Charter Schools • Religious Entanglement • Charter Revocation

Pocono Mtn. Charter Sch. v. Pocono Mtn. Sch. Dist., PICS Case No. 14-0350 (Pa. Commw. Feb. 26, 2014) Simpson, J. (39 pages).

Pocono Mountain Charter School challenged the State Charter School Appeal Board’s order revoking its charter based on religious entanglement with its church landlord and expending public funds for sectarian purposes, exposing students to religious symbols and failing to meet generally accepted standards of fiscal management. Vacated and remanded to the CAB.

Bloom submitted the charter application in 2003 and became the school’s first CEO. The school leased space from a church and operated in the same building. Bloom served as both the school CEO and as senior pastor in the church. The charter was renewed in 2006 despite the district’s knowledge of Bloom’s dual role. The district initiated charter revocation proceedings in May 2008 adopting a resolution containing 27 reasons to revoke the charter. The hearings focused on the alleged unconstitutional entanglement between the school and the church and alleged financial mismanagement and improper expenditures.

The district revoked the charter. The school appealed to the CAB and the CAB sustained the school’s appeal without a written decision. The district sought reconsideration of the CAB’s decision and moved to reopen the record to include a performance audit report form the State Auditor General. The CAB rescinded its decision, reopened the record and, after receiving the hearing officers findings, revoked the charter.

The evidence during the revocation hearing showed that after renewing the charter in 2006, the district became concerned that the school did not comply with its charter and sought information to ensure charter compliance. The school did not disclose its lease with the church until after the revocation process had begun. The lease with the church was signed by Bloom on behalf of the school and of the church. There was no evidence that the board of trustees of the school approved the lease. The school spent more than $1.6 million on buildings and improvements for the year ending June 30, 2008.The expenditures included a LED message sign placed along a public roadway with the name of the church permanently at the top of the sign and the name of the school below the message screen. The screen frequently displayed religious messages and the church made no payment toward the sign. An expert real estate appraiser appearing for the school conceded that the lease did not constitute an arm’s length transaction .Additionally, Bloom had no experience in instructional leadership, regulatory compliance or personnel administration and the church and school hired his wife, son, and daughter.

The school contends that the CAB violated its due process rights and abused its discretion in reopening the record to accept supplemental evidence and in re-voting on the revocation and that the decision was not supported by substantial, competent evidence. There was no due process violation in the alleged vagueness of the May 2008 revocation notice since the parties engaged in discovery regarding charges and the school points to no harm caused by the alleged non-compliance.

There is no dispute that the charges ultimately cited in the written revocation notice did not correspond to the minutes from the public meeting where the district voted on revocation, Nevertheless, the fact that the 27 grounds are not memorialized in the minutes does not invalidate the revocation resolution. The resolution met the standards required and the school had notice of the charges ultimately litigated. Thus, the revocation notice may not be collaterally attacked. If there was a violation of the Sunshine Law, the remedy is provided in that law.

A condition in its charter gave the school a 60 day cure period for any violations of its charter. The school did undertake efforts to cure the violations with Bloom’s resignation and removal of the church sign. However, the 60 day notice was properly calculated from the May 2008 written revocation notice and not, as the school argues, from the October 2010 adjudication.

The first CAB vote and decision was not in writing, did not contain findings and did not qualify as an adjudication. Thus, the CAB retained jurisdiction and could properly consider the petition to reopen. Under the requirements of the CSL, a public vote is not self-executing and requires a decision and order under §1729-A. Additionally, based on the structure of the CSL and the rules of statutory construction, the CAB is not constrained to issue a written decision on revocation within 60 days.

The CAB’s decision to admit the performance audit report from the State Auditor General constituted a clear abuse of discretion because the information did not qualify as previously unavailable and it was offered after the close of the hearing record after the CAB had voted the first time. In its written decision the CAB apparently relied on this audit and the supplemental evidence related to it.

The CAB should be afforded the opportunity to correct the procedural irregularities on remand. Thus, the matter is remanded so the CAB may decide the appeal on evidence of facts that occurred during the relevant time frame under review, comprised of the record before the board.