STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KID’S COMMUNITY COLLEGE CHARTER SCHOOL ORANGE COUNTY, INC.,

Petitioner,

vs.

DEPARTMENT OF EDUCATION,

Respondent.

/

Case No. 18-1302

RECOMMENDED ORDER

Administrative Law Judge D. R. Alexander conducted a hearing in this matter by video teleconference on April 30, 2018, at sites in Tampa and Tallahassee, Florida.

APPEARANCES

For Petitioner: Joy Smith-McCormick, Esquire

Kid’s Community College 11519 McMullen Road

Riverview, Florida 33569-6627

For Respondent: Jamie Braun, Esquire

Riley Michelle Landy, Esquire Department of Education Turlington Building, Suite 1244

325 West Gaines Street Tallahassee, Florida 32399-0400

STATEMENT OF THE ISSUES

The issues are whether the Department of Education’s (Department) decision to deny Petitioner’s application for capital outlay funding for the 2017-2018 school year is in

conflict with Florida Administrative Code Rule 6A-2.0020(4)(b), as amended effective August 13, 2017, and is, therefore, based on an unadopted rule; and whether the Department’s decision to deny the application should be determined under the prior version of the rule.

PRELIMINARY STATEMENT

On October 30, 2017, the Department notified Petitioner by letter that it was not eligible for charter school capital outlay funding for the 2017-2018 school year, pursuant to eligibility requirements in amended rule 6A-2.0020(4)(b). An amended letter was sent to Petitioner on February 2, 2018, to clarify that the reason for denial was Petitioner’s “D” grades for the school years 2015-2016 and 2016-2017. Petitioner timely requested a hearing, and the matter was forwarded by the Department to the Division of Administrative Hearings to resolve the dispute.

At the hearing, Petitioner presented the testimony of one witness. Petitioner’s Exhibits 1 through 5, 8, 9, and 13 through 16 were accepted in evidence. The Department presented the testimony of one witness. Department Exhibits 1 through 8 were accepted in evidence. Also, official recognition was taken

of the Final Order in DOAH Case No. 17-1986RP, which held amended rule 6A-2.0020(4)(b) to be a valid exercise of delegated legislative authority.

A one-volume Transcript of the hearing was prepared. Both parties filed proposed recommended orders on June 29, 2018, which have been considered.

FINDINGS OF FACT

1. Petitioner is a not-for-profit public charter school located in Ocoee, Florida, serving approximately 260 students in kindergarten through grade five.

2. The school opened in the 2012-2013 school year, but did not receive a school grade until 2014-2015. That year, it received a grade of “B.” It received a grade of “D” in 2015-2016 and a “D” in 2016-2017.

3. Since school year 2015-2016, Petitioner has been operating under a School Improvement Plan, approved and reviewed by its sponsoring school district, the Orange County School District. A School Improvement Plan is a plan designed to improve academic performance and is required when a charter school receives a grade of “D” or “F.” See § 1002.33(9)(n)1.,

   Fla. Stat. (2016).

   
   

4. The Department is the agency charged with the responsibility of administering capital outlay funds for charter schools pursuant to section 1013.62, Florida Statutes.1/

5. Charter school capital outlay funding is a source of funds for charter schools, which must meet eligibility criteria set forth in section 1013.62. The funds can be used only for

   
   

   specific purposes set forth in the statute, such as the purchase of real property, construction of school facilities, purchase of vehicles, computer equipment and software, insurance for school facilities, and renovation and repair of school facilities. See

   § 1011.71(2), Fla. Stat. Petitioner has used the funding “for subsidizing or supplementing [its] rent.”

6. If funds are appropriated by the Legislature, each year the Department is required to allocate capital outlay funds to eligible charter schools. The allocation is based on the number of students in the school.

7. In school year 2017-2018, charter school capital outlay consisted of a combination of state and local funds, which included both a state appropriation and revenue resulting from the discretionary millage level levied by local school districts under section 1011.71(2). The state appropriation for charter school capital outlay for that year was $50 million.

8. In order to receive capital outlay funds, a charter school must satisfy a number of criteria, one of which is that the school must have “satisfactory student achievement based on state accountability standards applicable to the charter school.”

   § 1013.62(1)(a)3., Fla. Stat. A school’s budgetary concerns are not a consideration in the approval process.

9. Rule 6A-2.0020 governs eligibility for charter school capital outlay funds and implements the statutory requirement for

   
   

   satisfactory student achievement. The previous version of the rule, effective December 15, 2009, stated, in part:

   (2) The eligibility requirement for satisfactory student achievement under Section 1013.62, F.S., shall be determined in accordance with the language in the charter contract and the charter school’s current school improvement plan if the school has a current school improvement plan. A charter school receiving an “F” grade designation through the state accountability system, as defined in Section 1008.34, F.S., shall not be eligible for capital outlay funding for the school year immediately following the designation.

   
   

10. Under this version of the rule, a charter school that received an “F” grade was automatically ineligible for capital outlay funding. A school that received any grade other than an “F” was evaluated based upon satisfaction of performance metrics in the charter school contract and the School Improvement Plan, if there was one. Therefore, capital outlay funding was not guaranteed to any charter school under the former version of the rule.

11. The 2016 Legislature amended section 1013.62 to change eligibility criteria for charter school capital outlay funding, although the section of the statute relating to satisfactory student achievement was not amended. The goal of the Legislature was to raise academic standards required of charter schools in order to qualify for capital outlay funding.

    
    

12. In order to comply with these statutory changes, the Department proposed revisions to rule 6A-2.0020. These proposed revisions also included changes to the criteria for determining satisfactory student achievement that would be required in order to be eligible for capital outlay funds. Rule development began in May 2016, and the Department anticipated that the amended rule would go into effect before school year 2016-2017.

13. The Department determined that revisions to the satisfactory student achievement portion of the rule were necessary in order to be consistent with the Department’s overall approach to school quality and accountability, which included the adoption of new standards and assessments. Based on a review of the school grading statute, and the definition of a “D” school as one that is making less than satisfactory progress, the Department determined that a school earning an “F” or two consecutive grades below a “C” was not consistent with the requirement for satisfactory student achievement.

14. The proposed rule was approved by the State Board of Education at the September 2016 board meeting, but was later withdrawn for further revision.

15. On February 28, 2017, the Department published a Notice of Proposed Rule, proposing that, beginning in school year 2017- 2018, a charter school with two consecutive grades below a “C,” as well as a single “F” grade, would be ineligible for capital

    
    

    outlay funds. The amended portion of the rule that addresses satisfactory student achievement and which is at the heart of this dispute, states as follows:

    1. Satisfactory student achievement under Section 1013.62(1)(a)3., F.S., shall be determined by the school’s most recent grade designation or school improvement rating from the state accountability system as defined in Sections 1008.34 and 1008.341, F.S. Satisfactory student achievement for a school that does not receive a school grade or a school improvement rating, including a school that has not been in operation for at least one school year, shall be based on the student performance metrics in the charter school’s charter agreement. Allocations shall not be distributed until such time as school grade designations are known.

       
       

       1. For the school year 2016-17, a charter school that receives a grade designation of “F” shall not be eligible for capital outlay funding.

          
          

       2. Beginning in the school year 2017-18, a charter school that receives a grade designation of “F” or two (2) consecutive grades lower than a “C” shall not be eligible for capital outlay funding.

          
          

       3. Beginning in the school year 2017-18, a charter school that receives a school improvement rating of “Unsatisfactory” shall not be eligible for capital outlay funding.

          
          

16. The words, “Beginning in the school year 2017-18,” were included in the rule to make it clear that the new criteria for satisfactory student achievement would not apply to schools in school year 2016-2017, but instead would apply to schools applying for funding for the school year 2017-2018.

    
    

17. These changes were approved by the State Board of Education on March 22, 2017, or before charter schools began submitting applications for funding for the following school year. Due to a third-party challenge of the new rule, however, it did not become effective until August 13, 2017. Fla. Ass’n of

    Indep. Charter Sch. v. Fla. Dep’t of Educ., Case No. 17-1986RP (Fla. DOAH July 21, 2017), aff’d, 2018 Fla. App. LEXIS 8802

    (Fla. 1st DCA June 21, 2018)(per curiam).

    
    

18. The Department requires charter schools to submit an application for capital outlay funding each year and requires the sponsoring school district to review the application and make a recommendation regarding eligibility. The applications are filed with the Department using a web-based system known as the Charter School Portal. The Commissioner of Education then makes the final decision as to whether the school has satisfied all eligibility requirements.

19. For the school year 2017-2018, applications for charter school capital outlay funding were due by July 7, 2017, and each sponsoring school district was required to review and recommend its charter schools’ capital outlay plans by July 28, 2017. For school year 2017-2018, 582 applications were submitted for review by the Department.

20. Petitioner began receiving capital outlay funding in school year 2015-2016. It also received funding for school

    
    

    year 2016-2017. Funding in those two years was based on the old rule. Because Petitioner expected, but was not guaranteed, to get capital outlay funding again in 2017-2018, it planned its budget for the upcoming school year with those funds included.

    Had its application been approved, Petitioner would have received approximately $68,000.00 in capital outlay funding.

21. On June 27, 2017, or three months after the rule was adopted by the State Board of Education, Petitioner submitted its application for charter school capital outlay funding. The Department did not inform Petitioner by separate written notice that the new rule would apply to all capital outlay applications for school year 2017-2018.2/ On July 13, 2017, the Orange County School District recommended that Petitioner be eligible for capital funding.

22. Based on the amended rule, which became effective on August 13, 2017, Petitioner was determined ineligible for capital outlay funding for the 2017-2018 school year, as its two most recent school grades from 2015-2016 and 2016-2017 were lower than a “C.” This determination was consistent with the language in the revised rule, which stated clearly that the rule would apply “Beginning in the school year 2017-18.” In making this determination, the Department applied the rule in a prospective manner, beginning with the 2017-2018 school year, but it used the two most recent school grades (2015-2016 and 2016-2017) to

    
    

    determine eligibility for capital outlay funds. Petitioner was one of approximately a dozen schools that were impacted adversely by the change in the rule.

23. On August 29, 2017, the Department sent an automated email to Petitioner stating that the school was ineligible for capital outlay funds. The email informed Petitioner that the basis for the denial could be accessed on the web-based system that the school used for filing its application. Petitioner also was notified of the denial of capital outlay funds by letter dated October 30, 2017, and yet a third time in an amended letter dated February 2, 2018. The last paragraph in the amended letter reads as follows:

    After review of your Charter School Capital Outlay Plan, submitted for 2017-18 school year, it has been determined that your school is ineligible to receive charter school capital outlay fund. According to Rule 6A- 2.0020(4), Florida Administrative Code, beginning in the 2017-18 school year, a charter school that receives a grade designation of “F” or two (2) consecutive grades lower than a “C” shall not be eligible for capital outlay funding. Therefore, Kids Community College Charter does not meet the requirements for charter capital outlay funding for the 2017-18 school year, as the school received two consecutive grades lower than a “C” [in school years 2015-2016 and 2016-2017].

    
    

24. Petitioner contends that because the letter conflicts with the terms of the amended rule, it constitutes an unadopted rule and cannot be used as the basis for denying its application.

    
    

25. In the same vein, Petitioner argues that the most reasonable interpretation of the rule is that only school grades earned beginning in 2017-2018 and beyond can be used to satisfy eligibility for capital outlay funds. This interpretation of the rule, however, would mean that charter schools with any grade designation, including “Fs,” could receive funding in school years 2017-2018 and 2018-2019. Also, it would effectively delay implementation of the new academic standards for two years. In short, if Petitioner’s interpretation is accepted, the new eligibility criteria could not take effect until school year 2019-2020. This is contrary to the Department’s interpretation of the rule, which determines eligibility for capital outlay funds based on the new criteria beginning in school year 2017- 2018. The Department’s interpretation of the rule is as or more reasonable than the interpretation offered by Petitioner.

26. On February 23, 2018, Petitioner filed its request for an administrative hearing to contest the Department’s decision.

    CONCLUSIONS OF LAW

    
    

27. The facts establish that Petitioner is substantially affected by the Department’s decision and has standing to initiate this action.

28. Section 120.57(1)(e)1., prohibits an agency from basing agency action that determines the substantial interests of a party on an unadopted rule.

    
    

29. Relying on section 120.57(1)(e)1., Petitioner contends that the Department’s decision, as set forth in the letter dated February 2, 2018, is contrary to the language in amended rule 6A- 2.0020(4) and constitutes an unadopted rule. It further contends the alleged unadopted rule was applied in an arbitrary and capricious manner because the Department failed to give it prior notice that the amended rule would be used in evaluating its application. Petitioner also alleges the new rule was applied in a retroactive manner. In sum, Petitioner contends the old version of the rule should be used in determining eligibility for funding.

30. Petitioner argues that the words, “Beginning in the school year 2017-18,” require the Department to determine eligibility for capital outlay funds using school grades for that year and beyond. On the other hand, the Department interprets the language in the rule to mean that, beginning with capital outlay funding applications for that school year, the school’s most recent school grades will be used to determine eligibility. Otherwise, a charter school with any grade designation, including an “F,” would get a free pass to receive funding until school year 2019-2020. The Department’s interpretation is the most reasonable and is not clearly erroneous. See, e.g., Eager v. Fla. Keys Aqueduct Auth., 580 So. 2d 771, 772 (Fla. 3d DCA

    
    

    1991)(an agency’s interpretation of its rules will not be overturned unless the interpretation is clearly erroneous).

31. Moreover, the rule conveys a clear and definite meaning. The statements in the letter add nothing to the plain meaning of the rule. See, e.g., Amerisure Mut. Ins. Co. v. Fla.

    Dep’t of Fin. Servs., 156 So. 3d 520, 532 (Fla. 1st DCA 2015)(where the agency’s application and construction of a rule is consistent with and required by the rule, no unadopted rule need be conjured up to explain the agency’s action); Envtl. Trust v. Dep’t of Envtl. Prot., 714 So. 2d 493, 498 (Fla. 1st DCA 1998)

    (an agency statement explaining how an existing rule of general applicability will be applied in a particular set of facts is not in itself a rule); Fla. Quarter Horse Track Ass’n v. Dep't of Bus. & Prof'l Reg., 133 So. 3d 1118, 1120 (Fla. 1st DCA 2014)(an

    agency’s interpretation of a rule that is “readily apparent” from a literal reading of the rule is not a rule). The Department is not required to adopt another rule to explain how it will interpret the words, “Beginning in the school year 2017-18.” The statements in the amended letter are not a rule.

32. Petitioner contends the amended rule was applied in an arbitrary and capricious manner because the Department did not send it prior written notice that the new eligibility requirements would be used beginning in school year 2017-2018. There is, however, no requirement that the Department provide

    
    

    notice above and beyond what is required by chapter 120, and Petitioner cites none. The fact that separate written notice was not given to Petitioner before it filed its application does not render the Department’s action arbitrary and capricious.

33. Petitioner contends the Department applied the amended rule in a retroactive manner by using historical data. An administrative rule generally has only prospective application. However, a rule does not operate retroactively merely because it applies to prior conduct. To operate in a retroactive manner, the rule must impair rights a party possessed when the agency acted. As previously found, Petitioner had an expectation, but no guarantee, that it would continue to receive capital outlay funds from year to year. See, e.g., Fla. Hosp. Waterman, Inc. v. Buster, 984 So. 2d 478, 489 (Fla. 2008)(to be vested, a right

    must be more than a mere expectation). Thus, the Department’s use of historical data to determine eligibility on a prospective basis does not impair or alter any vested right of Petitioner to capital outlay funding.

34. In summary, the Department’s decision to deny Petitioner’s application for capital outlay funding was correct. Petitioner is not entitled to recover attorney fees and costs.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Education enter a final order denying Petitioner’s application for capital outlay funding for the school year 2017-2018.

DONE AND ENTERED this 9th day of August, 2018, in Tallahassee, Leon County, Florida.

S

D. R. ALEXANDER Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 9th day of August, 2018.

ENDNOTES

1/ References to the Florida Statutes are to the 2016 version, unless otherwise stated.

2/ The undersigned finds it unlikely that Petitioner was unaware of the new capital outlay funding standards being proposed by the Department in rule 6A-2.0020(4), or that the new standards would take effect beginning in the school year 2017-2018. Rule development had been underway since May 2016, and the final version of the rule was adopted by the State Board of Education in March 2017, or three months before Petitioner’s application was filed. Moreover, the rule then was challenged by an association whose membership is comprised of charter schools.

COPIES FURNISHED:

Jamie Braun, Esquire

Florida Department of Education Turlington Building, Suite 1244

325 West Gaines Street Tallahassee, Florida 32399 (eServed)

Joy Smith-McCormick, Esquire Kid’s Community College 11519 McMullen Road

Riverview, Florida 33569-6627 (eServed)

Riley Michelle Landy, Esquire Department of Education Turlington Building, Suite 1244

325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)

Pam Stewart, Commissioner of Education Department of Education

Turlington Building, Suite 1514

325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)

Matthew Mears, General Counsel Department of Education Turlington Building, Suite 1244

325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)

Judy A. Bone, Esquire Department of Education Turlington Building, Suite 1244

325 West Gaines Street Tallahassee, Florida 32399-0400 (eServed)

Dr. Barbara Jenkins, Superintendent Orange County School Board

445 West Amelia Street Orlando, Florida 32801-0271

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 18-001302

Orders for Case No: 18-001302