                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: December 3, 2015                   519321
________________________________

In the Matter of MAUREEN
   ABRAMOSKI et al.,
                    Appellants,
      v                                     MEMORANDUM AND ORDER

NEW YORK STATE EDUCATION
   DEPARTMENT et al.,
                    Respondents,
                    et al.,
                    Respondents.
________________________________


Calendar Date:   October 14, 2015

Before:   Lahtinen, J.P., McCarthy, Lynch and Devine, JJ.

                             __________


      Charny & Associates, Rhinebeck (Nathaniel K. Charny of
counsel), for appellants.

      Eric T. Schneiderman, Attorney General, Albany (Julie M.
Sheridan of counsel), for New York State Education Department and
others, respondents.

                             __________


McCarthy, J.

      Appeals (1) from a judgment of the Supreme Court (McNamara,
J.), entered October 16, 2013 in Albany County, which dismissed
that part of petitioners' application, in a combined proceeding
pursuant to CPLR article 78 and plenary action, to review a
determination of respondent State Education Department excluding
the cost of petitioners' post-retirement medical insurance in the
close-down tuition rate of a special act school district, and (2)
from an order of said court, entered June 25, 2014 in Albany
County, which, among other things, denied petitioners' motion to
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vacate the prior judgment.

      Petitioners are retired employees of West Park Union Free
School District Number Two, Town of Esopus, Ulster County
(hereinafter the District). The District is a special act school
district created by special legislation in 1973 for the purpose
of educating residents of a facility for adolescent girls with
emotional disabilities (see Education Law § 4001 [8]; L 1967, ch
566, as amended by L 1973, ch 744). In January 2011, due to a
significant decline in enrollment, the residential treatment
facility announced its closing. Because the District was
permitted to serve students solely from the residential facility,
respondent Board of Education of West Park Union Free School
District (hereinafter the Board) resolved to begin the process of
dissolving the District.

      The Board notified respondent State Education Department
(hereinafter SED) of its decision to cease operation, and SED
informed the Board of the District's closing date and of its
various responsibilities during the close-down period (see
generally 8 NYCRR 200.7 [e]). Among other things, the Board was
tasked with calculating the District's close-down costs, which
included the cost of educating students during the final year of
operation and any outstanding financial obligations. During this
process, a question arose as to whether the costs of certain
contractual obligations that the Board had to pay petitioners for
their post-retirement health and dental insurance coverage for
their respective lifetimes would be included in the tuition rate
for the close-down period. SED informed the Board that the cost
of such lifetime insurance coverage for the District's retirees
would not be included in the close-down tuition rate.

      Petitioners thereafter commenced this combined CPLR article
78 proceeding and plenary action against SED, respondent
Commissioner of Education, respondent University of the State of
New York, respondent Board of Regents of the University of the
State of New York, and respondent President of the Civil Service
Commission (hereinafter collectively referred to as the State
respondents), as well as the Board and its Superintendent,
seeking, among other things, review of SED's determination
excluding the costs related to petitioners' lifetime insurance
                              -3-                519321

benefits in the close-down tuition rate, an order directing the
reinstatement of their post-retirement health insurance and
damages for breach of contract. The State respondents joined
issue, but the Board and its Superintendent did not. Upon
petitioners' motion, Supreme Court awarded petitioners a default
judgment on their contract causes of action against the Board and
its Superintendent. Thereafter, the court dismissed petitioners'
CPLR article 78 claims against the State respondents and denied
petitioners' subsequent motion to, among other things, vacate
that judgment. Petitioners appeal from both the judgment
dismissing their CPLR article 78 claims and the order denying
their motion to vacate. We affirm.

      SED's determination that the close-down tuition rate did
not include the Board's costs related to petitioners' lifetime
insurance coverage was not arbitrary, capricious or affected by
an error of law. This Court's review of an administrative
determination such as the one at issue is limited to whether the
determination was arbitrary and capricious, lacked a rational
basis or was affected by an error of law (see Matter of Murphy v
New York State Div. of Hous. & Community Renewal, 21 NY3d 649,
652 [2013]; Matter of Board of Educ. of Monticello Cent. School
Dist. v Commissioner of Educ., 91 NY2d 133, 139 [1997]). "An
action is arbitrary and capricious when it is taken without sound
basis in reason or regard to the facts" (Matter of Peckham v
Calogero, 12 NY3d 424, 431 [2009]; see Matter of Beck-Nichols v
Bianco, 20 NY3d 540, 559 [2013]). Further, courts must apply
deference to an agency's "interpretation of its own regulations
in its area of expertise" (Matter of Peckham v Calogero, 12 NY3d
at 431; see Matter of Neighborhood Cleaners Assn.-Intl. v New
York State Dept. of Envtl. Conservation, 299 AD2d 790, 792
[2002]).

      As provided by 8 NYCRR 200.9 (g), during the close-down
period of a special act school district, tuition "[r]eimbursement
shall be determined in accordance with [8 NYCRR 200.9 (f) (1) and
(2)]." As is relevant, 8 NYCRR 200.9 (f) (1) (i) provides that
the tuition rate "shall include administration and direct care
costs and the costs of operation and maintenance of instructional
facilities." In addition, uncontested evidence established that
the calculation of tuition is used, at least in part, to assess
                              -4-                519321

the amount of reimbursement to be paid by the public school
district or social services district responsible for the student
in the special act school district.

      In concluding that petitioners' lifetime insurance benefits
should not be considered in the close-down tuition rate, SED
interpreted 8 NYCRR 200.9 (f) (1) (i) to exclude long-term
outstanding debt obligations that were largely – if not entirely
– unrelated to the costs of providing an education to the
students attending the District during the relevant tuition
period. This interpretation is reasonable and is consistent with
a statutory and regulatory scheme that evinces an intent to
tailor tuition rates to those costs reasonably related to the
special act school district's provision of services to students
during the relevant tuition period (see generally 8 NYCRR 200.7;
see e.g. Education Law § 4401 [11]).

      Indeed, the opposite conclusion that is furthered by
petitioners – that a close-down tuition rate should include all
outstanding financial obligations of a special act school
district – would arbitrarily punish those entities that happened
to have placed a student in a special act school district during
that district's close-down period; instead of reimbursement rates
tailored to the costs of providing education services, the rates
would be tailored to the costs of resolving all of the special
act school district's debts. Such a reimbursement scheme is
inconsistent with the clear intent of the statute and regulation.

      Finally, petitioners' contention that SED violated their
constitutional rights to due process and equal protection are
without merit. SED was not a party to the contracts that
provided petitioners their rights to insurance benefits. The
fact that SED's determination may have incidentally affected
petitioners' ability to collect their respective judgments
against the Board and the Superintendent does not support their
allegations of constitutional violations. To the extent not
discussed herein, petitioners' remaining arguments are also
without merit.

     Lahtinen, J.P., Lynch and Devine, JJ., concur.
                              -5-                  519321

      ORDERED that the judgment and order are affirmed, without
costs.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
