”) is a not- for-profit membership organization incorporated under the laws of the State of New York. Its membership consists of approximately six hundred and sixty-two (662) or ninety-one percent (91%) of all public school districts and boards of cooperative educational services (BOCES) in New York State. Pursuant to Section 1618 of New York’s Education Law, NYSSBA has the responsibility of devising practical ways and means for obtaining greater economy and efficiency in the administration of the affairs and projects of New York’s public school districts, on behalf of school districts and BOCES across the State. Consistent with that charge, NYSSBA often appears as amicus curiae before both federal and state court proceedings involving constitutional and statutory issues affecting public schools, and indeed has done so previously before this court. Among those proceedings are: Santer v. Bd. of Educ. of East Meadow Union Free School Dist., 23 N.Y.3d 251 (2014); Kolbe v. Tibbetts, 22 N.Y.3d 344 (2013); Matter of the Arbitration between Shenendehowa Cent. School Dist. Bd. of Educ. v. Civil Service Employees Ass’n., Inc., 20 N.Y.3d 1026 (2013); Matter of North Syracuse Cent. School Dist. v. New York State Div. of Human Rights, 19 N.Y.3d 481 (2012); Regional Economic Community Action Program, Inc. v. Enlarged City School Dist. of Middletown, 18 N.Y.3d 474 (2012); Baker v. Poughkeepsie City 6 School Dist., 18 N.Y.3d 714 (2012); Meegan v. Brown, 16 N.Y.3d 395 (2011); Consedine v. Portville CSD, 12 N.Y.3d 286 (2009); Campaign for Fiscal Equity v. State of New York, 8 N.Y.3d 14 (2006); Cronk v. John B. King, Commn’r of Educ. of the State of N.Y. et al., 130 A.D.3d 1415 (3 rd Dept. 2015), Erie 2-Chautauqua- Cattaraugus Board of Cooperative Educational Services (BOCES) v. Parke R. Brown, Index No. 520220 slip opinion (3 rd Dep’t November 25, 2015); In re Bd. of Educ. of Valhalla Union Free School Dist. v. Valhalla Teachers Ass’n, 112 A.D.3d 620 (2 nd Dep’t 2013); Matter of Enlarged City School Dist. of Middletown v. City of Middletown, 95 A.D.3d 840 (2 nd Dep’t 2012); New York State United Teachers Ass’n. v. Bd. of Regents of Univ. of State of N.Y., Case No. 513191 (3 rd Dep’t 2011, appeal settled); Scro v. Jordan-Elbridge Cent. School Dist., 87 A.D.3d 1342 (4 th Dep’t 2011); Geneva City School Dist. v. Anonymous, a Tenured Teacher, 77 A.D.3d 1365 (4 th Dep’t 2010); Byram Hills Cent. School Dist. v. Carlson, 72 A.D.3d 815 (2 nd Dep’t 2010); East Meadow Union Free School Dist. v. New York State Div. of Human Rights, 65 A.D.3d 1342 (2 nd Dep’t 2009); Wilson v. Bd. of Educ. Harborfields Cent. School Dist., 65 A.D.3d 1158 (2 nd Dep’t 2009); Consedine v. Portville Cent. School Dist., 49 A.D.3d 1289 (4 th Dep’t 2008); Putnam Northern Westchester Board of Cooperative Educational Services, et al v. Mills and Galluzzo, 46 A.D.3d 1062 (3 rd Dep’t 2007); Mineola Union Free School Dist. v. Mineola Teachers Ass’n, 37 A.D.3d 605 (2 nd Dep’t 2007); Baker v. Bd. of 7 Educ. of Wappingers Cent. School Dist., 29 A.D.3d 574 (2 nd Dep’t 2006); In re Binghamton City School Dist. v. Peacock, 33 A.D.3d 1074 (3 rd Dep’t 2006); Forest Grove School Dist. v. T.A., 129 S.Ct. (2009); Bd. of Educ,. of the City School Dist. of the City of N.Y. v. Tom F., 128 S.Ct. 1 (2007); Arlington Cent. School Dist. v. Murphy, 126 S.Ct. 2455 (2006); C. L. v. Scarsdale Union Free School Dist., 744 F.3d 826 (2 nd Cir. 2014); The Bronx Household of Faith v. Bd. of Educ. of the City of N.Y., 750 F.3d 184 (2 nd Cir. 2014); Zeno v. Pine Plains Cent. School Dist., 702 F.3d 655 (2 nd Cir. 2012). Presently before this court are issues that ultimately will affect the continued ability of not only the non-party respondent Schenectady City School District (the School District), but also other school districts throughout the state, to reasonably anticipate annual revenues and expenditures and properly manage their finances, so as to ensure the delivery of educational programs and services necessary to fulfill the state constitutional mandate for the provision of a sound basic education to public school students. Accordingly, NYSSBA submits this Brief Amicus Curiae on behalf of the School District on the grounds that the issues before this court are of statewide importance to all school districts and BOCES throughout New York. In addition, the amicus curiae brief invites this court’s attention to law and arguments that 8 otherwise might not be brought to its attention by the parties, and thereby be of special assistance to the court. 9 STATEMENT OF THE ISSUE WHETHER THE COURT BELOW PROPERLY DETERMINED THAT A COURT MAY NOT ORDER A SCHOOL DISTRICT TO REIMBURSE A TAXPAYER ALLEGED EXCESS SCHOOL TAXES PAID FOR YEARS FOR WHICH THE TAXPAYER FAILED TO COMMENCE A TIMELY CHALLENGE TO THE REAL PROPERTY TAX ASSESSMENT WHICH SUPPORTED THE LEVY OF SUCH TAXES? The amicus curiae respectfully submits the answer is yes. 10 STATEMENT OF FACTS The amicus curiae will not recite a separate statement of facts, except as hereinafter specifically cited within the text of its brief, but will defer instead to the facts submitted by the School District, and as set forth in the Record before this court. 11 INTRODUCTION The underlying issue before this court relates to the scope of a court’s authority to provide relief in a tax certiorari proceeding conducted pursuant to Article 7 of the Real Property Tax Law. The specific question concerns whether a court may order a school district to reimburse a taxpayer alleged excess school taxes paid for years for which the taxpayer failed to commence a timely challenge to the real property tax assessment which supported the levy of such taxes. At stake is the continued ability of school districts, absent catastrophic circumstances, to reasonably anticipate annual revenues and expenditures and properly manage their finances. Such ability is not a mere prudent fiscal exercise. It is integral to the planning and delivery of educational services needed for public school students to obtain the sound basic education guaranteed to them by the State constitution (see N.Y. Const. Art. XI, § 1; Campaign for Fiscal Equity, Inc. v. State of New York, 86 N.Y.2d 307 (1995); 100 N.Y.2d 893 (2003); 8 N.Y.3d 14 (2006)). It goes without question that the principle of fair taxation constitutes one of the fundamental values that led to the foundation of this nation. Such a principle, however, derives from the equally compelling recognition that taxation is essential 12 to the sustainability of governments and their ability to provide services to their constituent communities. Thus, in acknowledging that “(r)eal property taxation provides the major source of municipal revenues” this court also has commented on the importance of the accuracy of individual assessments that support the levying of real property taxes (Matter of Sterling Estates, Inc. v. Bd. of Assessors of the County of Nassau, 66 N.Y.2d 122, 124-25 (1985)). According to this court, both taxpayers and taxing authorities share a “palpable interest in the amount and accuracy of individual assessments” and the prompt resolution of disputes over the same is key to the stabilization of tax rolls and establishment of tax rates (Id. at 125). Thus, for its part, the Legislature has established, in Article 7 of the Real Property Tax Law, a statutory system pursuant to which taxpayers can challenge the accuracy of their individual real property tax assessments, and obtain reimbursement of any excess taxes paid that relate to the challenged assessment. That system applies equally to the levy of school taxes by school districts that, like the non-party respondent Schenectady City School District, are authorized to tax their residents to support the provision of public education services. As a result, resolution of the question presently before this court certainly requires examination of the statutory conditions pursuant to which a school district can be required to issue a school tax refund. 13 It requires, as well, careful consideration of other relevant provisions of law that balance the prevention of unfair taxation reflected in the tax certiorari system against the need to mitigate the impact of adverse tax certiorari rulings. Such a need is clearly reflected in the Legislature’s authorization of tax certiorari reserve funds for school districts subject to statutorily prescribed constraints (see N.Y. Educ. Law § 3651(1-a)) that is more fully discussed in the School District’s brief. Critical in this latter context, is a considered understanding of the adverse ramifications for the operational stability of school districts that would result from a reversal of the lower court’s decision at issue herein. The amicus curiae supports the legal arguments advanced by the School District in its brief before this court, and will defer to those arguments rather than repeat them herein. Instead, the amicus curiae will focus its brief on policy considerations relevant to the resolution of the issues presently before this court, and the negative impact that a reversal of the decision of the court below would have on the ability of school districts to provide adequate educational services to their students. The importance of those policy considerations and the need to protect against the impairment of a school district’s ability to provide educational services to their students cannot be overstated, as that ability directly relates to the constitutional right of students to obtain a sound basic public education. 14 For the reasons set out in the School District’s brief, and those discussed below, the amicus curiae respectfully submits that this court should affirm the ruling of the court below. 15 ARGUMENT THE COURT BELOW PROPERLY DETERMINED THAT A COURT MAY NOT ORDER A SCHOOL DISTRICT TO REIMBURSE A TAXPAYER ALLEGED EXCESS SCHOOL TAXES PAID FOR YEARS FOR WHICH THE TAXPAYER FAILED TO COMMENCE A TIMELY CHALLENGE TO THE REAL PROPERTY TAX ASSESSMENT WHICH SUPPORTED THE LEVY OF SUCH TAXES. As previously noted above, resolution of the issues before this court involves consideration of the public policies involved both in the safeguarding against unfair taxation and in the protection of school districts against the harmful consequences of adverse rulings in tax certiorari proceedings. The procedures set out in Article 7 of the Real Property Tax Law provide the means by which the Legislature has sought to equitably balance both interests. Affirmance of the decision below would affect those seeking tax reimbursements only to the extent that such affirmance reinforces the importance of promptly resolving disputes over the accuracy of their individual assessments, previously stated by this court (see Matter of Sterling Estates, Inc. v. Bd. of Assessors of the County of Nassau, 66 N.Y.2d 122 at 125). In this regard, it is important to note that regulations applicable to tax assessment review proceedings already put taxpayers challenging their taxes on notice that “[a] separate note of issue shall be filed for each property for each tax year” (22 NYCRR § 202.59(d)(2)). Thus, affirmance of the lower court’s decision would merely give 16 full force and effect to the public policy embedded by the Legislature in Article 7 of the Real Property Tax Law that balances the rights of both taxpayers and those that might become obligated to issue a refund of previously collected excess taxes. A reversal of the lower court’s decision, on the other hand, would disrupt that balance to the detriment of school districts. At the most basic level, school districts function to fulfill New York’s constitutional obligation to “provide for the maintenance and support of a system of free common schools, wherein all the children of this state may be educated” (N.Y. Const. Art. XI, § 1). Funding for that endeavor derives primarily from three sources – federal moneys made available through programs such as the Individuals with Disabilities Education Act (20 USC §§ 1400 et seq.) and the Elementary and Secondary Education Act of 2001 (a.k.a. the No Child Left Behind Act) (20 USC §§ 6301 et seq); State aid formulas (N.Y. Educ. Law Art. 73); and local revenues raised through local property taxes that are levied by boards of education (N.Y. Educ. Law §§ 1608, 1716, 1908, 2022, 2023, 2023-a, 2601-a). Affirmance of the lower court’s decision is essential to the ability of school districts to reasonably anticipate their revenues and expenditures for a given school year, and to concomitantly determine the amount of taxes they must levy to 17 maintain educational programs and services necessary to accomplish their core mission. By their nature, miscalculations of revenues inevitably result in financial deficits. In a school district, financial deficits are likely to result in the elimination of staff positions including teachers, teaching assistants and aides, and administrators as a means of closing the revenue gap. Reductions in staff, in turn, could result in the elimination of programs such as advanced placement, pre- kindergarten and kindergarten offerings and an increase in class sizes, all of which have been deemed “inputs” critical to the provision of a sound basic public education required by the state constitution (see Campaign for Fiscal Equity, Inc. v. State of New York, 86 N.Y.2d 307 (1995); 100 N.Y.2d 893 (2003); 8 N.Y.3d 14 (2006)). Similarly, cuts in expenditures forced by an unanticipated decrease in revenues could also place at risk the health and safety of students and staff as a result of possible eliminations in security and custodial staff positions, as well as potential repair delays. Subjecting school districts to unanticipated and unforeseeable tax certiorari liability based on assessments not previously contested in a timely manner certainly would create revenue deficits for school districts, as funds otherwise dedicated for educational and other related purposes are diverted to pay for such liability. Such an outcome would unquestionably put in jeopardy the ability of 18 school districts to maintain programs and services necessary to provide a sound basic public education to their students required by constitutional mandate (see Campaign for Fiscal Equity, Inc. v. State of New York, 86 N.Y.2d 307 (1995); 100 N.Y.2d 893 (2003); 8 N.Y.3d 14 (2006)). Accordingly, this court should affirm the decision of the court below. In this context, it is important to not assume that school districts can easily recover from the effect of an unanticipated and unforeseen tax certiorari liability through future increases in their tax levies. In the first instance, school districts have the authority to establish and deposit funds into a tax certiorari reserve fund. However, as more fully discussed in the School District’s brief, there are limitations on the use of such monies. For example, school districts may make deposits into such a fund in relation to pending tax certiorari proceedings, but not retroactively (see Matter of Westchester Joint Water Works v. Assessor of City of Rye, 37 Misc.3d 238 (Sup. Ct., Westchester Co., 2012), citing Appeal of Giardina, 46 Ed. Dept. Rep. 524, Dec. No. 15,583 (2007), Opn. 98-16, Office of the State Comptroller (1998)). Secondly, although there is no limit on the level of expenditures provided for by a school budget, there is a tax levy limit (also referred to as the tax levy cap) on the amount of taxes that school districts may levy in any given year. Pursuant to that limitation, property tax levies from one year to the next can grow only by the 19 lesser of 2% or the sum of 1 plus the inflation factor set out in law (N.Y. Educ. Law § 2023-a(2)). Should a school district’s voters refuse to approve a budget, the board of education must then adopt a contingency budget (N.Y. Educ. Law §§ 2022(5), 2023(1), 2023-a(7),(8), 2601-a(4),(5)) that may not result in a tax levy greater than the tax that was levied for the prior school year (i.e. a zero tax levy increase) (N.Y. Educ. Law §§ 2023(4)(a), 2023-a(8)). It is also relevant to note that before proceeding to levy taxes, school districts (other than large city school districts) must present an annual school budget to district voters for their approval (N.Y. Educ. Law §§ 1608, 1716, 1804(4), 2601-a). That budget must include a complete, accurate, and detailed written statement of estimated revenues, including payments in lieu of taxes, and property tax refunds from certiorari proceedings, proposed expenditures, transfers to other funds, and the amount of fund balance to be used in support of budgetary appropriations, as well as a comparison with the prior year’s data (N.Y. Educ. Law §§ 305(26), 1608(3), 1716(3), 2601-a(3); 8 NYCRR § 170.9) (emphasis added)). The above budget statement requirements were enacted into law to make a school budget more transparent and understandable to school district voters trying to decide whether to approve or reject the budget (L. 1996, Ch. 474 § 112). A 20 reversal of the lower court’s decision would render the public policy embedded within those requirements meaningless, to the extent that school districts would never be able to accurately provide notice in their school budget statement of property tax refunds from certiorari proceedings, or a true comparison with the prior year’s data. For all the foregoing reasons, and those more fully discussed in the School District’s brief, this court should affirm the decision of the court below and rule in favor of the School District. CONCLUSION For all the foregoing reasons, this court should affirm the decision of the court below, and grant the School District such other and further relief as the court deems just and proper. Dated: December 22, 2015 Respectfully Submitted by: Latham, New York ______________________________ JAY WORONA, ESQ. SHUBH NIGAM MCTAGUE, ESQ. Attorneys for Amicus Curiae New York State School Boards Ass’n., Inc. 24 Century Hill Drive, Suite 200 Latham, New York 12110-2125 Tel. No. (518) 783-0200