New Board of School Commissioners v. Public School Administrators & Supervisors Ass'n

MARVIN H. SMITH, Judge, Retired, Specially Assigned. The New Board of School Commissioners of Baltimore City (“the City Board”) is the appellant and cross-appellee in this appeal. The appellee and cross-appellant is the Public School Administrators and Supervisors Association of Baltimore City (“the Association”), which represents all principals, assistant principals, and other administrative and supervisory employees of the Baltimore City Public School System. The Association negotiated an agreement, known as a “Memorandum of Understanding,” with the City school system concerning certain working conditions of the employees the Association represents. 1 This appeal and cross-appeal concern eight principals who were reassigned at the end of the 1997-98 school year to assistant principal positions. 2 At issue is whether the State Board of Education (“the State Board”) was required to conduct an evidentiary hearing before ruling on the propriety of a decision of the City Board, to the effect that the reassignments were not subject to arbitration pursuant to a collective ⁶⁵ bargaining agreement.

Assuming no evidentiary hearing was required, a second issue is whether the State Board’s affir-mance of the City Board’s decision was correct as a matter of law. FACTS There is no dispute that each of the former principals has been employed by the Baltimore City Public School System for 25 to 30 years. The Association informs us that none of the principals had received an unsatisfactory performance evaluation prior to the end of the 1997-98 school year. 3 In early June of 1998, Dr. Robert Schiller, then the Interim Chief Executive Officer (“the CEO”) of the City Board, sent letters to each of the eight principals. Each letter stated that the principal would “be reassigned to the position as an assistant principal or to an equivalent level position for the FY '99, effective July 1, 1998.” Each letter further stated that the principal’s salary would “be adjusted accordingly.” By way of explanation for the actions, each letter stated: “A determination has been made that [the reassignment] is in the best interests of the Baltimore City Public School System. ...” The Association filed grievances with the CEO on behalf of each of the eight principals. 4 Each grievance stated that the principal had been “[a]rbitrarily and capriciously demoted to asst, principal.... ” Each alleged vaguely that the demotion violated the evaluation procedures set forth in Article YII of the Memorandum of Understanding, and that it also was contrary to past practice.

The CEO declined to process the grievances and returned them to the Association. ⁶⁶ The Association then filed, on behalf of the principals, appeals to the City Board from the CEO’s actions. The Association indicated that the appeals were filed in accordance with Article XV of the Memorandum of Understanding between the Association and the City Board. Article XV set forth grievance and arbitration procedures. Initially, the City Board refused to process the appeals on the ground that the CEO had statutory authority to reassign the principals, and that the statutory authority trumped any provisions set forth in the Memorandum of Understanding.

The City Board apparently believed that under the circumstances it had no authority to consider the appeals. The Association then submitted a request for arbitration to the American Arbitration Association. The City Board subsequently reconsidered the matter and determined that it did have statutory authority to consider the appeals. 5 The City Board instructed the Association to submit separate appeals in writing as to each of the principals. It indicated that it would decide the appeals based on the written submissions unless it determined that a particular appeal should be submitted to a hearing officer for factual determinations because “specific allegations of fact ..., if true, would prove that the decision to reassign was arbitrarily unreasonable ... or illegal.... ” The Association withdrew its request for arbitration.

It submitted letters to the City Board, on behalf of the principals, in which it asserted in essence that the CEO had acted arbitrarily and capriciously in that he had (1) failed to offer any explanation for the reassignments except to state that they were in the “best interests of the school system,” and (2) failed to follow a longstanding practice of permitting employees who are reassigned to lower level positions to retain their job titles and the higher pay rates. 6 ⁶⁷ The City Board did not submit any of the appeals to a hearing examiner. Instead, it issued a written opinion in which it concluded that “[t]he reassignments were implemented by the Interim CEO acting properly within the scope of his statutory responsibilities.” The City Board determined that the Association “has articulated no basis to support its claim that the CEO acted arbitrarily or outside of his authority in either making the transfers or reducing the salaries of the former principals to the appropriate level for their current positions.” The Association renewed its request for arbitration. The City Board, however, filed a petition in the Circuit Court for Baltimore City to stay arbitration until the State Board could decide if the matter was negotiable. The trial court granted the petition and observed in a two-page order that “it is ... as a matter of public policy recommended that Courts defer to the expertise of the State Board of Education in the first instance when called upon to decide whether a matter relates to educational policy or salaries, wages, hours, and other working conditions.... ” The court directed the Association to “appeal” the City Board’s decision to the State Board.

The Association filed the appeal to the State Board as directed. The Association conceded to the State Board that the CEO has statutory authority to assign and transfer principals as the needs of the schools require. 7 It nevertheless argued that, under the Memorandum of Understanding in effect at the time of the reassignments, the CEO could not change the job titles or reduce the salaries of the reassigned principals. ⁶⁸ The City Board moved for summary affirmance of its decision that the CEO’s actions were proper, and the State Board granted the motion. In a brief opinion, the State Board explained that “a transfer of a principal to a lateral position or to a position of lower rank is within the discretion of the local superintendent.” 8 It further explained that, “[d]espite [the Association’s] attempt to separate matters of salary from that of reassignment to a new position, we believe that these issues are indistinguishable when an employee is transferred pursuant to the CEO’s [statutory] authority....” 9 The State Board concluded: Here, certain principals were reassigned for the subsequent school year by the Interim CEO acting properly within the scope of his statutory responsibilities.... In accordance with the reassignment, the employees’ salaries for the next year were appropriately adjusted to reflect their assignments to lower level positions.

This salary adjustment is a necessary part of the CEO’s statutory authority to transfer professional personnel as the needs of the schools require. Because the issue in this case actually concerns the CEO’s [statutory] transfer authority ... and not a salary dispute, we find that the local board acted properly in declining to process the disputes as grievances and in declining to submit the disputes to arbitration.[ 10 ] The Association petitioned for a judicial review. It asked the Circuit Court for Baltimore City to “reverse the decision of the State Board, rule that agreements with respect to the salaries to be paid principals following their reassignment [are] subject to arbitration under the [Memorandum of Under ⁶⁹ standing], and remand this case to the State Board for further proceedings.” The circuit court heard oral argument, then issued a written opinion. Although the Association did not ask the court to remand the case to the State Board for an evidentiary hearing, and indeed never requested that the State Board hear more than oral argument, the court remanded the case to the State Board for a full evidentiary hearing.

The court thus implicitly vacated the State Board’s decision. It wrote: The substantial rights, including the Constitutional Due Process Rights, of the [Association] were violated when the MSBE failed to hold a hearing on the matter before rendering its opinion. Without such factual basis the Court cannot apply the law.... It added: . .. [T]his Court finds that [the] Interim CEO ... did simply regurgitate his statutory authority to reassign the Principals and ... was hiding behind such authority when he gave no other reasons for the Principal’s reassignment but for the “in the best interest of the School” provision.

Furthermore, this Court finds that the Principals were not given any other reasons for their reassignment because there were no hearings, at any level of the School Board, in this case. This total lack of rights given under precedent of the decisions cited herein and the lack of Due Process guaranteed by the United States Constitution, makes this Court greatly suspect as to the true reasons for the reassignment of the Principals in this matter. ISSUES As we have indicated, the City Board has appealed and the Association has cross-appealed from the trial court’s decision. The City Board argues, in essence, that the trial court should have affirmed the State Board’s decision.

The Association argues, in essence, that the trial court should have reversed the State Board’s decision and instructed the State Board to issue a new decision to the effect that the salaries of ⁷⁰ the reassigned principals are subject to arbitration. Both parties argue that the trial court erred by remanding the case to the State Board for an evidentiary hearing. We find merit in the arguments presented by the City Board. We shall therefore vacate the judgment of the circuit court and remand the case to that court with instructions to affirm the decision of the State Board.

STANDARD OF REVIEW “Under Maryland law, when the Court of Special Appeals is reviewing an appeal originating out of an administrative agency, the role of the appellate court is ‘precisely the same as that of the circuit court.’ ” Bragunier Masonry Contractors, Inc. v. Maryland Comm’r of Labor and Indus., 111 Md.App. 698, 716 , 684 A.2d 6, 15 (1996) (citation omitted). “Thus, ‘we must review the administrative decision itself.’ ” Mayberry v. Bd. of Educ. of Anne Arundel County, 131 Md.App. 686, 700 , 750 A.2d 677, 684 (2000) (citation omitted). We examine the agency decision in the same way as the trial court. We examine the decision for errors of law, a nondeferential review ..., and to determine if substantial evidence exists to support the conclusion, a deferential review. Bragunier Masonry Contractors, Inc., 111 Md.App. at 716 , 684 A.2d at 15 (citations omitted).

We keep in mind that [a]n agency’s interpretation of the statute it administers is generally entitled to weight.... This principle is particularly important in the case of the State Board of Education ... [in that] “the paramount role of the State Board of Education sets it apart from most administrative agencies.” Montgomery County Educ. Assoc., Inc. v. Bd. of Educ. of Montgomery County, 311 Md. 303, 309 , 534 A.2d 980, 983 (1987) (citation omitted). “The authority of the State Board of Education ... has been described as ‘a visitatorial power of the most comprehensive character,’ one that is ‘in its nature, summary and exclusive.’ ” Chesapeake Charter, Inc. v. Anne Arundel County Bd. of Educ., 358 Md. 129, 137 , 747 A.2d 625, ⁷¹ 629-30 (2000) (citation omitted). The State Board is “investid] ... with the last word on any matter concerning educational policy or the administration of the system of public education.” Wilson v. Bd. of Educ. of Montgomery County, 234 Md. 561, 565 , 200 A.2d 67, 69 (1964).

DISCUSSION — Propriety of Ordering Evidentiary Hearing — The trial court suggested that the manner in which the eight principals were reassigned denied them procedural due process. Despite the fact that neither party had requested that the State Board conduct an evidentiary hearing, the trial court remanded the case to the State Board for just such a hearing. As the Court of Appeals has explained: The first prerequisite in raising a due process argument is that the action complained of must constitute “state” action.... Next, the state action must result in a “deprivation” of the complainant’s interest ... and such interest must be a “property” interest within the meaning of the due process clause [of the Fourteenth Amendment of the United States Constitution and Article 24 of the Maryland Declaration of Rights]....

Finally, if state action deprives one of a property interest, the court must balance the various interests at stake in order to determine the procedural due process which is constitutional required under the circumstances .... Pitsenberger v. Pitsenberger, 287 Md. 20, 27-28 , 410 A.2d 1052, 1056-57 (1980) (citations omitted). In the context of administrative decisions, as in other decisions, “[d]ue process does not require adherence to any particular procedure ... The minimum due process required where a deprivation of a property interest is involved is that the deprivation be preceded by ‘notice and opportunity for hearing appropriate to the nature of the case.’ ...

In order ⁷² to determine what due process is required, there must be a balancing of the private and government interests affected Bragunier Masonry Contractors, Inc., 111 Md.App. at 712 , 684 A.2d at 13 (citations omitted). The factors to be considered in addressing procedural due process in an administrative setting are: “[f]irst, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail.” Id., 684 A.2d at 13 (citation omitted). The parties do not dispute that the process afforded by the State Board was all the process due at that point. That is, they agree that the only question before the State Board was whether the reassignments of the principals were subject to negotiation.

They further agree that it was unnecessary for the State Board to conduct an evidentiary hearing in order to resolve that question. The parties disagree only on whether the legal conclusion reached by the State Board was correct. In effect, the trial court ordered the Association to seek, and the Association sought, a declaratory ruling from the State Board. See Code (1978, 1999 Repl.

Vol.), § 2-205(e)(1)(i) and (2) of the Education Article (“The State Board shall explain the true intent and meaning of the provisions of ... [t]his article that are -within its jurisdiction ...,” and “[t]he Board shall decide all controversies and disputes under these