ORDERS:
ORDER
________________________
REVERSED
IN PART, AFFIRMED IN PART
________________________
STATEMENT OF THE CASE
These
matters are before the Administrative Law Court (“ALC” or “Court”) pursuant to
an appeal filed by Thornwell Charter School Planning Committee (“Thornwell
Planning Committee”) on November 27, 2006, and a cross-appeal filed by the
Lauren County School District 56 Board of Trustees (“School Board”) on November
29, 2006, both seeking review of the Final Order issued by the South Carolina
State Board of Education (“State Board”) on October 30, 2006 which ultimately upheld
the School Board’s denial of charter school status to the Thornwell Planning
Committee; each party appealed one or more findings made by the State Board. On
January 23, 2007, the South Carolina Attorney General (“Attorney General”)
filed a motion to file an amicus brief in the case docketed as No.
06-ALJ-30-0897-AP, which was granted by the Court. After extensive briefing of
the issues by both parties, the Court heard oral arguments on March 29, 2007.
FACTUAL AND PROCEDURAL BACKGROUND
On
the evening of November 8, 2005, parents of day students who attended the
private Thornwell Home and School for Children (“Thornwell School”) met in an informational meeting with its principals and
its president, Robert W. “Skip” Stansell, to discuss reorganizing Thornwell School into a public charter school.
Over 150 potential students were represented at the meeting. There was
discussion concerning the closure of Thornwell School because of its financial
problems, as well as conversation about reorganizing Thornwell School into a public charter school.
Subsequently, a corporation entitled the Thornwell Charter School, Inc. was
established by Norman Dover, principal of the Hartness-Thornwell Elementary School, John Farmer, principal of the Thornwell High School and Dr. Trelawney
Marchant, a vice president of Piedmont Technical College. The Thornwell
Planning Committee was created within this corporation. It is comprised
of 24 members; 19 members were employees or parents of students, or both, at
the Thornwell School.
On May 1, 2006, the Thornwell Planning Committee submitted
its application to the State Board for a public charter school in Clinton, South Carolina to be called the Thornwell Charter School. Mr. Dover was listed as the contact person. After two meetings between the
Thornwell Planning Committee and the State School Advisory Committee (“Advisory
Committee”), the Advisory Committee certified the application as having met the
requirements of the South Carolina Charter Schools Act of 1996 (“Charter
Schools Act”); the Thornwell Planning Committee received the certification on
July 13, 2006.
The application proposed licensure for grades K-5 through 12
for the Thornwell Charter School; further, the school would be licensed for
five years beginning with the 2007-2008 school year. The proposed enrollment
was 520 students, with 40 students per grade. The application further provided
that: the Thornwell Charter School would serve two classes of 20 students per
grade; its academic program would have a comprehensive course of study
following South Carolina curriculum frameworks, state-required testing, and
normal means of classroom assessment; its high school would meet all
requirements to award a South Carolina high school diploma; all its teachers would
be “highly qualified” under state and federal standards; all its employees
would be considered at-will, unless modified by written contract approved by
the board of the Thornwell Charter School; and that the South Carolina Teacher
Employment and Dismissal Act would not apply to the Thornwell Charter School.
The Thornwell Planning Committee also proposed in the
application that it would use for its elementary and high schools the
facilities and equipment owned by the Thornwell School. Grades K-5 of the Thornwell School utilized a facility at 102 McDonald Drive, Clinton, South Carolina that
contained 13,520 square feet and consisted of nine classrooms, a library,
restrooms, and office space. Elementary space for five additional classrooms
and restrooms was available, if needed, in the upstairs portion of the building
located at 302 South Broad Street, Clinton, South Carolina. The facilities
proposed for grades 6 - 12 consisted of a one-story, 30,647 square foot
building located at 203 West Calhoun Street, Clinton, South Carolina. It
contained 17 classrooms, a library, restrooms, an office space, a 1,077 square
feet gymnasium, and a 6,018 square foot athletic center with dressing and
weight facilities. The facilities, classrooms, furniture, textbooks, library
books, office furniture, equipment, computers, and all other materials
currently housed in the proposed facilities would be leased by the Thornwell School to the Thornwell Charter School.
The proposed “draft” lease
(“Lease”) between the Thornwell School and the Thornwell Charter School for the facilities and equipment was attached to the application. It includes the
buildings, athletic facilities, and all school-related furniture and
equipment. The Lease does not include an amount of rent; however, it provides
that rent will be reviewed annually in a fair and commercially reasonable
manner, taking into consideration the financial resources and financial
stability of the Thornwell Charter School. Thornwell School would be
responsible for and provide all maintenance and repairs, janitorial and
security service, and utilities. The initial budget for the Thornwell Charter School estimated total revenue of $3,127,144 and total expenditures of
$3,018,768. It estimated zero expenses for utilities, repairs, maintenance,
and rentals; this corresponds to the terms of the proposed lease which
indicates that no rent would be payable to the Thornwell School.
On August 10, 2006, the School
Board conducted a public hearing on the application. During the hearing the
Thornwell Planning Committee argued in favor of approval of the application,
stating that is was in compliance with the requirements of Charter Schools Act;
the administration of the school district (“District Administration”) argued
against its approval. The District Administration presented three expert
witnesses; the Thornwell Planning Committee did not present any. At the
conclusion of the public hearing, the School Board voted unanimously to deny
the Thornwell Planning Committee’s application on four specific grounds as set
forth hereinafter in its order dated August 18, 2006 (“School Board’s Order”):
(1) the proposed charter school
constituted an improper conversion of a private school to a charter school
contrary to the spirit and intent of the Charter Schools Act as defined in S.C.
Code Ann. § 59-40-210;
(2) its grant would require the School
District to transfer between $2.5 and $2.7 million dollars from its general
fund to the Thornwell Charter School and cut its spending by over 5%, thus
violating the meaning of S.C. Code Ann. § 59-40-70© and Regulation 43-601 since such actions would adversely affect the remaining students in the
district’s public schools through class size increases, increases in
teacher-pupil ratios, reductions in extracurricular and elective programs such
as art, music, athletics, other extracurricular activities, programs for
advanced students, technology, and vocational programs;
(3) the financial plan/budget for the
charter school overestimated revenue and underestimated expenses and did not
appropriately assess the revenue needed from those students who lived outside
the school district (approximately 20%), thus violating the provision in S.C. Code Ann. § 59-40-60(F)(6) which requires the financial plan to be
economically-sound; and
(4) since the facilities at the
proposed charter school did not have fire sprinkler protection and alarm
systems, they did not comply with the health and safety requirements applicable
to all public schools operated in the school district as required by S.C. Code
Ann. § 59-40-50(B)(1).
The
Thornwell Planning Committee appealed the School Board’s Order to the State
Board. After receiving written materials from both parties, the State Board
conducted an appellate hearing in Columbia, South Carolina during the morning
and afternoon hours of October 11, 2006. The morning session consisted of a
“Public Comment Period” which ended at 10:00 a.m. when the members of the State
Board took a break and went into executive session. About 3:25 p.m., they came out of executive session, reconvened the hearing and
allowed legal counsel for both parties to present oral arguments. After the
presentation of oral arguments by legal counsel and questioning of them, the
members of the State Board again went into executive session. When they returned
to the hearing room, the chairman announced that the members would vote on each
of the issues in the appeal separately. Thereafter they voted as follows:
(1) 7 to 6 to reverse
the School Board's determination that the proposed charter school facilities
failed to meet the appropriate health and safety standards;
(2) 7 to 5 to reverse
the School Board's determination that the creation of the charter school would
have an adverse impact on the students in the School District;
(3) 7 to 5 to reverse the
School Board's determination that the proposed charter school's
budget was
not economically sound; and
(4) 8 to 4 to affirm
the School Board's determination that the creation of the proposed charter
school constituted a conversion of a private school.
Based on the outcome of the voting on the four separate grounds, the
members of the State Board thereafter voted 9 to 3 to uphold the School Board’s
denial of the Thornwell Planning Committee's application for a charter.
JURISDICTION AND STANDARD OF REVIEW
The local school district’s board of trustees from which an applicant is
seeking sponsorship as a public charter school shall rule on the application
for the charter school in a public hearing, upon reasonable public notice,
within thirty days after receiving the application. S.C. Code Ann. §
59-40-70(B). The board only shall deny an application if the application does
not meet the requirements specified in Sections 59-40-50 or 59-40-60, fails to
meet the spirit and intent of Title 59, Chapter 40, or adversely affects, as
defined in regulation, the other students in the district in which the charter
school is to be located. S.C. Code Ann. § 59-40-70©. It shall provide,
within 10 days, a written explanation of the reasons for denial, citing
specific standards related to provisions of Section 59-40-50 or 59-40-60 that
the application violates. This written explanation must immediately be sent to
the charter committee and filed with the State Board and the Advisory
Committee. Id. An appeal from a local school board’s decision regarding
a charter school is to the State Board that may, within forty-five days, by
order “affirm or reverse the application for action” by the applicant Charter.
S.C. Code Ann. § 59-40-70 (G); see also Regulation 43-600.
Regulation 43-600 provides that the standard of review to be applied by the
State Board in its appellate review mirrors the APA’s limited standard of
review. Beaufort County Board of Education v. Lighthouse Charter School
Committee, et al, 516 S.E. 2d 655, 657 (1999).
A decision by the State Board may be appealed to the Administrative Law
Court. S.C. Code Ann. 59-40-90 (Supp. 2005). The Administrative Law Court
has authority to review the order of the State Board as an appeal under the
South Carolina Administrative Procedures Act (“APA”), S.C. Code Ann. § 1-23-380
(A)(6) (as amended 2005), which provides for reversal only if its findings are:
(a) in violation of constitutional or
statutory provisions;
(b) in excess of the statutory authority of the agency;
© made upon unlawful procedure;
(d) clearly erroneous in view of the
reliable, probative and substantial evidence on the
whole record; or
(3) arbitrary or capricious or characterized
by abuse of discretion or clearly unwarranted
exercise or discretion.
In applying its scope of review, the reviewing court may not
substitute its judgment for that of the agency as to the weight of the evidence
on questions of fact, but may reverse where the decision is affected by an
error of law. Liberty Mutual Ins. Co. v. South Carolina Second Injury Fund,
363 S.C. 612, 611 S.E.2d 297 (Ct. App. 2005). This Court reviews the findings
of the State Board to determine if its findings of fact or conclusions of law
are based on substantial evidence contained in the whole record. The South
Carolina Supreme Court in Porter v. South Carolina Public Service Commission,
333 S.C. 12, 20-21, 507 S.E.2d 328, 332 (1998) defined the substantial evidence
standard of review as:
Substantial
evidence is relevant evidence that, considering the record as a whole, a
reasonable mind would accept to support an administrative agency’s action.
Substantial evidence exists when, if the case were presented to a jury, the
court would refuse to direct a verdict because the evidence raises questions of
fact for the jury. It is more than a mere scintilla of evidence, but is
something less than the weight of the evidence. Furthermore, the possibility
of drawing two inconsistent conclusions from the evidence does not prevent a
court from concluding that substantial evidence supports an administrative
agency’s finding.
The Supreme Court found that, “[t]his deferential standard of review does
not mean, however, that the Court will accept an administrative agency’s
decision at face value without requiring the agency to explain its reasoning.” Id. At 332. Further, it stated that the agency:
must
fully document its findings of fact and base its decision on reliable,
probative, and substantial evidence on the whole record…An administrative body
must make findings, which are sufficiently detailed to enable this Court to
determine whether the findings are supported by the evidence and whether the
law has been applied properly to those findings. Where material facts are in
dispute, the administrative body must make specific, express findings of fact. Id.
Underlying each of the substantive issues raised in this appeal is the
fundamental question of whether the State Board applied the standard of review
appropriately in reaching its decision on each of the sustaining grounds. The
South Carolina Supreme Court discussed this very issue in the context of the
Act in Beaufort County Bd. Of Educ. V. Lighthouse Charter Sch. Comm.,
335 S.C. 230, 516 S.E.2d 655 (1999), and specifically discussed the application of the substantial evidence standard to both the State Board's review of the local board's decision and the subsequent application of the substantial
evidence standard on further appeal to the Circuit Court. In Lighthouse, with regard to each of the Circuit Court's specific holdings, the Court
applied the substantial evidence standard with respect to whether substantial
evidence supported the local board's decision and not with respect to
whether, on appeal from the State Board, the PÐLfort County Bd. Of Educ. V.
Lighthouse Charter Sch. Comm., 335 S.C. 230, 516 S.E.2d 655 (1999)" \s
"335 S.C. 230" \c 3 State Board's decision was supported by
substantial evidence. For example, the Court held:
Again, under Reg. 43-600, the State Board has a limited standard of review on appeal from a local board’s
decision regarding a charter school application. We find the Beaufort Board’s
decision rejecting Lighthouse’s reliance on speculative revenue from proposed
fund-raising is not arbitrary and is within the Beaufort Board's discretion.
Accordingly, the Beaufort Board’s finding the plan is not economically sound
should not have been reversed under the standard of review set forth in Reg.
43-600. The circuit court properly reversed the State Board’s ruling on this
issue.
* * *
In conclusion, we find the Beaufort
Board’s decision to deny Lighthouse’s application is not clearly erroneous or
arbitrary under the applicable standard of review. Accordingly, the circuit
court properly reversed the order of the State Board on these grounds.
Lighthouse,
335 S.C. at 239-40, 516 S.E.2d at 659, 660. In so holding, the Court affirmed
the Circuit Court's conclusion that the “State Board should not have reversed
the Beaufort Board’s findings under its limited standard of review because
those findings were supported by evidence in the record.” Id. at 234,
516 S.E.2d at 657.
Thus, the question on appeal from a local board’s denial of a charter
application is whether there is substantial evidence on the record before the
local board to support its decision. This is the standard to be applied on
appeal to the State Board under Reg. 43-600, to this Court under the APA, or to
the appellate courts under S.C. Code Ann. § 1-23-610.
In the present matter, the Act has vested in local boards the powers,
functions, and discretion to approve or deny charter applications within the
parameters of the law. In order to honor this authority vested in local school
boards and allow them to exercise this authority effectively, subsequent
reviewing bodies, such as the State Board and this Court, cannot substitute
their judgment for that of local school boards. The substantial evidence
standard is designed to preserve the reasonable judgment exercised by a local
board and, therefore, requires that the decision of the local board in this
case be set aside only if its findings are arbitrary, clearly erroneous,
contrary to law, or such that, considering the record as a whole, reasonable
minds could not have reached the decision that the local board reached or must
have reached in order to deny the application.
In carrying out its review of the School Board’s denial of the charter
application in this case, the State Board failed to properly apply the
substantial evidence standard to each of the additional sustaining grounds.
The School Board’s decision was reasonable considering the record as a whole
and certainly not arbitrary, clearly erroneous, or based on a misapplication of
the law. Consequently, the Court finds that the State Board erred in not
upholding the three additional sustaining grounds as reasons to deny as
discussed hereinafter.
DISCUSSION
The
School Board determined that the charter school would adversely affect other
students and its Order contains detailed information regarding the direct and
negative impact on students in the School District. The State Board reversed
this finding in its order. The Thornwell
Planning Committee presented several arguments in an effort to convince this
Court that the School Board improperly determined that the sponsorship of Thornwell Charter School would adversely affect other students in the District in violation
of State law. However, its arguments are without merit.
Initially, the Thornwell
Planning Committee argues that the School Board failed to demonstrate that the
Thornwell Charter School would have a direct negative impact on other students
in the school district and that it only described in broad terms the financial
adjustments the School District might have to make to compensate for the
transfer of funds to the Thornwell Charter School. However, this argument
fails. In its order, the School Board relied on financial information provided
by a reliable expert in public school finance, Glenn A. Steigman, Jr., as well
as district administrators with many years experience in public education; they
provided detailed information and testified to a variety of ways in which the Thornwell Charter School would directly and negatively impact students. This direct,
negative impact included, for example, increases in class sizes and
teacher-pupil ratios in the district’s public schools and reductions in
extracurricular activities and elective programs that would result from a required
transfer of $2.5 to $2.7 million dollars from the district’s general fund to
the charter school and a required cut in the district’s spending of over 5%.
Second, the Thornwell
Planning Committee asserts the School Board failed to identify any options it
reviewed when considering ways to reduce the adverse financial impact the Thornwell Charter School would have on the School District and its students. However, this
argument is misplaced as the School Board did consider, as reflected in its
Order, other options such as increased revenue from a speculative ten mill
countywide tax increase, for example. The Thornwell Planning Committee also
asserts the School Board failed to identify or consider any cost saving
benefits the School District and its students would gain as a result of the
approval of the application. But, a review of the Record and the School Board’s
Order indicates that it did identify and consider cost saving benefits such as the
elimination of some teaching positions resulting from the transfer of students
from the district to the charter school and the receipt of additional revenue
from Laurens School District 55.
Third, the Thornwell Planning
Committee asserts that the School Board’s determination that Thornwell Charter School would adversely affect other students is identical to the position
taken by the Lee County School District Board of Trustees, which decision was
reversed by the State Board and recently upheld by the South Carolina Supreme
Court. Lee County Sch. Dist. Bd. Of Trustees v. MLD Charter Sch. Academy
Planning Comm., 371 S.C. 461, 641 S.E.2d 24 (2007). However, a review of the Lee County case shows nothing identical about the Lee County charter school and Thornwell Charter School matters.
For example, in Lee County, the school board did not: (1) consider
any information from an expert in public school finance; (2) review or consider
specific information regarding how students would be directly and negatively
impacted; (3) consider any options to reduce the negative impact; and (4) make
any findings of fact in its order regarding the impact on students.
Additionally, the proposed charter school in Lee County was limited to five grades, as opposed to
thirteen grades at Thornwell Charter School, and the economic impact would be
approximately one-half the impact of Thornwell Charter School. Unlike Lee County, in the present matter, the School
Board reviewed and considered this very type of information and relied on it in
reaching its decision that the Thornwell Charter School would directly and
negatively impact students. The School Board also included detailed supporting
information in its order.
The Thornwell Planning
Committee asserts incorrectly that the School Board only considered the adverse
impact of the Thornwell Charter School on taxpayers, rather than students.
Regulation 43-601(IV)(B)(1) requires the School Board to “show
options it has considered in an effort to reduce the adverse financial impact
of the charter school” and subsection (2) thereof requires that the School Board
consider “the net fiscal impact of the charter school, including the fiscal
benefits that the charter school may bring the district.” Thus, the School
Board was required to consider potential additional revenue from the
equalization formula with Laurens County School District 55, property tax
increases, and additional state revenue to determine the “net fiscal impact.”
The School Board then determined the affect of the “net fiscal impact” on
students, which included increasing class size for non-below basic students and
reducing extracurricular activities and elective programs, programs for
advanced students, technology and vocational programs. This is precisely the
analysis required by Regulation 43-601(IV) that the School Board complied with
explicitly.
This Court finds that after a
review of the Record, there was substantial evidence to justify the School Board's
determination that Thornwell Charter School would adversely impact the students
in the district and that the State Board’s determination to the contrary should
be reversed.
Economically sound budget-
S.C. Code Ann. §
59-40-60(F)(6) and Regulation 43-601(II)(F) require that an application for a public charter school must include a plan that is economically sound for the term
of the charter. See also Beaufort County Bd. Of Educ. V.
Lighthouse Charter Sch. Comm., 335 S.C. 230, 516 S.E.2d 655 (1999).
The School Board retained the services of Glenn A. Steigman, Jr. to
review the proposed budget plan for the Thornwell Charter School and to offer
testimony at the public hearing concerning the application. Based on Mr. Steigman’s analysis and his
testimony as an expert witness at the hearing, in a best-case scenario the
budget would provide an annual shortfall for the Thornwell Charter School of $404,561.
The Thornwell Planning Committee argues that the School Board improperly
relied on Mr. Steigman’s testimony in making its findings that the proposed
budget plan was not economically sound. The Court notes, however, that the Thornwell
Planning Committee did not present any evidence in writing before or during the
School Board hearing refuting the analysis and contentions of Mr. Steigman. Rather,
the testimony of its members and witnesses emphasized the benefits the charter
school could bring to the school district. Further, during the hearing the
Planning Committee’s witnesses asserted that it did not matter if the budget plan
was economically sound because it was merely a planning document - not an
operating budget.
The Thornwell Planning Committee now asserts that its proposed budget was
sound and in compliance with the Act. It asserts that its committee was
comprised of a former Laurens County School District 56 superintendent, a
former Laurens County School District 56 Board of Trustees’ chairman,
individuals familiar with the existing school facilities, and numerous
educational professions. It argues that these individuals have direct
experience and knowledge of operating a public school in Laurens County. However, none of these individuals testified during the hearing to rebut the testimony
of Mr. Steigman or to rebut the findings made in the School Board’s Order. In
fact, the Thornwell Planning Committee presented little testimony at the
hearing on the veracity of the proposed budget plan.
It was proper for the School District to
procure the services of an outside expert in public school finance to analyze
the Thornwell Planning Committee’'s economic plan since its members are lay
individuals with limited expertise in school finance. Mr. Steigman is
the Assistant Superintendent for Business Services for Spartanburg County
School District Seven. He has over
29 years experience in public school financing issues in South Carolina and is
a recognized expert in school finance. The School Board was entitled to rely on his detailed and
reasoned analysis of the Planning Committee's economic plan. See Poston v. Southeastern
Constr. Co., 208 S.C. 35, 36 S.E.2d 858 (1946) (“The opinion of an expert witness is
intended to aid the Commission in coming to a correct conclusion, and the
weight and credit to be given such testimony was a matter, of course, to be
determined by the Commission.”). Mr. Steigman is not affiliated with either
the District or any aspect of the Thornwell School or the Thornwell Charter School and has no relationships with or to the local community that would impact his
ability to render an impartial analysis of the economic plan.
The Court finds, based upon the Record
and the showing by Mr. Steigman of a severe imbalance in the Thornwell Planning
Committee’s proposed budget, that there is substantial evidence to support the School Board's
findings and determination that the Thornwell Planning Committee’s application
did not contain an economically-sound budget and plan as required by the Act. The
State Board’s determination to the contrary amounts to no more than holding
that a mere plan or pro forma budget is sufficient; such a determination is
squarely contrary to the holding in Lighthouse. Accordingly, the State
Board’s determination on this issue must be reversed.
Adherence to health and safety requirements-
Substantial
evidence supports the School Board’s determination that the proposed school
facilities for the Thornwell Charter School do not meet the requirement of S.C.
Code Ann. § 59-40-50(B)(1). This subsection requires charter schools to
adhere to the same health and safety requirements as applied to public schools
that operate in the same school district.
As found by the School Board, the proposed charter school’s facilities do
not, and will not, meet the same safety requirements as applied to public
schools operating in the district since they do not have a fire sprinkler
system or a code-compliant fire alarm system. The Thornwell Planning Committee
improperly maintains to the contrary that the facilities of the proposed
charter school are not, and would not, be subject to the same fire and life
safety requirements as are applied to other schools in the district. This
position is contrary to the plain language of the Act, the express holding of
the Supreme Court in Lighthouse, and good sense and prudence with
respect to the safety of children attending a public school.
The Thornwell Planning Committee argues that the issuance of a letter of
compliance from the South Carolina Department of Education's (“SDE”) Office of
School Facilities (“OSF”), along with a positive inspection from the City of
Clinton’s Office of Inspections and Planning, is sufficient to show that a
proposed facility meets the same health and safety requirements that are
applied to public schools operating in the same school district. However, S.C. Code Ann. § 59-40-50(A) and (B)
mandates that charter schools are not exempt from and must adhere to the same health, safety, civil rights, and disability rights
requirements as are applied to public schools operating in the same school
district or, in the case of the South Carolina Public Charter School district,
the local school district in which the charter school is located.
Additionally, regarding inspections and permits to be granted by the SDE and
its OSF, state law mandates that “[a] provision of fire and life safety
standards or specifications must not be waived.” S.C. Code Ann. §
59-23-230(B) (emphasis added). Importantly, nowhere
does the Act correlate a certificate of occupancy with health and safety
requirements.
The State Board’s Order is erroneously founded on both the position that
compliance with Regulation 43-601(K), “Facilities and Equipment” (requiring a certificate of occupancy from OSF), is also compliance with Section
59-40-50(B)(1), which it is not, and the position of the SDE regarding the
certificate of occupancy set forth in “South Carolina Charter School Facilities
Approval Process, Effective September 15, 2005” (“SDE Approval Process”). The SDE Approval Process is based on a misapprehension of the authority granted
to the SDE by S.C. Code Ann. § 6-9-110(A). This section provides:
A county, municipal, or other local
ordinance or regulation which requires the purchase or acquisition of a permit,
license, or other device utilized to enforce any building standard does not
apply to a:…(2) school district facility, permanent improvement project,
construction project, renovation project, or property which is reviewed and
approved by the State Department of Education; except that the State Department
of Education or a local school district may direct that the local ordinance
or regulation apply to a particular facility, project, or property. (Emphasis
added).
Section
6-9-110(A)(2) does not give the SDE the authority to declare that the fire and
life safety standards for charter schools are whatever standards apply in the
county or municipality where the charter school is located. Rather, “the local
ordinance or regulation” in the exception of subsection (A)(2) refers to the “local ordinance or regulation which requires the purchase or acquisition of a
permit, license, or other device” in the main part of section (A). The phrase “local ordinance or regulation” in the exception does not stand alone,
but is used with the same meaning as the phrase is used previously in the same
sentence. The SDE Approval Process takes the exception in subsection (2) out
of context.
In addition, Section 59-40-50(B) requires that the charter school must “adhere
to the same health, safety…requirements as are applied to public schools in
the same school district.” Therefore, if the SDE’s interpretation of
Section 6-9-110 were correct, then in school districts that cover multiple
counties or municipalities, different charter schools within the same school
district would have different fire and life safety standards. Furthermore,
each school district also would have the authority to pick and choose which
fire and life safety standards apply to its schools depending on the county or
municipality in which the school is located. A patchwork of fire and life
safety standards across the State violates the express terms of Section
59-40-50(B) that all schools within a district, including charter schools, will
have the same health and safety requirements. Simply put, Section 6-9-110(A) does not give the SDE or the local school district the authority to choose
either local fire and life safety standards or statewide fire and life safety
standards.
The Act is conjoined with the statewide standards imposed on all public
schools by S.C. Code Ann. § 59-23-210, which mandates that:
[a]ll construction, improvement and
renovation of public school buildings and property . . . Shall comply with the
latest applicable standards and specifications set forth in the South Carolina
School Facilities Planning and Construction Guide as published by the South
Carolina Department of Education.
It is important to recognize that the SDE has the authority to waive
certain square footage and other standards, as provided in Section 59-23-230(A). However, it is clear that this waiver authority does not apply to fire and
life safety: “[A] provision of fire and life safety standards or specifications
must not be waived.” S.C. Code Ann. § 59-23-230(B). This Court appreciates the extraordinarily difficult task presented to
the OSF of the SDE to ensure safe school buildings for all children who attend
public schools in our State. While the SDE has authority to waive certain
codes and standards in certain situations and to delegate the authority to
inspect buildings, the SDE does not have the authority to apply different fire
and life safety requirements to charter schools than it applies to the schools
of the school district in which the charter school is located; such authority
would be contrary to Section 59-40-50(B)(1), which mandates the same health and safety standards apply.
Accordingly, the School Board's finding of noncompliance with Section
59-40-50(B)(1) is not clearly erroneous or arbitrary in light of the
substantial evidence in the Record. The State Board did not properly apply the
substantial evidence standard; instead, it substituted its own judgment for the
judgment of the School Board by not affirming the School Board’s finding that
the proposed charter school facilities did not comply with the required health
and safety standards.
For these reasons, the State Board’s Order on this issue must be reversed
and the findings of the School Board that the facilities of the proposed
charter school are not in compliance with Section 59-40-50(B)(1) must be affirmed.
Closure of a
private school for one year before converting to a public charter school-
Substantial evidence supports the order of the State Board and the School
Board that the creation of and grant of a charter to the Thornwell Charter
School within the time frame suggested by the Advisory Committee was in
violation of S.C. Code Ann. § 59-40-210, which states:
A school established as a private
school, on the effective date of this section, which desires to convert to a
charter school shall dissolve and must not be allowed to open as a charter
school for a period of twelve months.
Here, the private Thornwell School desired to change or convert from a
private school to a public charter school. At the time of the organizational
meeting for the proposed charter school, Messieurs Stansell, Dover, and Farmer,
who are all administrators, employees and agents of Thornwell School, were
quoted in a Clinton Chronicle newspaper article dated November
16, 2005, as saying that becoming a public charter school is the only viable
option in keeping a school on Thornwell’s 130-year-old campus and that “[r]ight
now, the major option we have that is feasible is the charter school….”
Additionally, as reported in another November 2005 article in the Clinton
Chronicle, “[t]he first option presented to the Thornwell Board was the
possibility of Thornwell becoming a charter school after it closes ….The
proposed charter school would not be operated by Thornwell, but the institution
would have an active role in the school and the residents of the Home could
attend the school.”
Similarly, the desires of the private Thornwell School to convert to a
charter school are evidenced by the fact that the charter school project was
initiated as part of “a major restructuring” of the institution’s programs,
including the option of closing schools. In addition to
contemporaneous statements of Thornwell School administrators and board members,
the statements of various individuals from December 2005 through January 2006
that were submitted on behalf of the application also make plain their
understanding of Thornwell School’s desire to convert to a charter school. It is clear that Thornwell School had the desire to reorganize, restructure, or convert to a public charter school
primarily in an effort to address its inability to economically sustain
itself.
In Section 59-40-210, the
General Assembly focused on the term “private school” and the “desires” of a
private school to become a public “charter school.” The term “school” is
defined in Black's Law Dictionary as “an institution of learning and education,
esp. for children.” The institution is comprised of administration, faculty,
equipment, buildings, playing fields, books, etc. Here, the General Assembly's
concern was not with corporate ownership; its concern was with private schools,
which are defined in statute as non-publicly funded schools. See S.C.
Code Ann. § 59-1-110. Section 59-40-210 clearly addresses the
situation where a private educational institution desires to become a public
charter school, and it is clear that a mere change in corporate ownership is
not sufficient to meet the statutory tests.
During the application process the Thornwell Planning Committee sought an
opinion from the South Carolina Attorney General’s office whether the proposed
charter school would be prohibited by Section 59-40-210. The Attorney General issued an opinion opining that state law would not prohibit it. Op. S.C.
Atty. Gen., June 1, 2006 (2006 W.L. 1877115). The Attorney General stated, “[t]he application, furthermore, is specifically at ‘arms length’ in its relationship with ‘Thornwell’ as a private school” and that “there does not appear any ‘desires’
by the present school associated with the Thornwell Home for Children ‘to
convert’ that school to the Thornwell Charter School….” Consequently, the
Attorney General's opinion assumed factually that the private Thornwell School was “independent,” “unrelated,” and “arms length” in relationship to the
proposed charter school.
It is well established that opinions issued by the South Carolina
Attorney General are not binding upon the courts or subsequent fact-finding
bodies. See Eargle v. Horry County, 344 S.C. 449, 455, 545
S.E.2d 276, 280 (2001) (“this Court is not bound by opinions of the Attorney General”); Anders v. S.C. Parole and Cmty. Corr. Bd., 279 S.C. 206,
209-10, 305 S.E.2d 229, 231 (1983) (“The cited opinion of the Attorney General is not binding on this Court.”). Further, as the Attorney General's Office itself recognizes:
Because this Office does not have the
authority of a court or other fact-finding body, we are not able, in a legal
opinion, to adjudicate or investigate factual questions. Unlike a fact-finding
body ... we do no possess the necessary fact-finding authority and resources to
adequately determine the difficult factual questions present here. These
limitations have been recognized consistently by this Office and we reiterate
them here. Accordingly, only a court possesses the authority to resolve the
issues of fact which may be highly relevant to any final resolution of the
question raised by your letter.
Op. S.C. Atty.
Gen., July 1, 2003 (2003 WL 21691879). (Citation omitted). See also 7 Am. Jur. 2d Atty Gen. §11; 1 S.C. Jur. Atty Gen. § 19.
Based on the facts in the Record before the School Board, which may or
may not have been presented to the Attorney General, the School Board disagreed
with the Attorney General’s conclusions, as it was entitled to do. Specifically,
in light of the facts in the Record, the School Board correctly determined that
the relationship between Thornwell School and the Thornwell Charter School was
not “arm’s-length” and that Thornwell School desired to convert the form of its
private school to that of a charter school, thereby constituting the conversion
of a private school to a public charter school in violation of Section
59-40-210.
The Attorney General also
asserted in its amicus curiae brief that because the Thornwell Charter School would be under nominally different corporate ownership, it would be an entirely
different school and thus it would not constitute the conversion of a private
school to a public school. This argument completely ignores the plain language
of Section 59-40-210 that focuses on the desires of the
existing private school. Moreover, it is without any factual foundation with
respect to the identity of the proposed charter school. There is substantial
evidence in the Record showing that the Thornwell School and the Thornwell Charter School would essentially be the same educational institution. For
example, the entity that presently operates and owns the Thornwell School would continue to own the proposed charter school’s buildings, grounds, athletic
facilities, furniture, equipment, textbooks, library books, and supplies – all
of which would be leased in place and in their entirety to the proposed charter
school.
The following also supports
the position that the Thornwell Charter School is really a continuation of the
Thornwell School only under new corporate ownership and with sponsorship and
support of the School District and the State of South Carolina: (1) members of
the Planning Committee get priority placement for their children at the
Thornwell Charter School; (2) it is the intent of Thornwell Home that all its
children who reside there will attend Thornwell Charter School; (3) Thornwell
Charter School will continue to have the same administration and students as
well as the same physical plant and equipment; (4) although no member of the Planning
Committee serves as either a director or an officer of the Thornwell Home, two
of the three incorporators of the charter school and the vast majority of the
board members of the Thornwell Charter School are employees or parents of
students of the Thornwell School. The educational institution will continue to
be the same, only under nominally separate corporate ownership and in a
different form with respect to funding, i.e., from private funding to
public funding.
In short, all of the
components of the private Thornwell School as an institution would continue to
be in place once converted to a public charter school. The educational
institution would effectively continue to be the same - only the source of the
school’s funding would change, i.e., public funding rather than
private. The position by the Amicus Curiae offers a strained analysis of
Section 59-40-210, which is not consistent with the statute’s
plain meaning, and further confuses the form of ownership of a school with the
educational institution itself.
In addition to confusing the
issue of corporate ownership of the educational institution with the
educational institution itself, Amicus Curiae further misapplies the doctrine
of “piercing the corporate veil.” The doctrine of “piercing the corporate veil”
is an equitable doctrine. As noted by the South Carolina Court of Appeals:
If any
general rule can be laid down, it is that a corporation will be looked upon as
a legal entity until sufficient reason to the contrary appears; but when the
notion of legal entity is used to protect fraud, justify wrong, or defeat
public policy, the law will regard the corporation as an association of
persons.
Sturkie v.
Sifly, 280 S.C. 453, 457, 313 S.E.2d 316, 318 (Ct. App. 1984). Neither the position of the School Board nor the State Board depends on disregarding the legal entity filing the charter school application, Thornwell Charter
School, Inc. Although the School Board contends that the dealings between Thornwell Charter School and Thornwell School were not at arm’s length, again
the more important issue under the Act is the desires of the private school and
that the private school is seeking to effect or implement its desires through
the establishment of Thornwell Charter School. It is immaterial to the
analysis under Section 59-40-210 whether or not Thornwell Charter School,
Inc. is treated as a corporate entity or an association of persons under the “corporate
veil” doctrine. In either case, the private Thornwell School plainly desires
to convert itself to a public charter school.
Moreover, contrary to Amicus
Curiae's argument, both the State and Local Boards’ construction of Section
59-40-210 is entirely consistent with the
legislative intent of the Act. Section 59-40-30 expresses the General Assembly's broad
intent under the Act.
In authorizing charter schools, it is the intent of the General Assembly
to create a legitimate avenue for parents, teachers, and community members to
take responsible risks to create new, innovative, and more flexible ways of
educating all children within the public school system. Notably, nothing in
Section 59-40-30 indicates an intent to permit all existing private schools to
become public schools; indeed, the General Assembly speaks of creating new and innovative ways of educating children and not of permitting the Act
to be used solely to enable uneconomical or failing private schools to receive
a subsidy or bailout from public education funds at the expense of public
school students and local taxpayers. Consequently, Amicus Curiae’s
construction of Section 59-40-210 which would permit almost all private school
conversions to public charter schools without regard to whether the actual
educational institution essentially remains the same, is inconsistent with the
intent or purpose of the Act.
The language of Section 59-40-210 is clear; it does not require an
analysis which turns on the equitable doctrine of the “corporate veil,” or a
tortured and strained statutory construction in order to make sense or
otherwise to determine the legislative intent behind it. Indeed, the
legislative intent is as plain as the statutory language – when a private
school, such as the Thornwell School, desires to become a public charter
school, the private school must dissolve for a period of twelve months before
opening those same schoolhouse doors as a public charter school. Contrary to
this plain statutory provision, Thornwell School desires to become the Thornwell Charter School and consequently falls squarely within the prohibition of Section
59-40-210. Substantial evidence in the Record supports the School Board’s and
the State Board’s findings in this regard. The Record, therefore, supports the
finding by the School Board and the State Board that there was a conversion of
Thornwell School into Thornwell Charter School in violation of S.C. Code Ann. §
59-40-210. Accordingly, the School Board’s and the State Board’s determination
of this issue must be affirmed.
CONCLUSION
Based upon the above analysis, the Court
finds there is substantial evidence in the Record to support the School Board’s
denial of the certification of the charter school application based upon
its findings that the charter would adversely affect the remaining students in the
School District’s public schools, the proposed charter school’s budget and financial plan was not economically-sound, the proposed facilities for the proposed charter school did not comply with the health and safety
requirements applicable to all public schools operated in the school district
as required by S.C. Code Ann. § 59-40-50(B)(1), and that the proposed charter school constituted an
improper conversion of a private school to a charter school contrary to the
spirit and intent of the Charter Schools Act as defined in S.C. Code Ann. §
59-40-210.
ORDER
Accordingly, for all of the above reasons,
IT IS HEREBY ORDERED that the State Board’s Order dated October
20, 2006 is REVERSED in part and AFFIRMED in part. Those portions of the State
Board’s order finding that the proposed charter school would not adversely
affect other students in the district, that the proposed charter school’s
budget and financial plan was economically-sound, and that the proposed facilities for the proposed charter school complied with the health and safety
requirements applicable to all public schools operated in the school district are
REVERSED. That portion of the State Board’s Order finding that the proposed charter school
constituted an improper conversion of a private school to a charter school is
AFFIRMED.
AND IT IS SO
ORDERED.
__________________________________
Marvin
F. Kittrell
Chief
Administrative Law Judge
June 19, 2007
Columbia, South Carolina
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