Calendar Date: March 28, 2018Before: Garry, P.J., McCarthy, Lynch, Clark and Pritzker, JJ.__________Robert T. Reilly, New York State United Teachers, Latham(Jennifer N. Coffey of counsel), for appellant.Barbara D. Underwood, Attorney General, Albany (Robert M.Goldfarb of counsel), for Mary Ellen Elia, and others,respondents.__________Lynch, J.Appeal from a judgment of the Supreme Court (McDonough,J.), entered November 3, 2016 in Albany County, which dismissedpetitioner’s application, in a combined proceeding pursuant toCPLR article 78 and action for declaratory judgment, to reviewthree determinations of respondent Commissioner of Educationresolving disputes between petitioner and respondent BuffaloPublic Schools during their negotiation of a receivershipagreement.In April 2015, the Legislature enacted the EducationTransformation Act of 2015, to provide for the “[t]akeover andrestructuring of failing schools” (L 2015, ch 56, part EE,subpart H, §§ 1, 2; see Education Law § 211-f). Under thestatute, respondent Commissioner of Education is required tocategorize those public schools “among the lowest achieving fivepercent of public schools in the state” as either “failingschools” or “persistently failing schools” (Education Law § 211-f[1] [a], [b]).1 Upon the Commissioner’s approval of acomprehensive education plan, the superintendent of a schooldistrict is vested with the authority of a receiver for eitherone year (for persistently struggling schools) or two years (forstruggling schools) (see Education Law § 211-f [1] [c] [i], [ii];[2] [b]). A receiver is authorized “to manage and operate allaspects of the school” (Education Law § 211-f [2] [a]). Amonghis or her duties, and “to maximize the rapid achievement ofstudents,” a superintendent, as receiver, “may request that thecollective bargaining unit or units representing teachers andadministrators and the receiver, on behalf of the board ofeducation, negotiate a receivership agreement that modifies theapplicable collective bargaining agreement or agreements withrespect to any failing schools” (Education Law § 211-f [8] [a]).The statute restricts the subject matter of the receivershipagreement to “the length of the school day; the length of theschool year; professional development for teachers andadministrators; class size; and changes to the programs,assignments, and teaching conditions in the school receivership”(Education Law § 211-f [8] [a]). In the event that the partiesare unable to reach an agreement with regard to a strugglingschool, “unresolved issues” must be submitted to conciliation,and, if issues remain, to the Commissioner for final resolution;unresolved issues regarding a receivership agreement forpersistently struggling schools go directly to the Commissionerfor resolution (Education Law § 211-f [8] [b] [c]). In eithercircumstance, the Commissioner has five days to resolve theissues in accord with standard collective bargaining principles(see Education Law § 211-f [8] [b] [c]).In July 2015, the Commissioner informed respondent BuffaloPublic Schools (hereinafter the school district) that 25 of itsschools were either persistently struggling or struggling. OnAugust 27, 2015, respondent Kriner Cash, the school district’sSuperintendent and the person vested with the authority grantedby Education Law § 211-f (1) (c) (hereinafter theSuperintendent), wrote to petitioner to request that it negotiatea receivership agreement “for schools in receivership.” Inresponse, petitioner requested more information — including alist of the affected schools “and the specific modifications [tothe collective bargaining agreement] sought for each school” — toallow it to respond to the Superintendent’s request. Bycorrespondence dated September 8, 2015, the Superintendentrejected the request and reiterated that petitioner shouldschedule negotiations with the school district’s labor relationsrepresentative. On September 25, 2015, the Superintendent sentspecific proposals and advised that petitioner had until October1, 2015 to either accept the proposals or meet to “discuss andrespond to these proposals.” Petitioner acknowledged receipt,but questioned the Superintendent’s deadline, asserting thatnegotiations had to be completed by November 16, 2015. Theschool district’s labor relations representative disputedpetitioner’s time calculations, but proposed that the partiesmeet on October 13 and 14, 2015 to discuss “all issues[,] . . .review the [September 25, 2015] proposals for receivershipagreements . . . and receive counterproposals in return”(emphasis added).The parties met on the two proposed dates and again onOctober 19 and 22, 2015. By correspondence dated October 23,2015, petitioner sent counterproposals, including one to reduceclass sizes. On October 26, 2015, without reference topetitioner’s counterproposals, the Superintendent’s laborrelations specialist advised that the Superintendent had decided“that it [was] time to take the next step” to “submit[ ] theunresolved issues regarding the proposed [r]eceivership[a]greements to either” a conciliator or the Commissioner, asappropriate. Petitioner directly responded that such a step was“premature,” asserted that the time to complete negotiations hadnot yet run and, alternatively, asked to extend that time tocomplete negotiations. There was no response to this request.On October 28, 2015, the Superintendent sent theCommissioner a request that she “resolve the issues between the[school d]istrict and [petitioner] as they relate to negotiationsfor a receivership agreement for the [d]istrict’s fivepersistently struggling schools.” The Superintendent outlined 10proposals regarding teaching position vacancies and transfers,the length of the school day and year, daily teacher planningtime, professional development for teachers, use of technology inthe classroom and additional monthly faculty meetings.Petitioner responded asserting, in part, that the Superintendentdid not bargain in good faith and that his proposals violated theapplicable regulations and were “unmanageable.” Petitioner alsorequested that the Commissioner consider and accept its October23, 2015 counterproposals. The Superintendent objected to theconsideration of petitioner’s counterproposals as untimely. OnNovember 20, 2015, the Superintendent submitted a request forconciliation with respect to the struggling schools pursuant toEducation Law § 211-f (8) (c). The parties met on December 8,2015 and, with the conciliator’s assistance, were able to agreeon one of the Superintendent’s proposals. The Superintendentpromptly asked the Commissioner to resolve the remaining issues.By decision and order dated November 8, 2015, theCommissioner imposed a receivership agreement applicable to thepersistently struggling schools. By orders dated December 22,2015 and March 29, 2016, the Commissioner imposed similarreceivership agreements applicable to the struggling schools.Petitioner commenced two separate CPLR article 78 proceedings andactions for declaratory judgment to challenge the orders, and todeclare Education Law § 211-d (8) unconstitutional on its faceand as applied. With the parties’ consent, Supreme Courtconsolidated the two proceedings. Thereafter, Supreme Courtdismissed the petitions and declared Education Law § 211-f (8)constitutional on its face and as applied to petitioner.Petitioner now appeals.Our review of petitioner’s CPLR article 78 claims islimited to whether the Commissioner’s determinations, madewithout a hearing, were “arbitrary and capricious, irrational,affected by an error of law or an abuse of discretion” (Matter ofDeVera v Elia, 152 AD3d 13, 18 [2017] [internal quotation marksand citations omitted], lv granted 30 NY3d 907 [2017]; see CPLR7803 [3]). Further, review “is limited to the grounds invoked bythe agency” (Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop.Educ. Servs., 77 NY2d 753, 758 [1991]), and the “[f]ailure of theagency to set forth an adequate statement of the factual basisfor the determination forecloses the possibility of fair judicialreview and deprives the petitioner of his [or her] statutoryright to such review” (Matter of Montauk Improvement vProccacino, 41 NY2d 913, 914 [1977]).First, we find that the Commissioner’s determinationsincluded a sufficient factual basis to permit intelligent review.In each of the challenged orders, the Commissioner concluded thattwo collective bargaining principles were relevant and warrantedconsideration — “the interests and welfare of the public and thefinancial ability of the public employer to pay [and] the termsof collective agreements negotiated between the parties in thepast providing for compensation and fringe benefits” (CivilService Law § 209 [4] [c] [v] [b], [d]). With reference to theseprinciples, the Commissioner reviewed the Superintendent’sproposals seeking to circumvent seniority provisions so as toensure that “the most qualified” candidate is selected to fillteaching, summer school, recreational and part-time vacancies, topermit the Superintendent to deny teachers’ requests for transferand to transfer teachers involuntarily from applicable schools,and to allow the Superintendent to schedule mandatory facultymeetings either before or after school. The Commissioner alsoconsidered the Superintendent’s proposals to lengthen the schoolday and year with a proportionate increase in income, to changethe start and end time of each school day, and to add additionalcommon planning time for teachers. Also reviewed were theSuperintendent’s proposals to require teachers “to use alltechnological tools necessary and appropriate to more effectivelycommunicate with students and parents” and to attend “schoolspecific”professional development. After comparing the existingnegotiated terms of employment and petitioner’s responses to eachproposal, the Commissioner imposed receivership agreements thatincorporated all of the Superintendent’s proposals forpersistently struggling and struggling schools, albeit with somemodifications.There is no dispute that the existing terms and conditionsof employment in the collective bargaining agreement (hereinafterCBA) were a relevant collective bargaining principle to consider.The Commissioner compared each of the proposals to the parties’existing practices and, after consideration of petitioner’sresponses, altered proposals to limit the Superintendent’sdiscretion and added terms where she believed it would be fairerand more consistent with the existing CBA. Further, and contraryto petitioner’s claim, the Commissioner considered the bestinterests of the students and the purpose of the statute prior toimposing the terms of the receivership agreements. For example,when reviewing the Superintendent’s proposals with regard tofilling vacancies without strict adherence to seniorityprovisions, the Commissioner considered petitioner’s concerns andconcluded that, with the limited time afforded to makeimprovements, the Superintendent needed flexibility with regardto placing teachers in positions and to lead programs at theaffected schools. The Commissioner also considered petitioner’sclaims that additional faculty meetings, longer school days andlonger school years would have no effect on student outcomes.The Commissioner reasoned that more faculty meetings would resultin greater communication and allow teachers and administrators toquickly respond to issues as they arise. Citing publishedresearch, the Commissioner concluded that, in general, longerschool days and years could enhance students’ proficiency andtheir general educational experience. We are mindful thatpetitioner does not agree with all of the cited research andbelieves that alternative solutions could be more beneficial.The limited issue before us, however, is whether theCommissioner’s determinations were rationally based, even wherethere are reasonable alternatives (see Matter of Spence v NewYork State Dept. of Agric. & Mkts., 154 AD3d 1234, 1238 [2017]).For the foregoing reasons, we find that the Commissioner’sdeterminations had a rational basis and were sufficientlydetailed to permit adequate review.We do not agree with petitioner’s argument that theCommissioner arbitrarily and in violation of law failed toconsider whether the Superintendent bargained in good faith.Generally, a school in receivership “shall operate in accordancewith laws regulating other public schools” (Education Law § 211-f[2] [b]). The Public Employment Relations Board was created to“assist in resolving disputes between public employees and publicemployers” (Civil Service Law § 200), and, for purposes of theTaylor Law (see Civil Service Law art 14), the term “publicemployer” includes “a school district or any governmental entityoperating a public school” (Civil Service Law § 201 [6] [a][iii]). Here, the Superintendent was akin to a public employerbecause he had a statutory obligation to negotiate thereceivership agreement in good faith on behalf of respondentBoard of Education of the Buffalo Public Schools (see EducationLaw § 211-f [8] [a]). In our view, the Commissioner properlydetermined that petitioner’s claim that the Superintendent failedto negotiate the terms of the receivership agreements in goodfaith was an unfair labor practice claim subject to the exclusivejurisdiction of the Public Employment Relations Board (see CivilService Law § 205 [5] [d]; Matter of New York City Tr. Auth. vNew York State Pub. Empl. Relations Bd., 19 NY3d 876, 879 [2012];Matter of Zuckerman v Board of Educ. of City School Dist. of Cityof N.Y., 44 NY2d 336, 342 [1978]).Petitioner next contends that the Commissioner erred byfailing to consider its counterproposal to reduce class sizes.In each of the challenged orders, the Commissioner determinedthat the statute “requires the [S]uperintendent . . . to requestnegotiation of” permissible issues, like class size, but, becausethe receiver did not request negotiation of class size, it wasnot an issue for her to resolve. The Commissioner furtherdetermined that the Superintendent’s request to negotiate was not“proper” until September 25, 2015 and that “the 30 calendar daysin which negotiations were to have been completed had elapsed by. . . October 28, 2015,” when the Superintendent sought theCommissioner’s resolution.We find that the Commissioner’s determination that only thereceiver was authorized to propose terms of a receivershipagreement was erroneous. Education Law § 211-f (8) (a)authorizes the receiver to request that the parties negotiate areceivership agreement. The receivership agreement, in turn, mayonly address specified subjects, including class size. Thisstructure authorizes the receiver to initiate a negotiation, butdoes not limit the issues that the Commissioner may address tothose requested in the first instance by the receiver. Theexisting CBA includes a provision with regard to class size andrecognizes that, generally, petitioner and the school districtcollectively decide appropriate class size. To conclude, ineffect, that only one party to the negotiations can define thepossible terms of a negotiated receivership agreement does notcomport with the statutory language and would undermine thelegislative directive that negotiations occur “in good faith” andin accordance with collective bargaining principles (seeEducation Law § 211-f [8] [b], [c]).Similarly, we do not agree with the Commissioner’sdetermination that the Superintendent properly disregarded thecounterproposals because they were ostensibly submitted after the30-day period lapsed. No party disputes the finding that theSuperintendent’s negotiation request was not effective untilSeptember 25, 2015. When this request was made, the regulationsprovided that negotiations had to be completed within 30 schooldays, not calendar days (see 8 NYCRR former 100.19 [g] [5] [iii][b] [eff Sept. 1, 2015 to Oct. 26, 2015]; 100.19 [a] [18]). Themodification of the regulation on October 27, 2015, changing thetime frame to 30 calendar days, does not pertain here (see 8NYCRR 100.19 [g] [5] [iii] [b]). Generally, a regulation shouldnot be applied retroactively unless such a result is clearlyintended (see Matter of Zajdowicz v New York State & Local Police& Fire Retirement Sys., 267 AD2d 863, 865 [1999]). Notably, therecord evinces that the parties intended to discuss applicabledeadlines during negotiations and does not indicate any agreementto limit negotiations to four sessions within 30 calendar days.The point made is that the “30 school day” window fornegotiations was still open when petitioner offered thecounterproposals. That the Superintendent chose to terminate thenegotiations without responding to the counterproposals does notmean it was not a part of the negotiation process. Accordingly,we conclude that the Commissioner should have consideredpetitioner’s October 23, 2015 counterproposal with regard toclass sizes to be an unresolved issue pursuant to Education Law§ 211-f (8) (b) and (c).Petitioner’s argument that the Commissioner was biased wasnot preserved for our review. If we were to consider this claim,we would find that, in light of the Commissioner’s modifications,her orders “flowed from the evidence presented” and not from anypurported bias (Matter of Ashishi v Venettozzi, 155 AD3d 1198,1199-1200 [2017]; see generally Matter of Defreestville AreaNeighborhood Assn., Inc. v Planning Bd. of Town of N. Greenbush,16 AD3d 715, 723 [2005]).Turning to the constitutional challenge, petitionermaintains that Education Law § 211-f (8) is constitutionallydefective because it impairs its CBA with the school district inviolation of the Contract Clause of the US Constitution. USConstitution, article I, § 10 prohibits a state from passing alaw that “impair[s] the [o]bligation of [c]ontracts.” Becausestates “retain the power to safeguard the vital interests oftheir people,” this prohibition is not absolute (HealthNow N.Y.,Inc. v New York State Ins. Dept., 110 AD3d 1216, 1218 [2013][internal quotation marks, brackets and citation omitted]).Three questions must be considered to determine whether a statelaw violates the Contract Clause: “(1) is the contractualimpairment substantial and, if so, (2) does the law serve alegitimate public purpose such as remedying a general social oreconomic problem and, if such purpose is demonstrated, (3) arethe means chosen to accomplish this purpose reasonable andnecessary” (Buffalo Teachers Fedn. v Tobe, 464 F3d 362, 368[2006], cert denied 550 US 918 [2007]; see Sal Tinnerello & Sons,Inc. v Town of Stonington, 141 F3d 46, 52 [1998], cert denied 525US 923 [1998]; 19th St. Assoc. v State of New York, 79 NY2d 434,442-443 [1992]; HealthNow N.Y. Inc. v New York State Ins. Dept.,110 AD3d at 1219). Because the parties do not seriously disputethat the statute substantially impairs the existing CBA infurtherance of a legitimate public purpose, the questionpresented on this appeal is whether the statute was reasonableand necessary to further the significant and legitimate publicinterest in “maximiz[ing] the rapid achievement of students” atschools deemed to be persistently struggling and struggling(Education Law § 211-f [8] [a]).Generally, where a statute or regulation impairs a privatecontract, courts will defer to a legislature’s rationale withregard to its necessity (see Energy Reserves Group, Inc. v KansasPower and Light Co., 459 US 400, 412-413 [1983]). Less deferenceis warranted where the statute or regulation “is self-serving andimpairs the obligations of [the state's] own contracts” because“a [s]tate is not completely free to consider impairing theobligations of its own contracts on a par with other policyalternatives” (Condell v Bress, 983 F2d 415, 418 [2d Cir 1993][emphasis omitted], cert denied 507 US 1032 [1993]; see 19th St.Assoc. v State of New York, 79 NY2d at 443). Less deference maybe warranted even where, as here, the state is not a party to animpaired public contract (see Buffalo Teachers Fedn. v Tobe, 464F3d at 370). “[F]or an impairment to be reasonable and necessaryunder less deference scrutiny, it must be shown that the statedid not (1) consider impairing the contracts on par with otherpolicy alternatives or (2) impose a drastic impairment when anevident and more moderate course would serve its purpose equallywell nor (3) act unreasonably in light of the surroundingcircumstances” (id. at 371 [internal quotation marks, ellipses,emphasis and citation omitted]).Assuming without deciding that the less deferentialstandard applies, we find that Education Law § 211-f (8) isreasonable and necessary both on its face and as applied. Incontext, the receivership agreement was necessary in order toimplement available methods to address the immediate issues thatwere facing the struggling or persistent struggling schools. Thestatute provides that the Superintendent must act in accordancewith the existing CBA, and, where, as here, a receivershipagreement is requested, the statute limits the scope of theagreement — and impairment. No modification or impairment can beunilaterally imposed but instead must be negotiated. As applied,although an agreement was not reached with regard to all issues,the modifications imposed were applicable to the affected schoolsonly for the time limited by the statute. In sum, because thestatute and the agreements apply prospectively and limit thescope, application and duration of any modifications to existingagreements, while prohibiting any adverse financial impact, wefind that it was reasonably designed and necessary to further thegoal of helping students to succeed (see Buffalo Teachers Fedn. vTobe, 464 F3d at 372; Matter of Subway-Surface Supervisors Assn.v New York City Tr. Auth., 44 NY2d 101, 113 [1978]). Althoughpetitioner argues that there are means and methods that would bemuch more effective, the relative wisdom of the statute is notfor us to consider (see Home Bldg. & Loan Assn. v Blaisdell, 290US 398, 447-448 [1934]).We have considered the parties’ remaining arguments andfind them to be either without merit or, given the foregoingdeterminations, not necessary to consider.Garry, P.J., McCarthy, Clark and Pritzker, JJ., concur.ORDERED that the judgment is modified, on the law, withoutcosts, by reversing so much thereof as dismissed petitioner’sfourth and fifth causes of action in the consolidated petitions;matter remitted to respondent State Education Department forfurther proceedings not inconsistent with this Court’s decision;and, as so modified, affirmed.ENTER:Robert D. MaybergerClerk of the Court
