18-001302 Kid&Apos;S Community College Charter School Orange County, Inc. vs. Department Of Education Status: Closed Recommended Order on Thursday, August 9, 2018.

Summary: Petitioner failed to prove that Department used an unadopted rule in denying its application for capital outlay funding.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KID Ó S COMMUNITY COLLEGE CHARTER

SCHOOL ORANGE COUNTY, INC.,

Petitioner,

vs. Case No. 18 - 1302

DEPARTMENT OF EDUCATION,

Respondent.

_______________________________/

RECOMMENDED OR DER

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 Ó s Communi ty College

11519 McMullen Road

Riverview, Florida 33569 - 6627

For Respondent: Jamie Braun, Esquire

Riley M ichelle Landy, Esquire

Department of Education

Turlington Build ing, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

STATEMENT OF THE ISSUE S

The issue s are whether the Department of Education Ó s

(Department) decision to deny Petitioner Ó s application for

capital outla y 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 Ó 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 Ó s Ð D Ñ grades for the school

years 2015 - 2016 and 2016 - 2017. Petitioner timely req uested 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 Ó s Exhibits 1 through 5 , 8, 9, and 13

throu gh 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 - 19 86 RP, which held amended

rul e 6A - 2.0020(4)(b) to be a valid exercise of delegated

legislative authority.

A one - volume T ranscript of the hearing was prepared. Both

parties filed proposed recommended orders on June 29, 2018 , which

have been considered.

FINDING S 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 yea r , it

received a grade of Ð B. Ñ It received a grade of Ð D Ñ in 2015 - 2016

and a Ð D Ñ 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 O range 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 Ð D Ñ or Ð F. Ñ See § 1002.33(9)(n)1.,

Fla. Stat. (201 6 ).

4. The Department is the agency ch arged 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 criteri a

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 schoo l

facilities, and renovation and repair of school facilities. See

§ 1011.71(2), Fla. Stat. Petitioner has used the funding Ð for

subsidizing or supplementing [its] rent. Ñ

6. If funds are appropriated by the Legislature, each year

the Department is requir ed 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

includ ed 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 re ceive capital outlay funds, a charter

school must satisfy a number of criteria, one of which is that

the school must have Ð satisfactory student achievement based on

state accountability standards applicable to the charter school. Ñ

§ 1013.62(1)(a)3., Fla. Stat. A school Ó 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 previou s 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 char ter school Ó s current

school improvement plan if the school has a

current school improvement plan. A charter

school receiving an Ð F Ñ grade designation

through the state accountability system, as

defined in Section 1008.34, F.S., shall not

be eligible for c apital outlay funding for

the school year immediately following the

designation.

10. Under this version of the rule, a charter school that

received an Ð F Ñ grade was automatically ineligible for capital

outlay funding. A school that received any grade ot her than an

Ð F Ñ 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 vers ion 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 Ó s overall

approach to school quality and acc ountability, which included the

adoption of new standards and assessments. Based on a review of

the school grading statute, and the definition of a Ð D Ñ school as

one that is making less than satisfactory progress, the

Department determined that a school e arning an Ð F Ñ or two

consecutive grades below a Ð C Ñ 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

withdra wn 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 Ð C, Ñ

as well as a single Ð F Ñ grade, would be in eligible 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:

(4) Satisfactory student achievement under

Section 1013.62(1)(a)3., F.S., sha ll be

determined by the school Ó 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 Ó s charter agreement. Allocations

shall not be distributed until such time as

school grade designations are known.

(a) For the school year 2016 - 17, a charter

school that receives a grade designation of

Ð F Ñ shall not be eligible for capital outlay

funding.

(b) Beginning in the school year 2017 - 18, a

charter school th at receives a grade

designation of Ð F Ñ or two (2) consecutive

grades lower than a Ð C Ñ shall not be eligible

for capital outlay funding.

(c) Beginning in the school year 2017 - 18, a

charter school that receives a school

improvement rating of Ð Unsatisfactor y Ñ shall

not be eligible for capital outlay funding.

16. The words , Ð Beginning in the school year 2017 - 18 , Ñ 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 20 16 - 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 Ó n of

Indep . Charter Sch . v. Fla. Dep Ó t of Educ. , Case No. 17 - 1986RP

(Fla. DOAH July 21, 2017), aff Ó d , 2018 Fla. Ap p. 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

recommend ation 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 re quirements.

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 Ó 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 tw o 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, Pet itioner 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 fundin g. 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 eligib le 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 Ð C. Ñ This determination was consistent with the language in

the revised rule, which stated clearly that the rule would apply

Ð B eginning in the school year 2017 - 18. Ñ 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 impact ed 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 acc essed 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 t o Rule 6A -

2.0020(4), Florida Administrative Code,

beginning in the 2017 - 18 school year, a

charter school that receives a grade

designation of Ð F Ñ or two (2) consecutive

grades lower than a Ð C Ñ shall not be eligible

for capital outlay funding. Therefore, K ids

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 Ð C Ñ [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 r ule 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 Ð Fs, Ñ coul d 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 Ó s interpretation is accepted, the new

eligibility criteria could not take effe ct until school year

2019 - 2020. This is contrary to the Department Ó 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 Ó s interpretation of the ru le is as or more

reasonable tha n the interpretation offered by Petitioner.

26. On February 23, 2018, Petitioner filed its request for

an administrative hearing to contest the Department Ó s decision.

CONCLUSIONS OF LAW

27 . The facts establish that Petition er is substantially

affected by the Department Ó 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 Ó 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 retroac tive 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 , Ð Beginning in the

school year 2017 - 18 , Ñ 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 Ó s

most recent school grades will be used to determine eligibility.

Otherwise, a charter school with any grade designation, including

an Ð F, Ñ would get a free pass to receive funding until school

year 2019 - 2020. The Department Ó s interpretation is the most

reasonable and is n ot clearly erroneous. See, e.g. , Eager v.

Fla. Keys Aqueduct Auth. , 580 So. 2d 771, 772 (Fla. 3d DCA

1991)(an agency Ó 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 Ó t of Fin. Servs. , 156 So. 3d 520, 532 (Fla. 1st DCA

2015)(where the agency Ó s application and constructio n of a rule

is consistent with and required by the rule, no unadopted rule

need be conjured up to explain the agency Ó s action); Envtlust

v. Dep Ó t of Envtl. Prot. , 714 So. 2d 493, 498 (Fla. 1st DCA 1998)

(an agency statement explaining how an existing r ule of general

applicability will be applied in a particular set of facts is not

in itself a rule); Fla. Quarter Horse Track Ass Ó n v. Dep't of

Bus. & Prof'l Reg., 133 So. 3d 1118, 1120 (Fla. 1st DCA 2014)(an

agency Ó s interpretation of a rule that is Ð read ily apparent Ñ 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 , Ð Beginning in the school year 2017 - 18. Ñ 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, how ever, 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 Depa rtment Ó 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 opera te 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 cont inue 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 Ó s

use of historical data to determin e eligibility on a prospective

basis does not impair or alter any vested right of Petitioner to

capital outlay funding.

3 4 . In summary, the Department Ó s decision to deny

Petitioner Ó 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 Ó s application for capital outlay fundin g

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 .

ENDNOTE S

1/ References to the Florida Statu tes 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 Ó s application

was filed. Mor eover, 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 Ó 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, F lorida 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

Turlingt on 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 excep tions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.