The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2493-23
LEONOR ALCANTARA, APPROVED FOR PUBLICATION
individually and as guardian September 8, 2025
ad litem for E.A., LESLIE APPELLATE DIVISION
JOHNSON, individually and as
guardian ad litem for D.J., JUANA
PEREZ, individually and as
guardian ad litem for Y.P.,
TATIANA ESCOBAR, and IRA
SCHULMAN, individually
and as guardian ad litem for A.S.,
Petitioners-Appellants,
and
HENRY MORO, individually
and as guardian ad litem for A.S.,
Petitioner,
v.
ANGELICA ALLEN-MCMILLAN,
ACTING COMMISSIONER OF
THE NEW JERSEY DEPARTMENT
OF EDUCATION, NEW JERSEY
STATE BOARD OF EDUCATION,
and NEW JERSEY DEPARTMENT
OF EDUCATION,
Respondents-Respondents.
_______________________________
Argued April 8, 2025 – Decided September 8, 2025
Before Judges Smith, Chase, and Vanek.
On appeal from the New Jersey Department of
Education.
Paul L. Tractenberg argued the cause for appellants
(Paul L. Tractenberg, and Arthur H. Lang, attorneys;
Paul L. Tractenberg, and Arthur H. Lang, on the
briefs).
Christopher Weber, Deputy Attorney General, argued
the cause for respondents (Matthew J. Platkin,
Attorney General, attorney; Donna Arons, Assistant
Attorney General, of counsel; Ryan J. Silver, Deputy
Attorney General, and Christopher Weber, on the
brief).
The opinion of the court was delivered by
SMITH, J.A.D.
Petitioners, parents of children enrolled in the Lakewood Public School
District (Lakewood, or District), appeal from the acting New Jersey
Commissioner of Education's 1 (Commissioner) April 1, 2024 final decision
1
Pursuant to N.J.S.A. 18A:4-24, acting Commissioner Kevin Dehmer
delegated the responsibility to issue the April 1, 2024 final decision to Cary
Booker, the Assistant Commissioner of the Division of Early Childhood
Services. For ease of reference, we refer to Assistant Commissioner Cary
Booker as "the Commissioner" throughout this opinion.
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that the School Funding Reform Act 2 (SFRA) was constitutional as applied to
Lakewood. See N.J. Const. art. VIII, § 4, ¶ 1.
While we have concerns about the ongoing constitutional deprivation
suffered by the public school students of Lakewood, we affirm the
Commissioner's final administrative decision because we conclude the SFRA
is constitutional as applied to Lakewood and that the Commissioner fully
complied with our directive in Alcantara v. Allen-McMillan (Alcantara I), 475
N.J. Super. 58 (App. Div. 2023).
I.
As background, we recount relevant facts concerning the District from
Judge Mary Whipple's opinion in Alcantara I.
The record demonstrates Lakewood's school
district is in a unique and precarious position. This is
due, in large part, to demographic trends in the area.
Lakewood Township has seen a population rise in
recent decades, due in large part to a thriving
Orthodox Jewish community. As a result of this
demographic shift, the township has approximately
37,000 school-aged children, however, only about
6,000 are enrolled in the secular public schools. [*] The
majority—84%—are enrolled in private religious
schools . . .
__________
2
N.J.S.A. 18A:7F-43 to -70.
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[*]
Demographically, 8.1% of the District's students are
Black and 86% are Latino. The entire student body is
eligible for free or reduced-price lunches based on
household income. The District has a high percentage
of students who speak English as a second language.
__________
As a result, Lakewood is an outlier amongst
other New Jersey school districts, in which most of the
students are enrolled in public schools. The non-
public school students in Lakewood alone constitute
nearly a quarter of all such students in our state.
Like other districts, Lakewood's state-issued
school aid is calculated based upon its 6,000 enrolled
public school students. However, Lakewood's
education budget has been severely strained by its
obligation to provide transportation and special
education tuition to many of the 31,000 non-public
school students not included in its aid calculation.
The record developed before the ALJ is extensive, but
the key takeaway is this: the total budget for the most
recent school year at the time of that decision was
$143.45 million. Of that, over half—$78 million—
went to transportation and special education tuition for
non-public students. This is an abnormal and
unsustainable imbalance. By way of comparison, in
neighboring districts, the costs of transportation and
special needs tuition accounted for roughly four to
seven percent of their annual education budgets.
. . . Lakewood had difficulty hiring and
retaining teachers and other instructional aides.
Classroom instructional salaries were the second
lowest in the state on a per-pupil basis. A preschool
program, which had been recommended in a 2009
needs assessment, was never implemented.
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Student performance was also depressed. Test
scores from 2014-15 indicated that only twenty-three
percent of high school students met or exceeded
expectations on the PARCC assessment for English,
whereas only five percent met that threshold in math.
Only six percent of district students scored above
1550 on the SAT, compared to forty-three percent of
students statewide, placing Lakewood in the thirteenth
percentile of all districts.
[Alcantara I, 475 N.J. Super. at 62-63.]
On July 24, 2014, parents of children enrolled in the District filed a
petition of appeal with the Commissioner, alleging that Lakewood failed to
provide public school students with a thorough and efficient education (T&E)
as required by the New Jersey Constitution, due to insufficient SFRA funding.
Petitioners sought a declaration from the Commissioner that:
[A]ll of Lakewood’s students are entitled to the same
services to which students similarly situated elsewhere
in New Jersey are entitled, and to foreclose the
possibility of a remedy that disparately impacts the
children of Lakewood or that forces them to forego
their rights and privileges under the current law.
The Commissioner transmitted the claim to the Office of Administrative
Law (OAL) in 2014.
On May 1, 2021, an Administrative Law Judge (ALJ) issued an initial
decision. The ALJ determined that, while "Lakewood's students [were] not
receiving a thorough and efficient education as required by the New Jersey
Constitution, . . . the SFRA [was] not unconstitutional as applied to Lakewood
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because the lack of T&E in Lakewood [was] not due, in significant part, to the
SFRA." Rather, it was Lakewood's fiscal mismanagement, failure to raise
taxes, lack of a comprehensive preschool program, and transportation and
special education spending issues—coupled with the Legislature's annual
Appropriation Acts—that led to Lakewood not providing T&E. In the initial
decision, the ALJ recommended that the Commissioner conduct an additional
needs assessment of Lakewood.
The Commissioner issued a final administrative decision (FAD) on July
16, 2021, rejecting the ALJ's finding that Lakewood was not providing T&E.
We summarized the FAD this way:
In determining Lakewood's students were
receiving a constitutionally adequate education, the
Commissioner made essentially three arguments.
First, she asserted there was a positive trend of
improvement in the school's testing averages. Second,
while acknowledging cuts to various educational
programs at the district, she observed the District still
offered "all the courses required for graduation[,]" as
well as five AP classes, music programs, and research
skills courses. Third, while she acknowledged a "high
rate of teacher turnover" and a high student-teacher
ratio, she claimed Lakewood met various federal
targets under the ESSA (with exceptions).
As legal support for her conclusion, she
compared the above observations with the conditions
described in Abbott II, a case concerning stark
physical deficiencies in school facilities—students
being taught in coal bins, eating lunch in the corridor,
and using bathrooms without hot water. 119 N.J. at
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363, 575. In the Commissioner's estimation, because
Lakewood lacked these desperate conditions, the
quality of education it provided remained
constitutionally sound.
[Alcantara I, 475 N.J. Super. at 67-68.]
While the Commissioner accepted the ALJ's finding that the SFRA was
constitutional as applied to Lakewood, they did not reach the issue in the FAD
"because [appellants] failed to meet the threshold inquiry of establishing
Lakewood's failure to provide T&E." However, the Commissioner "directed
[the DOE] to conduct a comprehensive review of the District’s organization,
structure and policies to assess its compliance with the quality performance
indicators in accordance with N.J.S.A. 18A:7A-11 to determine how the
District can improve its educational program."
On petitioners' appeal from the FAD, we held that the Commissioner's
decision to reject the ALJ's T&E findings was not supported by the record. Id.
at 67 (citing Saccone v. Bd. of Trs., Police & Firemen's Ret. Sys., 219 N.J.
369, 380 (2014)) (internal quotation marks omitted) ("[A]n agency's
determination cannot be sustained if it lacks fair support in the record."). We
reversed and remanded, instructing the Commissioner:
[T]o consider the substantive arguments pertaining to
the SFRA in light of our Supreme Court's directive in
Abbott ex rel. Abbott v. Burke (Abbott XX), 199 N.J.
140, 146 (2009): the State has a continuing obligation
to "keep SFRA operating at its optimal level . . . " and
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"[t]here should be no doubt that we would require
remediation of any deficiencies of a constitutional
dimension, if such problems do emerge."
[Id. at 71.]
Next, the Commissioner directed the DOE to expedite the
comprehensive review they ordered in the July 16, 2021 FAD, noting that the
record before us in Alcantara I was outdated and finding a more current record
would assist the Commissioner on remand in "identifying the root causes that
led to the educational deprivations identified by the Appellate Division."
The Commissioner retained Dr. Kimberly Markus, an education
consultant and former Commissioner of Education, and Public Consulting
Group LLC, a management consulting firm, to conduct the review. The
review's purpose was to:
[E]xamine the Lakewood School District's operations
and performance in several key areas, including
educational policy, special education, administration
and governance, and accounting. In addition to these
areas, the review will include, but will not be limited
to, an examination of the particular areas of concern
raised by [appellants] in these proceedings, such as
transportation costs for the Lakewood School
District's students and special education funding.
The DOE produced its report, titled "Comprehensive Review of the
Lakewood Public School District" (CR), along with a supplemental exhibit
titled "Lakewood Public School District Review[,]" on March 1, 2024.
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On April 1, 2024, the Commissioner issued a final decision finding that
"Lakewood's failure to provide T&E to its students d[i]d not derive, in
significant part, from the provisions of the SFRA." The Commissioner
determined that the lack of T&E was caused by "Lakewood's tax-related
choices that decreased revenue, the significant deficiencies in Lakewood's
spending practices, and Lakewood's failure to control its transportation and
special education costs."
The Commissioner's FAD consisted of three causal theories leading to
the students' constitutional deprivation in the LPSD: the impact of other
funding legislation combined with Lakewood's failure to raise local school tax
revenue; fiscal mismanagement; and extraordinary transportation and special
education costs.
Concerning the District's power to raise revenue through local school
taxes, the Commissioner found that "Lakewood's decision to not maintain
adequate local fair share contributed to the [D]istrict's current fiscal
problems." The Commissioner also found that "Lakewood's school-tax rate
was below the state average and below other districts." The Commissioner
further found that the SFRA was not the only school funding mechanism
established by the Legislature that affected District finances, identifying
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legislation capping the District's tax levy (N.J.S.A. 18A:7F-38) and the
Legislature's annual Appropriations Act.
The Commissioner then determined that the record "demonstrate[d]
severe deficiencies in Lakewood's fiscal management, including its failure to
keep track of expenditures, records, and data and questionable spending
practices." The Commissioner supported this finding with the testimony of an
Office of Legislative Services auditor who "found financial transactions that
were not consistent with government auditing standards, a lack of control
environment leading to a lack of stability, lax reconciliation procedures, a lack
of supporting documentation, Board approval of contracts without review, and
other questionable expenses." Additionally, the Commissioner noted a lack of
"[a]ttention to administrative and financial detail" by District management.
The Commissioner also reported "significant data discrepancy and reporting
issues[,]" failures to "approv[e] vendors before payment[,]" the failure of the
District to provide many nonpublic students with a student identification
number, and poorly organized and administered public bidding processes and
procedures. The Commissioner ultimately found that Lakewood's fiscal
mismanagement led to its "inefficient use of funds."
Turning to transportation and special education costs, the Commissioner
initially found that "Lakewood [did] not take[] reasonable steps to control its
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special education and transportation costs despite receiving advice to do so"
from a 2009 needs assessment and a 2014 audit.
Regarding transportation costs, the Commissioner identified issues such
as Lakewood's courtesy busing policy, 3 its use of gendered buses and tiering
bell times, and its failure to increase route sharing or stagger school schedules.
As for the administration of transportation services, the Commissioner found:
"there [was] not sufficient separation between Lakewood as a contracting
agency and the Lakewood Student Transportation Authority (LSTA) as a
vendor"; full time employees worked for both Lakewood and the LSTA; the
District chose not to take opportunities to bid tiered routes rather than
individual routes; buses were running "four to eight routes a day" and "being
used on multiple routes"; and some students were billed for busing at higher
costs when "transported by the District rather than the LSTA."
Acknowledging Lakewood's higher nonpublic school transportation costs, the
Commissioner ultimately found that funding from the State, coupled with
increases to the local tax levy, would be sufficient to provide T&E to
Lakewood students.
3
The record shows that courtesy busing in the District operated to provide bus
transportation for non-public school students that did not live remotely from
their schools. Having engaged in the practice for several years, Lakewood
stopped providing courtesy busing in 2016.
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Regarding special education costs, the Commissioner found that
Lakewood failed to utilize the cost-saving strategies for special education that
the DOE's 2009 needs assessment recommended. The Commissioner also
found Lakewood could apply for "additional aid[] based on an unusually high
rate of low-incidence disabilities." The Commissioner also found the District
fell short in its efforts to educate Lakewood special education children in-
house. The Commissioner found that instructing such children in-house would
save the District money and perhaps make it eligible for more state aid.
Petitioners appealed the Commissioner's April 1, 2024 FAD, arguing
that: our holding in Alcantara I gave the petitioners "special status,"
permitting an Abbott-style challenge to the constitutionality of the SFRA
under the T&E clause of our state constitution.
II.
Our role in reviewing a final agency action is limited to three inquiries:
(1) whether the agency's action violates express or
implied legislative policies—i.e. the law;
(2) whether the record contains substantial evidence to
support the agency's findings; and
(3) whether the agency clearly erred in reaching a
conclusion that could not reasonably have been made
on a showing of the relevant factors.
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[Allstars Auto Grp., Inc. v. N.J. Motor Vehicle
Comm'n, 234 N.J. 150, 157 (2018) (quoting In re
Stallworth, 208 N.J. 182, 194 (2011)).]
If the agency has satisfied these criteria, then "substantial deference" is
owed, even if we would have reached a different result in the first instance. In
re Herrmann, 192 N.J. 19, 28 (2007). Additionally, decisions "made by an
administrative agency entrusted to apply and enforce a statutory scheme" are
reviewed "under an enhanced deferential standard." E. Bay Drywall, LLC v.
Dep't of Lab. & Workforce Dev., 251 N.J. 477, 493 (2022) (citing Hargrove v.
Sleepy's, LLC, 220 N.J. 289, 301-02 (2015)). We recognize that "a reviewing
court is 'in no way bound by [an] agency's interpretation of a statute or its
determination of a strictly legal issue.'" Allstars Auto Grp., Inc., 234 N.J. at
158 (second alteration in original) (quoting Dep't of Children & Families,
DYFS v. T.B., 207 N.J. 294, 302 (2011)).
III.
A.
Petitioners contend that our holding in Alcantara I "elevated
[Lakewood's public school students] to a status previously accorded only
students in Abbott districts." Put differently, petitioners argue that, because
we concluded that Lakewood public school students suffer from an ongoing
constitutional deprivation, Lakewood must now receive the unique
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constitutional status of "wards of the State." (citing Abbott v. Burke (Abbott
XXI), 206 N.J. 332, 340(2011)). This ward status, in turn, means "[t]he State
has a special, heightened responsibility to Lakewood’s students" as it did with
the Abbott districts. Petitioners insist that they have demonstrated a "clear
nexus" between the undisputed denial of T&E to Lakewood public school
students and the "flawed application of SFRA" to the District's finances. They
contend that this demonstrated nexus requires us to compel the other branches
of government to "take all necessary and appropriate steps to remedy the
constitutional deficiencies identified in this case . . . ." This sought -after
order, petitioners argue, should compel the respondents to take a series of
immediate steps to right the District's finances, including, but not limited to:
forgiveness of outstanding state loans; reimbursement of District monies spent
to comply with certain unfunded DOE mandates; increases in the annual state
aid payments; and passage of legislation designed to ensure Lakewood
receives adequate education funding similar to the Abbott districts throughout
the state. We consider the argument.
Like Abbott XXI, petitioners here challenge the constitutionality of the
SFRA as applied to a specific school district. See Abbott XXI, 206 N.J. at
369. However, the Abbott XXI petitioners argued that the SFRA was
unconstitutionally applied to them because it was not fully funded by the
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Legislature. Ibid. That is not the record we have before us. Indeed, the vast
record shows Lakewood has received all the SFRA funding that it has qualified
for. Instead, petitioners here argue that "[t]he State's failure to adjust SFRA
based on the admittedly unique characteristics of [a school district's] student
population and on 'up-to-date measure' of [a school district's] realistic 'ability
to pay' is at the heart of the SFRA's unconstitutionality as applied to
Lakewood." Stated another way, petitioners do not argue that the SFRA is
unconstitutional as applied to Lakewood because the Legislature underfunded
it. Petitioners posit that the statute is unconstitutional as applied to Lakewood
because the fully funded SFRA doesn't account for how the District chooses to
raise local revenue, allocate its budget or spend its money. Petitioners, in
effect, ask us to declare the SFRA unconstitutional because it doesn't yield
enough state aid to cover the shortfalls caused by Lakewood's budget and
spending choices, particularly in the areas of transportation and special
education. These choices, the record shows, have drained resources away from
Lakewood's public school students, and are consistently at odds with cost-
saving recommendations made by respondents. This is a distinction with a
difference, and we decline petitioners' invitation to apply the Abbott XXI
analysis to this unique record.
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We turn to the question of whether the Commissioner's April 1, 2024
FAD complied with the order which emerged from our holding in Alcantara I.
In Alcantara I, we remanded to the Commissioner with instructions to
determine whether the SFRA was unconstitutional as it applied to Lakewood.
Alcantara I, 475 N.J. Super. at 71. The Commissioner answered the question
in the negative, finding "Lakewood's failure to provide T&E to its students
d[i]d not derive, in significant part, from the provisions of the SFRA." The
Commissioner made numerous findings, which covered nearly every
meaningful aspect of District governance, management, and operations. They
included: Lakewood's decision not to increase its tax levy; its mismanagement
of finances; and its ongoing failure to reduce or even competently manage
transportation and special education costs. These findings are supported by the
exhaustive record from Alcantara I and supplemented by the detailed 2024 CR,
now before us.
We defer to an agency's well-supported factual findings. In re
Herrmann, 192 N.J. at 28. Because respondents are entrusted to apply and
enforce the SFRA, we review the Commissioner's FAD decision using an
enhanced deferential standard. E. Bay Drywall, LLC,251 N.J. at 493.
Applying our well-settled agency standard of review, we conclude that:
neither the Commissioner's FAD, nor respondents' actions in attempting to
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manage Lakewood's inability, or outright refusal, to take corrective action to
remedy pervasive financial and operational deficits have violated state law or
legislative policy; the record contains overwhelming evidence to support the
Commissioner's findings; and the Commissioner's conclusion that the SFRA is
not unconstitutional as applied to Lakewood is more than reasonable. This is
because the ongoing constitutional deprivation suffered by the public school
students of Lakewood is not due, in significant part, to the SFRA, given the
facts carefully enumerated and analyzed in the CR and incorporated in the
FAD. Allstars Auto Grp., Inc., 234 N.J. at 157. It follows that we cannot
conclude that the SFRA, as applied to Lakewood, is unconstitutional under
N.J. Const. art. VIII, § 4, ¶ 1.
B.
That said, we are mindful that there are Lakewood school children who
suffer from an ongoing constitutional deprivation. This stark truth, evident in
the record, is undisputed by the parties. Indeed, it is petitioners' foundational
claim, and respondents, charged with a constitutional obligation to ensure that
all New Jersey school children receive a thorough and efficient education, do
not disagree. While we conclude that Lakewood's failure to provide a
thorough and efficient education for its public school students is not due, in
17 A-2493-23
significant part, to the SFRA, the search for an equitable, effective and
efficient solution to the plight of these children must not end here.
The sweeping record compiled by the parties through the years reveals,
in sharp relief, extant causes for this ongoing constitutional deprivation. The
causes are well-documented, and quite frankly, hard to miss. The consistent
pattern of neglect and misfeasance by various elected and appointed Lakewood
school leaders with respect to critical governance, finance, curriculum,
transportation and special education recommendations made by respondents
over the years lends an aura of deliberate indifference to these proceedings.4
The record shows respondents understand the need to continue the
search for remedies which will restore public school children's opportunity to
obtain a thorough and efficient education in Lakewood. In respondents' merits
brief, they identify available remedial options, including, "ensuring the District
has sufficient funds to meet its immediate needs, moving to install a new State
4
Deliberate indifference jurisprudence involves certain claims under the
Eighth and Fourteenth Amendments. It refers to a state actor's conscious or
reckless disregard of a substantial risk of serious harm to an individual. To
establish deliberate indifference, a plaintiff must satisfy both an objective and
a subjective prong: (1) the harm or risk must be objectively serious, and (2) the
defendant must have subjective knowledge of the risk and disregard it. This
standard requires more than mere negligence but less than intentional harm.
We express no opinion on whether such a cause of action exists here . See
L.W. ex rel. L.G. v. Toms River Reg'l Schs. Bd. of Educ., 381 N.J. Super. 465,
488 (App. Div. 2005); C.P. by J.P. v. Twp. of Piscataway Bd. of Educ., 293
N.J. Super. 421, 435 (App. Div. 1996).
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monitor, and exploring the degree of oversight and intervention that may be
necessary . . . ." This statement demonstrates that respondents, including the
Commissioner, have a clear understanding of the tools at their disposal to
ensure the District meets its obligation to protect, not continue to harm, the
constitutional rights of petitioners and other Lakewood public school children.
One of these tools is a constitutionally sufficient SFRA. For these reasons, we
express measured optimism that respondents, and Lakewood, will navigate a
timely path forward to guarantee and safeguard the right of all Lakewood
schoolchildren to a thorough and efficient education.
Affirmed.
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