                 NOT FOR PUBLICATION WITHOUT THE
                APPROVAL OF THE APPELLATE DIVISION


                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-0743-10T4


BOROUGH OF SEASIDE PARK,
SEASIDE PARK BOARD OF                 APPROVED FOR PUBLICATION
EDUCATION, SUSAN BROSNAN,
                                          August 12, 2013
THOMAS CONNORS, PATRICIA
DEGUTIS, FAYE HARING, JAMES             APPELLATE DIVISION
JABLONSKI, LOUIS MACCHIAVERNA,
ROBERT MATTHIES, DAVID MEYER,
RICHARD MCMILLAN, MARYANN
PALMISANO, ANDREW SBORDONE,
ANN WEHRLEN, and MARTY WILK,
JR.,

      Plaintiffs-Appellants/
      Cross-Respondents,

v.

COMMISSIONER OF THE NEW
JERSEY DEPARTMENT OF
EDUCATION, CENTRAL
REGIONAL SCHOOL DISTRICT
BOARD OF EDUCATION, BERKELEY
TOWNSHIP, BERKELEY TOWNSHIP
BOARD OF EDUCATION, BOROUGH
OF OCEAN GATE, OCEAN GATE
BOARD OF EDUCATION, and
BOROUGH OF SEASIDE HEIGHTS,

      Defendants-Respondents,

and

BOROUGH OF ISLAND HEIGHTS,
ISLAND HEIGHTS BOARD OF
EDUCATION, and SEASIDE
HEIGHTS BOARD OF EDUCATION,1

     Defendants-Respondents/
     Cross-Appellants.
________________________________

          Argued: December 19, 2012 - Decided: August 12, 2013

          Before Judges   Axelrad,   Sapp-Peterson   and
          Nugent.

          On appeal from the Superior Court of New
          Jersey, Chancery Division, Ocean County,
          Docket No. C-162-07.

          Vito A. Gagliardi, Jr., argued the cause for
          appellants/cross-respondents        (Porzio,
          Bromberg & Newman, P.C., attorneys;      Mr.
          Gagliardi, of counsel and on the briefs;
          Kerri A. Wright and Phillip C. Bauknight, on
          the briefs).

          Melissa T. Dutton, Deputy Attorney General,
          argued the cause for respondent Commissioner
          of the New Jersey Department of Education
          (Jeffrey   S.   Chiesa,  Attorney   General,
          attorney; Lewis A. Scheindlin, Assistant
          Attorney General, of counsel; Ms. Dutton and
          Susan M. Huntley, Deputy Attorney General,
          on the brief).

          Arthur Stein argued the cause for respondent
          Central Regional School District Board of
          Education (Stein & Supsie, attorneys; Mr.
          Stein, of counsel and on the brief; Angela
          M. Koutsouris, on the brief).




1
  The Seaside Heights Board of Education also filed a third-party
complaint against all the parties that mirrored the claims of
plaintiffs' second amended complaint.     For ease of reference,
the appeal is analyzed based on plaintiffs' second amended
complaint as equally applicable to the third-party complaint.



                               2                           A-0743-10T4
         Francis J. Campbell argued the cause for
         respondent Township of Berkeley (Campbell &
         Pruchnik, LLC, attorneys; Mr. Campbell, of
         counsel and on the brief).

         Dina   M.  Vicari   argued   the  cause   for
         respondent   Berkeley   Township   Board   of
         Education    (R.C.    Shea    &   Associates,
         attorneys; Ms. Vicari, on the brief).

         Robert W. Allen argued the cause for
         respondents Borough of Ocean Gate and Ocean
         Gate Board of Education (Gluck & Allen, LLC,
         attorneys;  Gena   M.  Koutsouris,   on  the
         brief).

         Kenneth M. Kukfa argued the cause for
         respondent/cross-appellant Borough of Island
         Heights   (Kenneth   M.    Kukfa,   attorney;
         Christian E. Schlegel, on the brief).

         Ben A. Montenegro argued the cause for
         respondent/cross-appellant   Island   Heights
         Board of Education (Montenegro, Thompson,
         Montenegro & Genz, P.C., attorneys; Mr.
         Montenegro, of counsel and on the brief).

         David M. Casadonte argued the cause for
         respondent/cross-appellant Seaside Heights
         Board of Education.

         Respondent Borough    of       Seaside   Heights    has
         not filed a brief.

         The opinion of the court was delivered by

AXELRAD, P.J.A.D.

    Plaintiffs-appellants,    the       Borough   of    Seaside    Park,   its

Board of Education, and thirteen taxpaying residents, as well as

defendants-respondents/cross-appellants,          the     Seaside    Heights

Board of Education, and the Borough of Island Heights and its




                                    3                                A-0743-10T4
Board of Education, appeal from the Law Division's dismissal of

their various claims seeking dissolution of the Central Regional

School District (Central Regional or District), permission to

withdraw    from    the   District,     or   alteration     of    the    District's

funding     formula.2        We   are    satisfied    the        Legislature      has

established a comprehensive scheme for plaintiffs to seek this

relief, which includes a voter referendum.                The referendum held

on   dissolution     failed,      and    plaintiffs   did        not    pursue    the

statutory processes for withdrawal and modification of the tax

allocation method for Central Regional.                   Plaintiffs have not

asserted a cognizable constitutional or other claim that would

provide any legal or equitable basis for judicial intervention

and relief.     Moreover, even if we held that plaintiffs exhausted

their administrative remedies and are subject to a substantially

inequitable tax allocation, they would not be entitled to the

extraordinary       equitable     relief      afforded      in     Petition       for

Authorization to Conduct a Referendum on Withdrawal of North

Haledon    School    District     from    the   Passaic     County       Manchester

Regional    High    School    District,      181   N.J.    161     (2004)    (North

Haledon).    Accordingly, we affirm.



2
  Cross-appellants only sought dissolution of Central Regional,
and the Seaside Heights Board of Education additionally sought
to withdraw along with Seaside Park.



                                         4                                  A-0743-10T4
    We    place    this     appeal    in    context    by    first     reciting      the

history of regional school districts, including the history of

their funding, and the statutory mechanisms for dissolving or

withdrawing      from   a   regional       school   district.          We   will   then

discuss   the     specifics      of   Central       Regional     and    the    subject

litigation.

                                           I.

    In    l93l    the     Legislature      authorized      the   establishment         of

regionalized school districts.                  L. 1931, c. 275, § 1.              Costs

were to be apportioned among constituent districts "upon the

basis of ratables."          L. 1931, c. 275, § 8.             The "average daily

enrollment"      method     of   apportionment       was    introduced        in   1953,

i.e., per pupil basis, as an alternative to the existing ratable

method and was made available to all regional school districts

in 1955 subject to approval by the electorate.                          See Berkeley

Heights Twp. v. Bd. of Educ., 23 N.J. 276, 283 (1957).

    In a series of decisions in the 1970s, the Supreme Court

held the existing system of public school funding in New Jersey

unconstitutional based upon discrepancies in dollar input per

pupil, denying a thorough and efficient education, and required

the Legislature to adjust the funding methods.                    See Robinson v.

Cahill, 69 N.J. 133, cert. denied sub nom Klein v. Robinson, 423

U.S. 913, 96 S. Ct. 217, 46 L. Ed. 2d 141 (1975); Robinson v.




                                           5                                   A-0743-10T4
Cahill, 67 N.J. 35 (1975); Robinson v. Cahill, 63 N.J. 196,

cert. denied sub nom. Dickey v. Robinson, 414 U.S. 976, 94 S.

Ct. 292, 38 L. Ed. 2d 219 (1973); Robinson v. Cahill, 62 N.J.

473 (1973).

    In      response,      the    Legislature          passed        an     amendment      to

N.J.S.A.    18A:13-23      in    l975   that        altered   the         means   by    which

regional school districts were to be funded from a per pupil

basis to an equalized value of real estate situated in each

district,    which   shifted       costs       to    municipalities          with      higher

property values.3          N. Haledon, supra, 181 N.J. at 165.                            The

Legislature also adopted procedures for initiating withdrawal

from a limited purpose regional school district,4 including an

application    to    the    county      superintendent          to    investigate         the

advisability of withdrawal or dissolution, N.J.S.A. 18A:13-51; a

report from the county superintendent, N.J.S.A. 18A:13-52 and -


3
  In 1990, the Supreme Court ruled that the 1975 Act was
unconstitutional as applied as it did not provide a thorough and
efficient system of education to pupils residing in poorer urban
districts, and ordered the Act to be amended or new legislation
passed in order to ensure proper funding for those districts.
Abbott v. Burke, 119 N.J. 287, 295, 384-85 (1990) (Abbott II).
The Abbott litigation continues to this day.      See Abbott v.
Burke, 206 N.J. 332 (2011).
4
  Limited purpose regional school districts operate one or more
of the following:     "elementary schools, junior high schools,
high schools, vocational schools, special schools, health
facilities or particular educational services or facilities."
N.J.S.A. 18A:13-2(b).



                                           6                                        A-0743-10T4
53; a petition to the Commissioner of Education (Commissioner)

for permission to conduct a referendum, N.J.S.A. 18A:13-54 and -

55;    a    report      from    the    Board     of       Review   (Board)     granting   or

denying      the       petition,      N.J.S.A.        18A:13-56;     and   a    referendum,

N.J.S.A. 18A:13-57 to -59.                  L. 1975, c. 360.

       In 1993, the Legislature again amended N.J.S.A. 18A:13-23

to allow regional districts to choose among equalized valuation,

per pupil enrollment, or a combination of the two through voter

approval at an annual or special election.                         L. 1993, c. 67, § 1;

N.     Haledon,        supra,    181    N.J.         at    166.      The   goal    of   this

legislation was to "encourage[] the formation of regional school

districts          by       allowing          school          districts         considering

regionalization greater freedom in determining how costs should

be apportioned among the constituent districts."                               Statement to

Assembly Substitute for A. 1822 and 1063 (Feb. 8, 1993).                                   In

this regard, the Legislature acknowledged that the requirement

of cost apportionment based on equalized valuation acted as "a

disincentive to regionalization for certain districts which have

high       property      values       and    a       small   pupil    population,       when

considering joining with a municipality that has low property

values      and    a    large   pupil       population."           See,    e.g.,   Assembly

Education Committee Statement to A. 1822 (Oct. 1, 1992); Senate




                                                 7                                 A-0743-10T4
Education Committee Statement to Assembly Substitute for A. 1822

and 1063 (Dec. 10, 1992).

    Also        in    1993,   the    Legislature            revised       the    law   which

provided    a    procedure     for    withdrawal            from    a    regional      school

district by adding a parallel procedure for the dissolution of a

district.        L.   1993,   c.     255.       This    amendment         set    forth    the

following standard for determining if a referendum on withdrawal

or dissolution was successful:

            For withdrawal from a regional district, the
            question shall be deemed adopted if it
            receives an affirmative vote of a majority
            of the votes cast within the withdrawing
            constituent district and it receives an
            affirmative vote of a majority of the
            overall votes cast in the entire regional
            district.    For dissolution of a regional
            district, the question shall be deemed
            adopted if it receives an affirmative vote
            in a majority of the individual constituent
            districts and it receives an affirmative
            vote of a majority of the overall votes cast
            in the entire regional district.

            [L. 1993, c. 255, § 8; N.J.S.A. 18A:13-59.]

The Legislature also authorized the State Board of Education to

promulgate regulations to effectuate the provisions of the Act.

L. 1993, c. 255, § 14.

    In 2004, the Supreme Court decided North Haledon.                                  There,

North Haledon, Haledon, and Prospect Park had formed a limited

purpose     regional      school      district         in     the       1950s,    providing

secondary education at Manchester Regional High School using a



                                            8                                       A-0743-10T4
per pupil method for apportioning costs; however, in l975 the

funding method was changed to an equalized valuation.                          Supra,

181 N.J. at 165.           Consequently, because North Haledon had the

highest tax base of the three municipalities, its share of the

operating costs significantly increased disproportionally to the

other two districts.         Id. at 165-66.

       After       the   1993      amendment,       North    Haledon       pursued     a

referendum that would return the district to per pupil cost

apportionment, which failed because it did not garner a majority

of voters in Haledon and Prospect Park.                     Id. at 166.      By 1994,

North Haledon was paying over half of the district's operating

costs and more than two to three times per pupil than that paid

by Haledon and Prospect Park, respectively.                        Ibid.     In 2001,

North Haledon was paying $18,400 per pupil, while Haledon was

paying $5300, and Prospect Park was paying $3400.                    Id. at 169.

       In 1998, North Haledon initiated the process of withdrawal.

Although the county superintendent's investigative report did

not favor withdrawal, North Haledon petitioned the Commissioner

for permission to hold a referendum pursuant to N.J.S.A. 18A:13-

54.          Id.   at    166-67.       The       Board   granted     the    petition,

notwithstanding that North Haledon's withdrawal would result in

a     nine    percent     reduction    in        white   students    in    Manchester

Regional's student body.              Id. at 167-72.         The Board found the




                                             9                                A-0743-10T4
racial impact negligible because, based upon demographic changes

in the three sending districts, whether North Haledon stayed or

withdrew,     the    minority       population    at    the    high     school    would

continue to rise and the white population would continue to

decline.      Id. at 172.

      The   Regional     Board,      Haledon,     and   Prospect       Park   appealed

the   Board's       order,    but    no   stay    was    entered       to   block     the

referendum     pending       appeal.      Ibid.        The    voters    approved       the

referendum at a special election, and the Commissioner set a

date for North Haledon's withdrawal from the district.                        Ibid.

      We reversed the Board, 363 N.J. Super. 130, 144 (App. Div.

2003), disagreeing that the anticipated nine percent decrease in

the   white    student       population    of     Manchester      Regional       was    a

negligible impact.           The Supreme Court affirmed, holding that

              the constitutional imperative to prevent
              segregation in our public schools applies as
              well to the Board within the ambit of the
              exercise   of  its   responsibilities  under
              N.J.S.A. 18A:13-56(b)(4), which requires the
              Board to deny a withdrawal petition for
              "[a]ny other reason, which it may deem to be
              sufficient."

              [N. Haledon, supra, 181 N.J. at 181.]

      The Court concluded that

              withdrawal by North Haledon will deny the
              benefits of the educational opportunity
              offered by a diverse student body to both
              the   students  remaining  at   Manchester
              Regional and to the students from North



                                          10                                   A-0743-10T4
         Haledon.    We conclude that the Board's
         decision permitting a referendum on the
         question of withdrawal is not sustainable as
         a matter of law, and affirm the decision of
         the   Appellate   Division  reversing   that
         decision.

         [Id. at 184.]

    However, the Court acknowledged North Haledon's justifiable

concern about the disproportional tax burden shouldered by its

citizens as compared to the other constituent municipalities,

id. at 184-85, so it modified the judgment and remanded to the

Commissioner "to develop, in consultation with the constituent

municipalities, an equitable cost apportionment scheme for the

Regional District."   Id. at 186.    In so ruling, the Court held:

         the constitutional imperative to address
         racial segregation requires the Board to
         compel North Haledon to remain in the
         Regional District despite the tax burden on
         its citizens. . . . [W]hen a constituent
         municipality is compelled to participate in
         a Regional District, N.J.S.A. 18A:13-23 is
         not applicable and the Commissioner may
         determine cost allocations among and between
         Haledon, Prospect Park, and North Haledon.

         [Ibid.]

    On remand, by letter dated September 21, 2004, the Attorney

General's office advised the Commissioner:

         You have requested advice concerning whether
         the authority granted to you by the Supreme
         Court in [North Haledon] to equitably revise
         the    cost     apportionments    among   the
         constituent districts in the Manchester
         Regional   High    School  District   may  be



                                11                          A-0743-10T4
          utilized in other situations.        You are
          advised that such power may be exercised by
          the Commissioner where the relative tax
          burden of the constituent districts in a
          regional district is inequitable and the
          Board of Review (or a reviewing court)
          denies   dissolution    or    withdrawal   of
          constituent districts from the regional
          school    district    because    dissolution/
          withdrawal would result in deficiencies of a
          constitutional dimension.

               . . . .

               In sum, the Commissioner is authorized
          to    act   notwithstanding      the    statutory
          provisions governing apportionment of costs
          among constituent school districts of a
          regional school district as set forth in
          N.J.S.A.     18A:13-23,    in      a    situation
          substantially similar to that present in
          [North    Haledon].        Specifically,      the
          Commissioner may determine cost allocations
          among and between the constituent districts
          where    there   is    the   presence     of   an
          inequitable tax burden -- which could be
          demonstrated    by   a   constituent     district
          unsuccessfully     seeking    to     change   the
          apportionment methodology -- and due to a
          constitutional imperative such as addressing
          racial segregation, the Board of Review (or
          a court reviewing the Board's determination)
          determines that the regional district must
          remain intact.

          [(Emphasis added).]

    By letter of January 18, 2005, the Commissioner advised

that cost apportionment in North Haledon would be sixty-seven

percent   equalized    valuation   and    thirty-three   percent   pupil

enrollment,   phased   in   over   four   years.    In   so   doing,   he

cautioned:



                                   12                           A-0743-10T4
           I stress that the apportionment methodology
           [adopted] is a unique response to the
           circumstances   existing  in    the  present
           matter, and that it is neither binding on
           the regional district in the event that the
           voters of the district and its constituents
           subsequently   elect   to  approve  a   cost
           apportionment method of the regional board's
           own devising pursuant to N.J.S.A. 18A:13-23,
           nor intended to be precedent-setting in any
           other situation where cost apportionment is
           at issue among the constituent members of a
           regional district.

    On numerous occasions both before and after North Haledon,

the Legislature has considered issues involving regional school

districts,    including      its    funding      and     the    procedures         for

withdrawal    from     or   dissolution     of    such    districts,         but    no

significant changes have been made.               Seaside Park has been an

active participant in those discussions.

    For example, in 1994, the Senate introduced S. 1313, which

would have made it easier for a district to withdraw from a

limited    purpose     regional    school     district,        but    it    was    not

enacted.     In   1996,     the    Legislature     established        a    panel    to

investigate regionalization.          L. 1996, c. 138, § 31.                The New

Jersey Regionalization Advisory Panel issued its final report in

January 1998.        See N.J. Regionalization Advisory Panel Final

Report        (Jan.          1998),         http://www.njleg.state.nj.us/

PropertyTaxSession/OPI/FinalReport.pdf.                  It     recognized         the

disincentives     to    regionalization,         including,      in       part,    tax




                                       13                                    A-0743-10T4
apportionments, and encouraged regionalization and the increased

use   of   shared   services     to    improve     efficiency         and    maximize

facilities    and     professional       resources       available          to      local

districts.      Id.    at   2,   6-7.        The   Panel       also    recommended

"legislation that would direct and empower the Commissioner of

Education,    supported     by   the     county    superintendents               and    in

cooperation     with      the    local       boards       of    education              and

administrations, to identify school districts that might benefit

financially   and     educationally      from    either    regionalization              or

consolidation of services with other school districts[,]" and

legally mandated regionalization where appropriate.                    Id. at 2.

      Also in 1996, the Assembly created a task force on school

district regionalization "to examine and develop recommendations

concerning    issues     associated      with      the    regionalization               of

schools, including but not limited to:              apportionment of costs;

incentives and disincentives for regionalization; the financial

impact of State aid on regionalization; and cost savings to

taxpayers."    Assem. Res. 127, 206th Leg. (Nov. 14, 1996).                            The

task force was continued in the 1998-1999 legislative session,

see Assem. Res. 1, 208th Leg. (Jan. 13, 1998), and it held




                                        14                                       A-0743-10T4
hearings on February 25, 1998, March 26, 1998, and August 13,

1998.5

     On February 25, 1999, the task force issued a report on its

findings and recommendations.   See Assembly Task Force on School

District    Regionalization     Findings   and   Recommendations,

http://www.njleg.state.nj.us/legislativepub/reports/school.pdf.

It found, in pertinent part, that:

           4.    The disproportionate distribution of
           costs among constituent municipalities in
           regionalized    districts   is   a    major
           disincentive to regionalization.   However,
           any formula change designed to bring parity
           in the per pupil costs of the constituent
           municipalities will result in "winners" and
           "losers."

           5.   Smaller, more affluent communities in
           regional school districts, which are locked
           into   paying   based   on   their  equalized
           valuation, as opposed to on a per-pupil
           basis, may wind up paying more than what
           they   otherwise   would   pay   in  a   non-
           regionalized district.

           6.   Development  trends    of   constituent
           municipalities within a     regional school

5
    The mayor of Seaside Park served as a member of the task
force, which specifically considered the experience of Central
Regional,    Assembly    Task   Force    on    School   District
Regionalization, Transcript of Feb. 25, 1998, (pp. 84-94);
Central Regional's expert in this litigation, Melvyn Wyns,
testified at the March 26, 1998 hearing, Assembly Task Force on
School District Regionalization, Transcript of March 26, 1998,
(pp. 24-41, 64-67); and one of plaintiffs' experts in this
litigation, James Kirtland, testified at the August 13, 1998
hearing, Assembly Task Force on School District Regionalization,
Transcript of Aug. 13, 1998, (pp. 80-81, 98-120).



                                 15                        A-0743-10T4
             district can also negatively impact on the
             cost inequity factor.

                    . . . .

             8.    Many districts exhibit concern over
             regionalizing because the deregionalization
             process proves rigid and difficult.   Major
             issues relating to division of debt service
             and assets, personnel retention policies,
             and the ability of each resulting district
             to adequately provide for the education of
             their students, must be considered.

             9.    Withdrawal   from    a   regionalized
             arrangement by a constituent municipality
             may prove overwhelming since the current
             procedures require a majority of voters
             across the regional district in addition to
             a majority of voters in the constituent
             municipality which wants to exit from the
             arrangement.

       The   task    force    recommended,             in   pertinent         part:     (1)

restructuring        of   regionalization                agreements        "to        allow

reassessment of cost distribution if the per pupil cost deviates

by more than 10% between any two constituent municipalities of

the    regional     district";       (2)    modification          of    the     equalized

valuation method for apportioning costs to a "fairer formula"

that     would       "provide        more         equity        among         constituent

municipalities,"       with     "a    realistic         mechanism       which     compels

equitable     adjustments        in        the        distribution        costs       among

constituent      municipalities       for       the    small    number     of    existing

regionalized      districts      which      currently          evidence    an     extreme

disproportionate distribution of costs"; and (3) amendment of



                                           16                                     A-0743-10T4
the    withdrawal    statutes,      allowing    a     municipality   to   opt   out

"without major obstacles when a specified threshold deviation in

the per pupil amount paid by each constituent municipality is

reached, perhaps 10%" and providing a mechanism "to join another

regional district or enter into a sending/receiving relationship

with another regional district."              Ibid.

       In 2002, the Legislature considered S. 295, which would

have    reduced    per-pupil     cost    disparities      in   certain    regional

school districts and increased state aid to those districts to

offset    the     reduction    in    municipal        contributions.      Central

Regional supported the measure, but it did not pass.

       In 2005, the Office of Legislative Services (OLS) issued a

Background Report, Regional School Districts:                   Apportionment of

Costs in the Constituent Municipalities (July 20, 2005).6                       The

OLS acknowledged the disincentives to regionalization, including

the    perception    of   inequity      felt    by    wealthier   municipalities

paying based upon equalized property value.                    It also noted the

difficulty in altering the funding method for currently existing

regional school districts:

                 A referendum on a change in the
            apportionment method must be approved "by
            the voters of each municipality."    Because
            of this voting requirement, a change in the
            method   of  cost  apportionment  is   quite

6
    http://www.njleg.state.nj.us/PropertyTaxSession/OPI/bg123.pdf.



                                         17                               A-0743-10T4
             difficult to accomplish. Such a change will
             always create "winners" and "losers" among
             the constituent municipalities, and those
             municipalities slated to "lose" will not
             vote in favor of a change that will result
             in increases in their tax levy.              The
             constituent   municipalities    which    benefit
             from the current apportionment method are
             granted   effective   veto   power    over   any
             possible change.

       In   2006,    the     Legislature      created      four    joint    legislative

committees to make recommendations regarding proposals to reform

property     taxes,    including       the    Joint     Legislative     Committee       on

Public School Funding Reform and the Joint Legislative Committee

on   Government      Consolidation       and      Shared   Services.        Assem.     Con.

Res.   3,   212th     Leg.    (July    28,     2006).       The    Consolidation       and

Shared      Services       Committee     held      hearings        during     which     it

considered,         among     other     items,        consolidation         of      school

districts;7     however,       its    November      15,     2006    report       did   not

specifically        address     regional       school      districts.         See      2006

Special      Session         Joint     Legislative          Committee        Government

Consolidation and Shared Services Final Report (Dec. 1,2006),

http://www.njleg.state.nj.us/PropertyTaxSession/OPI/jcgo_final_

report.pdf.

7
   Plaintiffs' counsel testified regarding regional school
districts at the November 1, 2006 hearing.     See Transcript of
Public Hearing before Joint Legislative Committee on Government
Consolidation and Shared Services, pp. 33-38 (Nov. 1, 2006),
http://www.njleg.state.nj.us/legislativepub/pubhear/jcgo110106.
pdf.



                                             18                                  A-0743-10T4
    Following hearings, the Funding Reform Committee issued its

final   report    in   December    2006.     See   Special    Session     Joint

Legislative Committee Public School Funding Reform Final Report

(Dec. 1, 2006), http://www.njleg.state.nj.us/PropertyTaxSession/

OPI/jcsf_final_report.pdf.         Pertinent to the present appeal, the

Committee recognized the value of regionalization as well as the

financial    disincentives    to    the    creation    of   regional    school

districts,       and   recommended     adopting       the    Department       of

Education's recommendations regarding the apportionment of costs

in regional districts as follows:

            Under the revisions, State aid and local
            property    tax     contributions    would    be
            calculated separately for each constituent
            municipality in a regional district.       [And]
            [n]o jurisdiction in a regional school
            district would pay a tax levy per pupil
            which    exceeds    the    actual   per    pupil
            expenditures     of    the    regional   school
            district.

            While some may be concerned that this change
            would artificially cap the burden of some
            taxpayers who have a greater ability to pay
            under the measures employed, it is believed
            that the policy and educational benefits of
            having regional school districts outweigh
            this concern.

    Also in 2006, S. 1585 was introduced, 212th Leg.,8 which

would have provided for the reduction of per pupil expenditures


8
  S. 1585 can be traced back to A. 2623, from the 209th Leg.
(2000-2001 Legislative Session).    In 2001, A. 2623 was
                                                  (continued)


                                      19                               A-0743-10T4
for     certain     constituent     municipalities     of   regional    school

districts.        It apparently was designed to eliminate the funding

complained about by Seaside Park.            It would have reduced the tax

burden    for     municipalities    that    are   constituents   of    regional

school districts but: (1) comprise less than 10% of the regional

school district enrollment; (2) have a tax levy to support the

regional school district of more than $1 million; and (3) have a

per pupil expenditure that is more than 200% of the average per

pupil    expenditure     of   all    constituent    municipalities      of   the

regional district.        State aid would have been provided to the

regional school district to compensate for the loss of revenue

from the constituent municipality.                The bill, however, never

proceeded beyond introduction, and it was not carried over or

re-introduced in any more legislative sessions.

      Additionally, A. 3261/S. 2289 and A. 3422 were introduced

in 2008, 213th Leg., which were carried over or reintroduced as

A. 1327/S. 1638 in 2010, 214th Leg.                 These bills would have

revised the voting requirements necessary for the dissolution of



(continued)
introduced, referred to two assembly committees, and also
reported out of committee with a second reading and fiscal
estimates (with Seaside Park identified in the 2001 fiscal
estimate as one of the municipalities that would experience tax
savings).   However, it did not pass, and was carried over in
legislative sessions through 2006, introduced as S. 1585, but
never went anywhere.



                                       20                              A-0743-10T4
limited purpose regional school districts.                     They would have made

dissolution easier by eliminating the requirement that there be

a majority of the overall vote as cast; instead, dissolution

could    occur   with      an   affirmative     vote     in    a     majority    of    the

individual constituent districts.                However, the bills did not

progress past introduction in either legislative session.

                                          II.

    We turn now to the specifics of our case.                           In the early

1950s,    Seaside     Heights,        Seaside   Park,    Island       Heights,     Ocean

Gate, Berkeley Township, and Lacey Township sent students to

Toms River schools on a tuition basis.                   In 1953, however, Toms

River    advised      that       it     could    no     longer        continue        that

relationship.         By    public     referendum       held    in    1954,     the    six

municipalities      formed      Central    Regional      as     a    limited    purpose

school district to educate their junior and senior high school

students (grades seven to twelve).9                   Central Regional's school

buildings are located in Berkeley Township, which is the largest

municipality     in     terms     of     geography,      population,       registered

voters, and student enrollment.




9
  The boards of education of the constituent municipalities
passed resolutions to hold July 1 and September 1, 1954
referenda to allow voters to decide whether to create the
District. The first referendum did not pass; the second passed.



                                          21                                    A-0743-10T4
      In    the    1954    referendum        by    which    Central     Regional      was

formed, the voters agreed to apportion costs based on per pupil

enrollment.          However,     the   1975       legislation        altered   Central

Regional's funding mechanism to an equalized property valuation

basis.      L. 1975, c. 212.          Although the 1993 legislation allowed

for   changes      to   the   funding    structure         of   regionalized     school

districts, no such change has ever been effectuated at Central

Regional.

      In 1976, Seaside Heights, Seaside Park, and Lacey Township

petitioned        the   Department      of        Education     for    permission      to

withdraw from Central Regional.                    On May 20, 1977, the Board

permitted Lacey Township to conduct a referendum, but rejected

the petitions of Seaside Heights and Seaside Park on the ground

that the proposed alternative to Central Regional, a sending-

receiving relationship with the Point Pleasant School District,

was   not    viable.          Lacey   Township's         withdrawal      from   Central

Regional was approved by voter referendum held in 1977.10

      In     1981,      Island    Heights         and    Seaside      Heights    passed

resolutions         requesting        that         the     county      superintendent

investigate the advisability of their withdrawal from Central

Regional.       Island Heights later withdrew its petition after a


10
  The withdrawal became effective on July 1, 1978, but for ease
of reference in this opinion we will use the 1977 date.



                                          22                                    A-0743-10T4
joint meeting of the constituent communities, and the county

superintendent issued his report regarding Seaside Heights.                                     In

l983,    Seaside       Heights       then       petitioned         the    Commissioner         for

permission        to     conduct       a    referendum            regarding        withdrawal.

Seaside Park objected, and the Board denied the petition.

       In   1985,      the    Berkeley      Township         Board       of   Education       (the

respective Boards of Education will hereafter be referred to as

BOE) commissioned a feasibility study regarding its potential

withdrawal      from      Central       Regional.                The   author      recommended

withdrawal, but there is no record of any further action.

       In November 1995, the Seaside Park BOE approved withdrawal

from Central Regional and pursued a send-receive relationship

with    Point     Pleasant         under    a    pilot       program.          However,       this

attempt to withdraw was unsuccessful.

       In   October          1998,     Seaside            Park     passed      a     resolution

requesting that Central Regional consider the resolution "as a

petition     seeking         an    alteration        in    the    formula      for    municipal

contributions to the District, so as to return to a per pupil

cost formula[.]"             The resolution otherwise reflected an intent

by    Seaside     Park       "to    seek    all      appropriate         legal     redress      to

withdraw" from Central Regional.                          The resolution also directs

the     Borough     Clerk-Administrator               to     promptly         forward    it     to

Central Regional.                 The record reflects that Central Regional




                                                23                                      A-0743-10T4
received the resolution and discussed it, but does not reflect

any decision by Central Regional or further action by Seaside

Park regarding the resolution.

      In 2003, Seaside Park adopted a resolution requesting that

Central Regional place a referendum on the ballot for voters in

the   constituent      municipalities              authorizing      a   change       in   the

funding formula for Central Regional to sixty percent equalized

valuation and forty percent per pupil.                     In contrast to the prior

resolution, this resolution contained no provision directing its

submission to Central Regional and the record does not reflect

anything    further     with     respect       to     this    resolution,       including

whether it was sent to Central Regional.

      In    April     2005,     at     Seaside       Park's    request,        Donald      E.

Beineman,    Ed.D.,     and     James     L.       Kirtland,     C.P.A.,    prepared        a

preliminary    feasibility           study,    opining       that   Seaside      Park     was

subsidizing     the     other        constituent         municipalities        and     could

realize    significant        cost    savings       by    withdrawing     from       Central

Regional and entering into a sending-receiving relationship with

nearby Toms River or Point Pleasant, or by Central Regional

being   dissolved      and    Berkeley        Township       creating    its     own      K-12

district.     Accordingly, in June 2005, Seaside Park and its BOE

passed resolutions formally instituting the instant process by

requesting    that     the     Ocean     County          Superintendent    of        Schools




                                              24                                  A-0743-10T4
conduct an investigation into the advisability of Seaside Park's

withdrawal        from,      or     the     dissolution        of,      Central     Regional

pursuant   to      N.J.S.A.        18A:13-51.           Seaside      Heights      and    Island

Heights    and       their        Boards     of    Education         passed       resolutions

requesting      an    investigation           as    to    only       the    dissolution        of

Central Regional.

      Central        Regional           retained        its      own       school       finance

consultant, Melvin L. Wyns, who authored a report in November

2005.      He      recommended          opposition        to     both      dissolution        and

withdrawal based on the adverse tax impact it would have on the

constituent municipalities.

      In March 2006, the county superintendent issued a report

advising against dissolution.                 He found the following advantages

to dissolution: reduced administrative costs by consolidation,

anticipated       increases         in     state        aid    for     select     districts,

reallocation of the tax levy, and the ability of each school

district     to      assess       and     evaluate       their       present      educational

concerns     during        the       process.            He      found      the     following

disadvantages:            possible         lack    of    continuity         of    educational

programs, need to establish new relationships between sending

and receiving districts, effects on staff at Central Regional

and   Berkeley       Township       elementary       school      regarding        tenure      and

seniority, negative tax levy impact on Berkeley Township and




                                              25                                        A-0743-10T4
Ocean   Gate,     potential     increased        cost    per     student     ratios    in

Berkeley Township, and lost ability to share unique costs among

all   constituent      districts.      The       superintendent        concluded      the

disadvantages of dissolution outweighed the advantages.                              Most

notable was the negative impact on the taxpayers of Berkeley

Township and Ocean Gate, "who represent over 80% of the resident

population."

       In April 2006, Seaside Park and its BOE filed a petition

with the State Department of Education seeking permission to

conduct a referendum on withdrawing from or dissolving Central

Regional pursuant to N.J.S.A. 18A:13-54.                   They requested, in the

event the Commissioner denied a referendum or the referendum was

defeated,       that   she    "use   her        inherent       power   to   create    an

equitable tax apportionment formula, based in whole or in part

on a per-pupil formulation, to fund the Central Regional School

District."      Central Regional opposed the petition.

       The Board held hearings in July and August 2006.                       It voted

to grant Seaside Park's petition for a referendum on dissolution

of    Central    Regional,      memorialized        in     a    written     opinion   of

September 1, 2006.           See N.J.S.A. 18A:13-56.             The referendum was

held on March 13, 2007, and was defeated by the voters because

although the majority of the constituent municipalities favored

dissolution, a majority of the overall voters in the District




                                           26                                  A-0743-10T4
did not.       See N.J.S.A. 18A:13-59.               The referendum passed in

Seaside    Park,    Seaside      Heights,      and   Island   Heights,       but   was

defeated in Berkeley Township and Ocean Gate.11

                                      III.

      In May 2007, plaintiffs filed a complaint in the Chancery

Division, commencing this litigation, and a month later filed a

first amended complaint.           Defendants and cross-appellants filed

responsive pleadings, and the Seaside Heights BOE filed a third-

party complaint.         Island Heights and its BOE and the Seaside

Heights BOE sought dissolution of Central Regional, consistent

with the expressed desire of the majority of the voters in their

municipalities.         Alternatively, the Seaside Heights BOE sought

permission to withdraw with Seaside Park, but Island Heights did

not   seek    to   withdraw.       Both     municipalities         opposed   Seaside

Park's unilateral withdrawal.             Moreover, neither Seaside Heights

nor Island Heights, or their respective Boards of Education,

sought alteration of the current funding formula.

      In     December    2007,     plaintiffs        filed    a    second    amended

complaint seeking an order:           (1) compelling the Commissioner to

exercise     her   inherent      equitable      powers   to       dissolve   Central

11
   At that time, Berkeley Township had about seven times the
number of registered voters of Seaside Heights, Seaside Park,
and Island Heights, combined.    Moreover, Berkeley Township had
1709 pupils in the District while Seaside Heights, Seaside Park,
and Island Heights had a total of 311 pupils in the District.



                                          27                                 A-0743-10T4
Regional, permit Seaside Park to withdraw, or change Central

Regional's funding method because the current allocation system

is inequitable as applied to them (count one); (2) declaring the

l975   and     l993   school   funding    legislation        unconstitutional        as

applied to plaintiffs because it impairs their contractual right

to per pupil funding (count two); (3) declaring the subject

legislation unconstitutional as applied to plaintiffs because it

constitutes      a    taking   of    their    property      right    to   per    pupil

funding without just compensation (count three); (4) requesting

the    court    exercise    its     equitable    power      to   dissolve     Central

Regional, permit plaintiffs' withdrawal, or change the funding

method    for    Central   Regional      because      the   statutory     remedy     is

illusory due to the larger number of voters in Berkeley Township

(count four); (5) declaring the subject legislation violative of

plaintiffs'      procedural due process because it provides Berkeley

Township with the absolute power to block any change in the

allocation      method     (count    five);     (6)    declaring      the     subject

legislation      violative     of   plaintiffs'       substantive      due    process

because the amendments are not rationally related to any alleged

legislative objective and deprive them of their property (tax

dollars and contract rights) (count six); and (7) declaring the

current      allocation    method     does      not   provide       Seaside     Park's

students with an efficient system of education because of the




                                         28                                   A-0743-10T4
disproportional monetary burden on its taxpayers (count seven).

Defendants filed responsive pleadings.

      Prior      to     the    second      amended      complaint       being     filed,     the

Commissioner           and    Berkeley          Township       moved     to     dismiss      the

complaint        and     cross-complaint.                Central       Regional        and   the

Berkeley Township BOE joined in the motion.                            Plaintiffs opposed

the   motion      on     the    basis      that       the     statutory       procedure      for

withdrawal or dissolution is illusory given the disparity of

voter    registration           in    Seaside         Park     and     Berkeley       Township.

Following argument, Judge Frank A. Buczynski, Jr. issued an oral

decision and order on February 21, 2008, dismissing several of

the   claims      and    remanding         an    issue       for    clarification       by     the

Commissioner.

      The     Commissioner           had    sought       dismissal       of     the     amended

complaint on the grounds of plaintiffs' failure to exhaust all

administrative remedies of modification of the current funding

allocation,       permission          to    withdraw         from     the     District,      and

dissolution of the District.                     See N.J.S.A. 18A:13-23.3, -54, -

55, -56, and -57.             The court noted that Seaside Park had passed

a resolution petitioning Central Regional to alter the formula

for municipal contributions in l998 under N.J.S.A. 18A:13-23,

which    apparently           was    ignored;         however,       plaintiffs       waited    a

decade      to    seek        judicial      review       or        assistance     to     compel




                                                 29                                    A-0743-10T4
compliance.      Accordingly, the court concluded that plaintiffs

had not exhausted their statutory remedies for modification of

the current funding method for Central Regional.                    Dissolution,

however,   had    already     been    voted    upon    by     the    constituent

municipalities    and    rejected.      The    order   thus    reflected    that

count one was dismissed with prejudice insofar as plaintiffs and

third-party      plaintiffs     sought        an   order       directing      the

Commissioner to exercise any authority to dissolve or permit

withdrawal from the District.

      The remaining claims in count one relating to the statutory

process for modifying the regional funding allocation method and

the   statutory     procedures       for      withdrawal      of     constituent

municipalities    were    dismissed    without     prejudice.         The   order

further provided that "[a]s to the claim that plaintiffs have

not exhausted all administrative remedies," any public body can

request in writing pursuant to N.J.S.A. 18A:13-23 that Central

Regional consider holding a referendum to change the current

regional funding allocation, and failure of Central Regional to

timely respond will be deemed a denial of the request.

      The court, however, remanded the matter to the Commissioner

"for clarification as to whether the Board of Review considered

the petition for an order to conduct a referendum on the issue

of withdrawal on the merits."          The court required the Board to




                                      30                                A-0743-10T4
advise in writing that it addressed the issue of withdrawal, or

if    it     did     not,    to   consider       the    issue   "as      directed    by     the

Commissioner."

       The court also dismissed the constitutional claims (counts

two, three, five, and six) with prejudice as brought by the

governmental entities, but denied the motion to dismiss as to

the    individual          taxpayer        plaintiffs.       Specifically,         the   court

held that Seaside Park and its BOE lacked standing to pursue the

claims       of    impairment         of    contracts,      taking    of    property,       and

procedural and substantive due process violations based on the

principle, with citing reference, that municipalities and their

boards       of    education      as       political   subdivisions         generally     lack

standing to assert constitutional claims against other political

bodies such as the Commissioner.

       The        court     further    dismissed       counts     four     and   seven    with

prejudice as to all parties based on a failure to state a claim.

As     to     count       four,   the       court    held    that     the    mere    fact     a

constituent municipality may vote against the relief requested

in a referendum does not make the remedy illusory as a matter of

law,        noting    Lacey       Township's         withdrawal      from    the    District

following the 1975 revision.                   As to count seven, the court found

that plaintiffs failed to challenge any of the ten elements of a




                                                31                                   A-0743-10T4
"thorough    and     efficient"   education         articulated            in    Abbott    II,

supra, 119 N.J. at 350 n.23.

      The only claims that survived the court's February 21, 2008

decision were those constitutional claims asserted on behalf of

the taxpayer plaintiffs in counts two, three, five, and six.

Specifically, those claims alleged that the l975 and l993 laws:

(1) substantially impaired taxpayer plaintiffs' "contracts" with

the   regional     district;     (2)    constituted            a    taking      of   property

without    just    compensation;        (3)    violated            taxpayer     plaintiffs'

procedural     due     process    rights;          and    (4)        violated        taxpayer

plaintiffs' substantive due process rights.

      Plaintiffs       moved     for     reconsideration.                 Following       oral

argument on May 9, the court denied the motion on the record,

memorialized in an order of June 9, 2008.

      On May 19, 2008, the Commissioner notified Judge Buczynski

that the Board only considered the issue of dissolution and not

whether     Seaside     Park     should       be    granted           a    referendum       on

withdrawal.       She explained that in Seaside Park's petition, the

withdrawal relief was only requested in the alternative if the

Board denied its request for a referendum on dissolution, which

it did not.

      By    resolution    dated        September         10,       2008,     Seaside      Park

applied to the county superintendent for another investigation




                                          32                                         A-0743-10T4
into the advisability of Seaside Park's withdrawal from Central

Regional.         Our     record    reflects       no   proceedings       on     this

application.

       In response to the court's February 21, 2008 decision, by

resolution of February 27, 2008, Seaside Park requested that

Central Regional conduct a public referendum regarding a revised

funding formula.          On April 21, 2009, a referendum was held with

respect to altering Central Regional's cost allocation method

from equalized valuation to per pupil cost.                 It did not pass.

       Seaside Park also pursued modification of the District's

funding formula with the Department of Education.                      By letters

dated March 11, May 16, and July 29, 2008, the Mayor of Seaside

Park    sought      the    Commissioner's      assistance      and   support       in

resolving     the     "inequitable     tax     apportionment"        in     Central

Regional.     The Commissioner responded to each of the letters,

and    in   her   letter     of    August    18,    2008,    advised      that   the

Department had reviewed the data Seaside Park provided and was

aware of the per pupil costs borne by the constituent members of

Central Regional.         She added:

            The situation you described is not unlike
            that     of     many     other    constituent
            municipalities     involved    in    regional
            districts where there is simultaneously a
            wide   disparity   in   property  value   and
            enrollment among the constituents.     As you
            correctly pointed out, the existing tax
            apportionment methodology, and any attempt



                                        33                                 A-0743-10T4
               to change it, is governed by statute.      I
               recognize that it is often difficult and
               sometimes impossible to get the statutory
               voting majorities to effect the coveted
               change.    Unfortunately, as Commissioner I
               cannot impose that change, as I too must
               adhere to the existing statute.     However,
               with the recent passage of laws giving the
               Executive County Superintendent a wide range
               of authority to seek out and recommend
               programs and services that lead to increased
               efficiency at the district level, I will ask
               that your district receive swift attention
               in this matter.

                    It is my hope that in cooperation with
               the county office it may be possible to find
               a solution to your problem that would be
               acceptable to all of the parties involved,
               and one that will not harm the school
               district's ability to provide a quality
               public school education to all of the
               children.

       In    2010,    the     parties      filed   cross-motions      for    summary

judgment.        Following oral argument, by opinion and order of

August 30, 2010, Judge Buczynski denied plaintiffs' motions and

granted      defendants'      motions      dismissing    the    remaining     counts

(two, three, five, and six) as to the taxpayer plaintiffs.                         The

judge       found    "[t]he      record    [was]     bereft    of    any    evidence

supporting the existence of a contractual relationship between

the    parties[,]"     expressly        concluding    the     resolutions    of    the

constituent districts to hold the 1954 referenda to allow voters

to    decide    whether     to    create    the    District    did   not    meet   the

requirements of a valid contract.                   Nor was there a "taking"




                                           34                                A-0743-10T4
because     "[p]laintiffs    did    not        hold      a     property         right    in    the

original     funding   formula."             Similarly,         the     judge         held    that

"[p]laintiffs were not denied substantive due process because

[they] did not hold a fundamental right in the funding scheme

used for the District."

      Judge    Buczynski    was     also           convinced         that       pursuing       the

"drastic remedy" of "exercising control over the Commissioner

and   usurping     her     authority          is      not       warranted          under      the

['undisputed material'] facts of this case" and granting the

extraordinary equitable remedies sought by plaintiffs of "court

ordered     dissolution     of     the        District,         or      court      permission

allowing Seaside Park to withdraw, or court ordered modification

of    the    funding     formula,        .     .     .        without       a     finding       of

constitutional     violations[,]             would       be    an    abuse       of     judicial

discretion."

      He concluded:

                  Property owners' dissatisfaction with
             the current funding formula or their belief
             that it is unfair is not a basis for the
             court to intrude into what is a Legislative
             prerogative.      Central   Regional   School
             District   was  created   under   terms   and
             conditions outlined by our Legislature.
             Moreover, the funding formula was determined
             by the Legislature.    Controlling costs for
             education is one of several significant
             issues facing our State.    Our Governor and
             Legislature are facing complex economic
             challenges.     It   is   the   Legislature's
             obligation to provide for a thorough and



                                             35                                         A-0743-10T4
          efficient education as mandated in Article
          VIII, Section 4, Paragraph 1 of the New
          Jersey Constitution.    Therefore, it is for
          the Legislature to determine if the current
          educational funding used in Central Regional
          School   District   should   be   revised or
          repealed, not the court.

     Plaintiffs   appealed.    Seaside   Heights   BOE   and    Island

Heights and its BOE cross-appealed.

     On appeal, plaintiffs argue:12

          POINT I13
          THE TRIAL COURT ERRED IN DISMISSING, ON THE
          PLEADINGS ALONE, COUNTS ONE, FOUR, SIX, AND
          SEVEN, BECAUSE EACH COUNT SETS FORTH A VALID
          CAUSE OF ACTION.

          A.   The Trial Court Erred In Finding That
          Plaintiffs    Had   Not   Exhausted  Their
          Administrative Remedies And, As A Result,
          Dismissing Count One.

               l.    The trial court erred in
               finding that Plaintiffs failed to
               pursue withdrawal from Central.

               2.    The trial court erred in
               finding that Plaintiffs failed to
               pursue modification of the cost
               allocation method.

          B.   The Trial Court erred In Finding That
          The Commissioner Has No Equitable Authority
          To Modify A Regional District's Funding
          Formula.

12
  Plaintiffs' arguments regarding counts two, three, five, and
six do not challenge the court's ruling that Seaside Park and
its BOE lacked standing.
13
  We renumber plaintiffs' arguments as their Point I sets forth
the standard of review.



                                36                             A-0743-10T4
    l.     The trial court erred by
    dismissing an issue of "first
    impression"   at  the  pleadings
    stage.

    2.    Plaintiffs are entitled to
    equitable modification of the tax
    allocation   method   for  Central
    pursuant to the Supreme Court's
    decision in North Haledon.

C.    The Trial Court Erred By Dismissing
Count Four Because Plaintiffs Raised A
Cognizable    Claim   That    The   Statutory
Processes For Modification Of The Cost
Apportionment For, As Well As Withdrawal
From   Or   Dissolution   Of,   Central   Are
Illusory.

D.    The Trial Court Erred By Dismissing
Count Seven Because Plaintiffs Raised A
Cognizable Claim That The Current Method Of
Cost Apportionment For Central Does Not
Provide Plaintiffs With An Efficient System
Of Education For Their Students.

POINT II
THE TRIAL COURT ERRED IN GRANTING SUMMARY
JUDGMENT AS TO COUNT TWO BECAUSE THE
LEGISLATION AT ISSUE VIOLATED THE CONTRACTS
CLAUSES   OF   THE  U.S.  AND   NEW  JERSEY
CONSTITUTIONS AS APPLIED.

A.    The Trial Court Erred In Ruling That,
As a Matter of Law, There Was No Contract
Between The Various Parties.

B. The Trial Court Erred In Ruling That, As
a Matter of Law, Plaintiffs Were Not The
Third-Party Beneficiaries Of The Contract At
Issue.

C.   The Trial Court Failed To Analyze The
Substantial Impact Prong Of The Analysis.




                     37                         A-0743-10T4
           D. The Trial Court Erred In Finding That The
           Legislation At Issue Furthers A Legitimate
           Public Purpose.

           POINT III
           THE TRIAL COURT ERRED IN GRANTING SUMMARY
           JUDGMENT AS TO COUNT THREE BECAUSE THE
           LEGISLATION   AT   ISSUE   CONSTITUTED  AN
           UNCONSTITUTIONAL TAKING OF THE PLAINTIFFS'
           PROPERTY RIGHTS.

           POINT IV
           THE TRIAL COURT ERRED IN GRANTING SUMMARY
           JUDGMENT AS TO COUNT SIX BECAUSE THE 1975
           REVISION VIOLATED PLAINTIFFS' SUBSTANTIVE
           DUE PROCESS RIGHTS.

           POINT V
           THE TRIAL COURT ERRED WHEN IT REFUSED TO
           ADDRESS PLAINTIFFS' EQUITABLE CLAIMS AND
           SUBSTANTIVE DUE PROCESS CLAIMS.

           POINT VI
           PLAINTIFFS DEMONSTRATED GOOD AND JUST CAUSE
           FOR   THE  TRIAL   COURT  TO  EXERCISE  ITS
           EQUITABLE POWERS TO ADDRESS THE INEQUITIES
           OF THE CURRENT SITUATION.

    At    oral   argument   before     us,   counsel    for      Seaside   Park

advised   that   it   sought   the     direct   relief      of    a   judicial

determination    on   the   merits,    permitting      it   to    dissolve   or

withdraw from Central Regional, or to modify Central Regional's

cost allocation method.      Alternatively it sought a remand to the

Commissioner with direction to apply North Haledon remedies.

    In its cross-appeal, the Seaside Heights BOE argues that

the court erred in dismissing all counts of its complaint upon a

finding that it lacked standing to assert constitutional claims.




                                      38                              A-0743-10T4
At oral argument before us, its attorney reiterated that it

joined plaintiffs' request for dissolution of Central Regional

or alternatively supported the withdrawal of Seaside Park and

Seaside Heights, but did not support unilateral withdrawal by

Seaside Park or revision of the tax apportion formula.

      The Island Heights BOE asserts error by the court in: (1)

dismissing       count    four        because           the    evidence       supported      a

cognizable    claim      that       the    statutory          process    is    an   illusory

remedy;    (2)     granting         summary     judgment        dismissing        count   two

because the legislation violated the contracts clauses of the

United    States    and       New    Jersey     Constitutions           as    applied;    (3)

granting     summary      judgment         as      to    count     three      because     the

legislation      constituted          an   unconstitutional             taking;     and   (4)

granting summary judgment dismissing count six because the 1975

legislation      violated       the       parties'       due    process       rights.       It

further contends the evidence before the court demonstrated good

and   just    cause      to    address        the       inequities      of    the    current

situation by ordering dissolution of the District.

      Island Heights' arguments echo the abovementioned second,

third, and fourth arguments.                It additionally contends the court

should have accepted the allegations of the complaint as true

for purposes of the dismissal motion including, for example,

that the referenda were contracts, that taxpayer plaintiffs were




                                              39                                    A-0743-10T4
third-party beneficiaries of the contract formed by the 1954

referenda,      that     the      l975        and        l993    revisions       substantially

impaired any contractual relationship plaintiffs may have had

with the other members of the District, and that plaintiffs had

a   property     interest        as     to      the      1954    referenda.           It    further

contends that material factual questions existed as to whether

the    l993     revision         allowed         for       a     realistic      means        for     a

municipality to remove itself from the District and whether the

funding      changes    mandated           by      the    l975     revision      violated          the

constitutional         rights         of     the         residents       of     the    plaintiff

municipalities.         At oral argument before us, the attorneys for

Island       Heights    and       its        BOE        reiterated       that     they       joined

plaintiffs'         request      for         dissolution          of     Central       Regional;

however, they did not support unilateral withdrawal by Seaside

Park   or     revision      of    the        tax      apportion        formula,       and    Island

Heights did not seek withdrawal from the District if it were not

dissolved.

                                                 IV.

       The    Commissioner        argues         that      the    cross-appeals            filed    by

Island Heights and its BOE should be dismissed under Rule 2:8-2

because      they    lack   standing            to      appeal    from    the    dismissal          of

claims they did not assert in the trial court.                                The Commissioner

notes that the Seaside Heights BOE filed cross-claims asserting




                                                   40                                       A-0743-10T4
the   same    causes       of   action   as     plaintiffs   but    neither      Island

Heights nor its BOE asserted affirmative claims other than a

counterclaim         for        indemnification       and     cross-claims           for

contribution and/or indemnification.

      Only parties aggrieved by a judgment may appeal, meaning

those with "a personal or pecuniary interest or property right

adversely affected by the judgment in question."                         Howard Sav.

Inst. v. Peep, 34 N.J. 494, 499 (1961).                   Island Heights and its

BOE   did    not    file    any   affirmative      claims    for    relief.       Thus,

although they supported plaintiffs' prayer for dissolution of

the District, they were not aggrieved by the final judgment.

See Donofrio v. Farr Lincoln Mercury, Inc., 54 N.J. Super. 500,

504-07      (App.       Div.    1959).        Nevertheless,        considering       the

compelling public policy and public interest at stake, Tiger v.

Am. Legion Post, 125 N.J. Super. 361, 371 (App. Div. 1973), and

the fact that we will be addressing Island Heights' and its

BOE's arguments in the context of plaintiffs' appeal, we discern

no basis to dismiss their cross-appeals at this juncture.

      We    first    address      and    reject    plaintiffs'     and   the    Island

Heights BOE's arguments that the court did not apply the proper

standard     for    a    motion    to    dismiss    and   should    have   permitted

plaintiffs to develop their claims through discovery, and that




                                           41                                  A-0743-10T4
there were genuine issues of material fact precluding summary

judgment in defendants' favor.

    "Appellate review of an order dismissing an action [under

Rule 4:6-2(e), for failure to state a claim upon which relief

may be granted] is governed by a standard no different than that

applied by the trial courts."              Seidenberg v. Summit Bank, 348

N.J. Super. 243, 250 (App. Div. 2002).                   The court examines the

legal   sufficiency    of    the   facts       alleged    on   the   face    of    the

complaint,    doing     so    with    liberality,           and   accords       every

reasonable    inference      to    the        plaintiffs.         Printing      Mart-

Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989).

Dismissal    of   a   complaint,     however,       "is     mandated   where       the

factual allegations are palpably insufficient to support a claim

upon which relief can be granted."                  Rieder v. N.J. Dep't of

Transp., 221 N.J. Super. 547, 552 (App. Div. 1987).

    We review the grant of summary judgment de novo, applying

the same standard used by the motion judge under Rule 4:46.

Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010);

Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009).                        We

first consider whether the moving party has demonstrated that

there are no genuine disputes as to material facts, viewed in

the light most favorable to the non-moving party, i.e., "whether

the competent evidential materials presented, when viewed in the




                                         42                                  A-0743-10T4
light most favorable to the non-moving party, are sufficient to

permit a rational factfinder to resolve the alleged disputed

issues in favor of the non-moving party."              Brill v. Guardian

Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); see also R.

4:46-2(c).     If the evidence is "'so one-sided that one party

must prevail as a matter of law,'" then summary judgment should

be granted.     Brill, supra, 142 N.J. at 540 (quoting Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512,

91 L. Ed. 2d 202, 214 (1986)).           We then decide whether the

motion judge's application of the law was correct.                 Atl. Mut.

Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 231

(App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing,

we accord no deference to the motion judge's conclusions on

issues of law, Estate of Hanges v. Metro. Prop. & Cas. Ins. Co.,

202 N.J. 369, 382-83 (2010); Manalapan Realty, L.P., v. Twp.

Comm. of Manalapan, 140 N.J. 366, 378 (1995), which we review de

novo.

    Based on our review of the record, we are satisfied Judge

Buczynski     applied   the   appropriate      legal   standards     in   the

challenged    orders.     Plaintiffs    were    afforded   all     favorable

inferences as to their allegations of fact pertaining to the

resolutions, referenda, studies, and financial inequalities of

the funding formula.     Their challenges on appeal with respect to




                                   43                               A-0743-10T4
this issue, however, involve legal conclusions, such as whether

the municipal entities had standing; whether those facts created

a contract, property right, or established other prima facie

constitutional      claims;    or   whether       those    facts     justified   the

extraordinary       relief    of    an    exception       to   the    doctrine    of

exhaustion of administrative remedies or a unique North Haledon

remedy.     For the reasons set forth in the judge's comprehensive

oral decisions and written opinion, we are satisfied he provided

ample legal basis for dismissing some of the counts under Rule

4:6-2(e),    and    the   balance    of     the   complaint     subsequently      on

cross-motions for summary judgment.

               A.    Count One -         Exhaustion of Remedies

    In their first count, plaintiffs sought an order compelling

the Commissioner to use her "inherent power" as set forth in

North Haledon to provide them with equitable relief in the form

of dissolution of Central Regional, authorization for Seaside

Park's withdrawal from Central Regional, or modification of the

cost apportionment used by Central Regional.                   In February 2008,

Judge Buczynski dismissed this count on the ground that the

referendum had been unsuccessful on dissolution and plaintiffs

had failed to exhaust their administrative remedies regarding

withdrawal from the District or alteration of the District's

funding formula.       He directed plaintiffs to pursue alteration of




                                          44                               A-0743-10T4
the funding formula through the statutory mechanism, i.e., an

updated     request      to   Central      Regional,         and    remanded    to    the

Commissioner       for    consideration           of     plaintiffs'      alternative

request for a referendum on withdrawal.

      Then,   at    plaintiffs'         request,        Central     Regional    held     a

referendum    for     alteration      of    the    District's       funding    formula,

which failed.       Seaside Park requested similar relief in letters

to the Commissioner, who responded that she had no authority to

do    so.     In      response     to      the     trial     court's    remand,       the

Commissioner advised that she had only considered plaintiffs'

alternative request for dissolution, which she had authorized by

referendum.

      Plaintiffs first assert error by the court in finding they

had not exhausted their administrative remedies as to withdrawal

and modification of the cost apportionment formula.                           They urge

that they diligently sought relief from Central Regional and the

Commissioner to no avail.             Plaintiffs point to the fact that all

of    the   feasibility       studies       addressed        both    Seaside     Park's

withdrawal from and dissolution of Central Regional and they

sought alternate relief from the Commissioner.                          Nevertheless,

the   Commissioner       chose   to     only      act   on   their    request     for    a

referendum on dissolution, which was defeated by the voters in

March 2007.     Plaintiffs also contend they made repeated requests




                                           45                                   A-0743-10T4
after 1998 to have the funding method changed, which Central

Regional ignored, a fact the court failed to consider in its

exhaustion analysis.

       Plaintiffs further argue that mandating the exhaustion of

remedies   would       be    futile.        They    note    that    the     referenda   on

dissolution and altering the cost apportionment formula failed,

and posit that even if the Commissioner approved a referendum on

withdrawal,      it    likely    would      not     succeed    given      that   Berkeley

Township   has        more   total     voters       than    the     other    constituent

municipalities combined.

       Requiring       exhaustion      of     administrative         remedies      before

seeking judicial relief is a tenet of administrative law and

established by court rule.               See Abbott v. Burke, 100 N.J. 269,

296     (1985)        ("In      general,           available        and      appropriate

'administrative         remedies       should       be     fully     explored     before

judicial action is sanctioned.'") (quoting Garrow v. Elizabeth

Gen.   Hosp.   &      Dispensary,      79    N.J.    549,     558   (1979));     R.   2:2-

3(a)(2).    The exhaustion requirement serves three primary goals:

(1) it ensures that claims are initially heard by the body with

expertise in the area; (2) it produces a full factual record

facilitating meaningful appellate review; and (3) it conserves

judicial resources because the agency decision may satisfy the

parties.    Bd. of Educ. of Bernards v. Bernards Twp. Educ. Ass'n,




                                             46                                  A-0743-10T4
79 N.J. 311, 317 (1979).           We also have recognized the Department

of Education's "fundamental and indispensable jurisdiction" over

controversies and disputes arising under the school laws, and

have held that the doctrine of exhaustion of remedies requires

parties       to   attempt     resolution     of    such    matters     using     the

administrative process.            Theodore v. Dover Bd. of Educ., 183

N.J. Super. 407, 412-14 (App. Div. 1982).

       Nevertheless,       exhaustion    of   remedies      is   not   an   absolute

prerequisite to litigation.             N.J. Civ. Serv. Ass'n v. State, 88

N.J. 605, 613 (1982).

              Exceptions are made when the administrative
              remedies would be futile, when irreparable
              harm would result, when jurisdiction of the
              agency is doubtful, or when an overriding
              public interest calls for a prompt judicial
              decision. We have frequently held that in a
              case involving only legal questions, the
              doctrine of exhaustion of administrative
              remedies does not apply.

              [Ibid. (internal citation omitted).]

Thus,       "except   in   those   cases      where   the    legislature        vests

exclusive primary jurisdiction in an agency, a plaintiff may

seek relief in our trial courts."                  Abbott, supra, 100 N.J. at

297.

       We    are   satisfied    that    plaintiffs    did    not   exhaust      their

administrative        remedies     as    to    withdrawal        and    failed     to

demonstrate why the doctrine should not be invoked under the




                                         47                                 A-0743-10T4
circumstances        of    this    case.            The    case       can    and   should    be

considered in the first instance by the Commissioner pursuant to

the statutory scheme.             The Legislature established a process for

constituent municipalities to seek to withdraw from a regional

school district.            N.J.S.A. 18A:13-51 to -59.                         The statutory

mechanism provides that the Board is the sole entity that can

grant a petition for permission to conduct a referendum on the

issue     of    dissolution        or    withdrawal.                  N.J.S.A.     18A:13-56.

Plaintiff's April 27, 2006 petition requested that the Board,

pursuant to N.J.S.A. 18A:13-56, authorize a referendum on the

issue of dissolution of Central Regional and expressly pled that

if that request were "not to be considered, the Board should

authorize an alternative referendum on the withdrawal of Seaside

Park."    (Emphasis added).

    Plaintiffs received the relief they requested; the Board

followed the statutory process and granted plaintiffs permission

to hold a referendum on the issue of dissolution of Central

Regional as set forth in a detailed letter of September 1, 2006.

Rather    than       pursuing     their        alternate         relief       of   withdrawal

through        the   administrative            channels          as     mandated     by     the

Legislature, plaintiffs filed suit.                       In an abundance of caution,

Judge    Buczynski        remanded      that    issue       to    the       Commissioner    for

clarification, and we are satisfied an appropriate explanation




                                               48                                    A-0743-10T4
was provided for the Board's decision solely on the issue of

dissolution.

       We     are   also    not   persuaded       by   plaintiffs'     argument   of

futility based on the premise that that even if Seaside Park

secured a referendum on withdrawal, the resulting tax increase

and the veto power held by Berkeley Township virtually ensure

that    passage      of    such   a    referendum      would   never    occur.      A

speculation is insufficient.             See Harrow v. Prudential Ins. Co.,

279 F.3d 244, 249 (3d Cir. 2002) (requiring a plaintiff to make

a "'clear and positive showing of futility'" to warrant waiver

of     the     exhaustion     requirement)        (citation     omitted)).         We

recognize that Seaside Park has an uphill battle but as noted by

Judge Buczynski, the remedy is not illusory, as evidenced by

Lacey        Township's     withdrawal       in   1977.        Circumstances      and

attitudes of voters change over time.                     For example, we cannot

speculate as to            the potential impact of Superstorm Sandy in

October 2012 on the pupil enrollment and tax base of Seaside

Park and the other constituent municipalities in the District.

The Legislature was well aware of this fluidity when it enacted

and     revised     the     statutes    in     Title    18A    that    created    and

implemented the comprehensive scheme regarding regional school

districts.




                                          49                               A-0743-10T4
      Contrary    to     plaintiffs'            assertion,          the    record         amply

supports the court's factual finding that Seaside Park slept on

its   rights   after     it    passed         the    1998    Resolution         petitioning

Central     Regional      to        alter          the     formula        for     municipal

contributions.         Discovery        did    not       "produce    evidence      that       at

least one request was made each year for the 3 or 4 years

leading up to the filing of the Complaint."                               Plaintiff David

Meyer's testimony was vague, couched in terms of "I believe,"

was     non-specific     as    to       dates,       and    was     largely       based       on

information    provided       to    him       from       unidentified      persons.           No

document was provided other than the 1998 and 2003 Resolutions

and, as previously noted, no testimony or evidence was presented

that the 2003 Resolution was, in fact, sent to Central Regional.

Judge    Buczynski     correctly        concluded         that    plaintiffs       were      not

entitled to judicial intervention on this issue.                                 He advised

Seaside Park to pursue its statutory remedy of adopting and

forwarding a new resolution to Central Regional requesting a

referendum     authorizing          this       relief,       which    it        did.         The

referendum failed but the process was followed and the voters

spoke,    as   anticipated         by    the       Legislature       in    devising        this

comprehensive scheme.




                                              50                                       A-0743-10T4
                 B.     Count One -       Commissioner's Authority

      Plaintiffs next contend the court erred in dismissing count

one because, as they alternatively requested in their April 2006

Resolution,       the    Commissioner        has   inherent     authority        to    alter

Central     Regional's         funding      formula    under     North       Haledon        to

provide equitable relief to Seaside Park.                      They emphasize that

in both cases when the voters initially approved the formation

of the regional school district, costs were to be apportioned on

a   per   pupil       basis,   which      funding     method    was       changed     to   an

equalized       valuation      by   the     1975   revision.        See     N.   Haledon,

supra,    181     N.J.    at   165.       This     resulted    in     a    significantly

disproportionate increase in the operating costs of both North

Haledon    and    Seaside      Park    as    compared    with    their       constituent

districts, even though their students only accounted for a small

portion of the overall student body.                  See id. at 166.

      Seaside Park urges that its plight is "far worse than that

which     the     Supreme       Court       identified     as       inequitable            and

disproportionate in North Haledon" and that it meets the two

requisites to equitable relief as articulated by the Attorney

General, i.e., that it is compelled to remain in the district

and it is burdened with a disproportionate tax liability.                                  It

argues that "[w]hile North Haledon was compelled to remain in

the district due to the Court's belief that the Constitution




                                             51                                     A-0743-10T4
required it, Seaside Park is likewise compelled to remain in its

district,"   against     the   wishes    of       ninety-five   percent   of    its

voters,    "because    the     Legislature         believed     that   the     1975

Revision, which imposed the current cost allocation method [and

gave Berkeley Township and Ocean Gate a '$3 million incentive to

keep    Seaside   Park    a    member        of     Central'    Regional],      was

constitutionally required."         Seaside Park also points to the

growing inequitable burden placed on its taxpayers reflected in

its charts, noting, for example, that in the 2009-2010 school

year alone, its taxpayers paid about twelve times the per pupil

amount than paid by the taxpayers of Ocean Gate and seven times

more than that paid by the taxpayers of Berkeley Township.14

       Even if we were to accept plaintiffs' argument that they

exhausted their administrative remedies and are subject to a

substantially inequitable allocation, they would not be entitled


14
   During the rebuttal portion of oral argument before us,
counsel for Seaside Park mentioned as persuasive authority a
pending matter in which the Borough of Oradell had made an
application to the Commissioner for equitable relief, which the
Commissioner apparently referred to an administrative law judge.
Following argument, counsel submitted a January 24, 2012 letter
from the Commissioner regarding that matter.         The Deputy
Attorney General on behalf of the Commissioner objected to the
submission as it was not part of the trial record, plaintiffs
did not move to supplement the record, and the parties were
deprived of an opportunity to respond during the litigation.
See R. 2:5-4, 2:5-5.         The Commissioner's objection was
appropriate,   and   we   thus   disregard  this   post-argument
submission.



                                        52                                A-0743-10T4
to    the    extraordinary            equitable      relief      afforded       in    the     North

Haledon case.

       Following          passage      of    the    1993     amendment,        North     Haledon

unsuccessfully            pursued       a   referendum          seeking    to        return    the

district        to    a   per-pupil         cost    apportionment.             Ibid.          Here,

however, as previously discussed, Seaside Park had not actively

pursued a referendum seeking to return Central Regional to a

per-pupil        cost      apportionment           at     the    time     of     the     court's

dismissal of the first count.                      More critically, however, North

Haledon's application for withdrawal was granted by the Board,

and    the      referendum        was       successful.           Id.     at    172,     176-84.

However,        the   Court       having     found      it   was    one    of     "those       rare

circumstances"              requiring              judicial         intervention              with

administrative action, id. at 176, compelled North Haledon to

remain      a   member      of    a    regional      school      district       in     order    to

maintain a racially diverse student body.                          Id. at 172, 176-84.

       In this unique situation, the Court remanded the case to

the    Commissioner          to     implement        an    equitable       cost       allocation

formula         for       North       Haledon's         regional        school         district,

explaining:

                There is no suggestion in the record that
                North Haledon was racially motivated in
                petitioning for withdrawal; rather, North
                Haledon was justifiably concerned about the
                disproportional tax burden . . . carried by
                its citizens in relation to the other



                                                53                                      A-0743-10T4
constituent   municipalities.    We   are   not
unaware   of   the   frustration    and   anger
expressed by the senior citizens of North
Haledon   who    have   fixed    incomes    and
escalating property taxes. On the one hand,
North Haledon lost a referendum on the
question whether to alter the apportionment
scheme because the statute, N.J.S.A. 18A:13-
23, grants an effective veto power to
Haledon and Prospect Park who benefit from
the equalized valuation method North Haledon
seeks to change.    On the other hand, North
Haledon   cannot   petition   for    withdrawal
because of the impact of withdrawal on the
racial balance of the students attending
Manchester Regional.

     We    confronted     a    similar    issue
subsequent to our decision in Jenkins[ v.
Township of Morris School District, 58 N.J.
483, 492-93, 504 (1971), where we held the
Commissioner possessed the power and duty to
act to prevent withdrawal of Morris Township
students from Morristown High School and to
compel a merger of the two districts to
prevent de facto segregation]. After Jenkins
issued,   the   Commissioner    compelled   the
merger of the Morristown and Morris Township
school systems.      Twp. Comm. of Twp. of
Morris v. Bd. of Educ. of the Twp. of
Morris, 60 N.J. 186, 188 (1972). The boards
of education from both towns recommended
that the "allocation of costs between the
component municipalities of the regional
district be on the basis of apportionment
valuations rather than pupil enrollment."
Id. at 188-89. The Commissioner agreed, and
ordered   the   new   regional    district   to
apportion costs in the manner suggested by
the school boards.        Id. at 189.       The
Township Committee of Morris Township filed
suit, asserting the Commissioner lacked the
power to impose an apportionment scheme on
the new district. Id. at 189-90.            The
Township   Committee    argued    that,   under
N.J.S.A. 18A:13-34, the power to set the



                      54                          A-0743-10T4
         apportionment scheme had been conferred on
         the voters of a regional district.  Id. at
         190.

              We rejected the Township's argument
         because "[t]he Commissioner's determination
         as to allocation of the costs was reasonable
         and was well within the ambit of his
         powers." Id. at 191. We reasoned that the
         controlling statutory provision, N.J.S.A.
         18A:13-34    (which    calls   for   a   special
         election on the apportionment of costs for a
         regional district), was not applicable in
         the context of a compulsory merger ordered
         by the Commissioner, and that requiring
         voter approval would "disable effective
         action toward fulfillment of the State's
         educational and desegregation policies . . .
         nullify[ing] the very holding in Jenkins."
         Ibid.; cf. N.J.S.A. 18A:7F-6 (authorizing
         Commissioner to compel school districts to
         make additional expenditures even after
         school budgets have been approved by voters
         when "necessary to ensure implementation of
         [thorough and efficient] standards").         In
         this    case     also,     the    constitutional
         imperative to address racial segregation
         requires the Board to compel North Haledon
         to remain in the Regional District despite
         the tax burden on its citizens.            As in
         Jenkins, when a constituent municipality is
         compelled to participate in a Regional
         District,     N.J.S.A.    18A:13-23     is   not
         applicable     and   the     Commissioner    may
         determine cost allocations among and between
         Haledon, Prospect Park, and North Haledon.

         [N. Haledon, supra,      181   N.J.   at   184-86
         (emphasis added).]

    Here, however, neither the Commissioner nor the court has

mandated that Seaside Park remain a member of Central Regional

in contravention of the desire of the voters in the District




                               55                            A-0743-10T4
pursuant to the statutory scheme.               Rather, the voters rejected

the   referendum   on   dissolution,      see    N.J.S.A.    18A:13-59,    never

voted on the issue of Seaside Park's withdrawal, see ibid., and

rejected a modification of the funding formula after the court's

February 2008 decision, see N.J.S.A. 18A:13-23.3.                   Seaside Park

may   pursue   a   referendum   on   withdrawal      or     other    appropriate

administrative action to obtain relief.              However, because this

case does not implicate the impact of withdrawal or dissolution

on racial diversity or issues of other constitutional dimension

after a successful referendum, we discern no basis to invoke the

extraordinary remedy of judicial intervention and mandate that

the Commissioner implement an equitable cost allocation.

      Plaintiffs' recourse is to lobby the Legislature to change

the statutory mechanisms for dissolving or withdrawing from a

regional school district, or for revising its funding formula.

As is evident from the extensive legislative history set forth

in this opinion, it is clear the Legislature has considered this

issue at length over the years and has chosen not to embrace

plaintiffs' position.      We discern no basis here to second-guess

that policy choice, and thus affirm summary judgment dismissal

of plaintiffs' first count.




                                     56                                 A-0743-10T4
             C.   Count Four - Court's Equitable Powers

      Count four alleged that the statutory remedies available

for plaintiffs to dissolve, withdraw from, or change the funding

formula for Central Regional are illusory because Seaside Park

is unable to achieve any of these results.            The court dismissed

this count with prejudice as failing to state a claim, reasoning

that "[t]he mere fact that any of the [constituent] districts

may vote against the change [in the apportionment method] does

not as a matter of law make the remedy illusory" and that Lacey

Township's   successful   withdrawal     from   the    District   in   1977

contradicted plaintiffs' argument as to impossibility.

      Judge Buczynski astutely elaborated on this point in his

ruling on plaintiffs' motion for reconsideration, emphasizing

the   Legislature's   prerogative   in   enacting     this   comprehensive

statutory scheme:

           This court understands the difficulty that
           Plaintiffs face in withdrawing from the
           district or in changing the apportionment
           method.      The    Legislature    passed   these
           statutes   as    part   of   their    legislative
           responsibilities as a separate and distinct
           branch of government as empowered by the
           Constitution of this state.

                But the mere fact that one district
           enjoys a majority of registered voters does
           not, as a matter of law, render this
           statutory scheme as illusory.   Difficult to
           navigate, yes, but an illusion, no. This is
           not a cognizable Cause of Action in this




                                    57                            A-0743-10T4
             state.    Voter distribution will vary and
             will always vary from district to district.

                  The circumstances, as argued by the
             Plaintiffs,   miss   the    point.      Voter
             incentives will vary. And I understand that
             will change from election to election.    But
             the argument that one member of the district
             enjoys the overwhelming number of registered
             voters capable of defeating the referendum,
             thereby   making    the   statutory    scheme
             illusory, is soundly rejected by this Court.

         The trial court's ruling on this issue is unassailable.

The Legislature has created a high bar for achieving alteration

of   a    regional   district's   cost    allocation    formula,   N.J.S.A.

18A:13-23 and 18A:13-23.3, or withdrawal from or dissolution of

a regional school district, N.J.S.A. 18A:13-59.                However, the

statutory procedures are not illusory, as evidenced by Lacey

Township's withdrawal from Central Regional and other instances

in   which    regional   school   districts   have     been   dissolved,   or

municipalities have obtained voter approval to withdraw.                See,

e.g., N. Haledon, supra, 181 N.J. at 172; In re Div. of Assets &

Liabs. Among Constituent Dists. of Lower Camden Cnty. Reg'l High

Sch. Dist. No. 1, 381 N.J. Super. 91 (App. Div. 2005), certif.

denied, 186 N.J. 605 (2006); In re Petition for Authorization to

Conduct a Referendum on the Dissolution of Union Cnty. Reg'l

High Sch. Dist. No. 1, 298 N.J. Super. 1 (App. Div.), certif.

denied, 149 N.J. 37 (1997); Bd. of Educ. of Twp. of Egg Harbor

v. Bd. of Educ. of Greater Egg Harbor Reg'l High Sch. Dist., 188



                                     58                             A-0743-10T4
N.J. Super. 92 (App. Div.), certif. denied, 93 N.J. 245 (1982).

The Legislature merely designed the remedy to be difficult to

achieve, and that is a policy decision for the Legislature, not

to be second-guessed by the Judiciary.                    See, e.g., Aronberg v.

Tolbert,    207    N.J.      587,    602     (2011)    ("It   is   not    within       our

province    to    second     guess     the      policymaking      decisions      of    the

Legislature      when   no    constitutional          principle    is    at    issue.");

Wildwood    Storage     Ctr.,       Inc.   v.     Mayor   &   Council     of    City   of

Wildwood, 260 N.J. Super. 464, 474 (App. Div. 1992) (holding

that public policy decisions are not for the judiciary).

           D.    Count Eight -        Efficient System of Education

    In count seven, plaintiffs sought relief on the ground that

Central Regional's current system of cost apportionment does not

provide an efficient system of education for the students in

Seaside Park because its taxpayers are paying above the average

State cost of education per pupil, in violation of N.J. Const.

art. VIII, § 4, ¶ 1.           They concede that their claim is a novel

attempt to challenge an allegedly "inefficient system of funding

education."

    As previously noted, the municipalities and their boards of

education generally lack standing to assert the rights of third-

party taxpayers.        See, e.g., Stubaus v. Whitman, 339 N.J. Super.

38, 47-48, 51 (App. Div. 2001), certif. denied, 171 N.J. 442




                                             59                                 A-0743-10T4
(2002); State of N.J., Dep't of Envtl. Prot. & Energy v. Dopp,

268   N.J.    Super.        165,     173-74     (App.          Div.    1993)     (ordinarily,

litigants     may     not      claim    standing          to    assert     rights      of   third

parties, particularly constitutional rights).                               In particular,

they have no standing to assert a thorough and efficient claim

to    the    extent       it    is     based    upon           allegedly     disparate        and

burdensome tax rates.              Stubaus, supra, 339 N.J. Super. at 49-51.

With respect to the thorough and efficient claim, "[t]he real

party in interest is the taxpayers."                       Id. at 50.

      In dismissing this count for failure to state a claim, the

court enumerated the ten elements of a thorough and efficient

education outlined in Abbott II, supra, 119 N.J. at 350 n.23,

which   are    not    encompassed        in     Seaside          Park's    sole     allegation

"that the cost results in something other than an 'efficient

education.'"         As Judge Buczynski elaborated on reconsideration,

"[e]fficiency        in     taxation      is        not    what       is   constitutionally

protected" by the thorough and efficient clause; rather, what is

mandated is operational efficiency within school districts.

      Nor does Seaside Height's BOE's bald allegation that it

could provide a more thorough and efficient education to its

students      if    Central      Regional       were           dissolved    or    if    Seaside

Heights were permitted to withdraw from the District, provide a

basis to conclude that the District was unable to serve the




                                               60                                       A-0743-10T4
needs    of   its    students.         In    order      to   justify   the   "radical"

solution of encroaching upon an area constitutionally reserved

to the Legislature, a finding of constitutional deficiency "must

rest on granite" and not, as here, "hang by a thread."                            Abbott

II, supra, 119 N.J. at 320-21.

    Plaintiffs'            arguments    on       this     issue     misinterpret       the

constitution        and    relevant    case      law.        The   state   constitution

provides      that        "[t]he     Legislature        shall      provide    for      the

maintenance and support of a thorough and efficient system of

free public schools for the instruction of all the children in

the State between the ages of five and eighteen years."                               N.J.

Const. art. VIII, § 4, ¶ 1.                 In interpreting the "thorough and

efficient"     clause,       our   courts     have      focused     primarily    on    the

education of students, not with equality among taxpayers.                             See,

e.g.,    Abbott     II,     supra,    119    N.J.    at      303-22,   348-50,     357-68

(1990); Robbiani v. Burke, 77 N.J. 383, 393-95 (1978); Robinson,

supra, 62 N.J. at 513, 515; Stubaus, supra, 339 N.J. Super. at

52-56.

    Similarly, in establishing the Department of Education to

supervise and control public education, see N.J.S.A. 18A:4-1 to

18A:7G-48, in defining and designing a thorough and efficient

system of education, and in implementing state monitoring to

determine whether a thorough and efficient system of education




                                            61                                   A-0743-10T4
is being provided, the Legislature has focused on the quality of

children's education and the operational efficiency of school

districts.       See,     e.g.,      N.J.S.A.      18A:4-24;       N.J.S.A.       18A:7-8;

N.J.S.A.     18A:7A-10;        N.J.S.A.       18A:7A-14a;         N.J.S.A.      18A:7C-1;

N.J.S.A. 18A:7F-46; Abbott II, supra, 119 N.J. at 348-52; In re

Trenton    Bd.    of     Educ.,      86    N.J.    327,       329-30    (1981);        In    re

Application of Bd. of Educ. of Upper Freehold Reg'l Sch. Dist.,

86 N.J. 265, 272-78 (1981); Robinson, supra, 69 N.J. at 456-63.

      Here, there is no allegation that the students of Central

Regional are not receiving a thorough and efficient education,

i.e., that there are insufficient financial resources in the

District    to   provide       a    thorough      education,      or    that    financial

resources are being squandered at the expense of the children's

education.       Rather, plaintiffs attack the constitutionality of

the   equalized        valuation      method      for    funding       regional       school

districts    because      it       imposes    a   greater       financial       burden      on

municipalities such as Seaside Park, which have high property

values    and    few    students      attending         the    school     system.           The

distribution     of     education         costs   among       taxpayers    is    a    policy

decision to be made by the Legislature, which determined that a

wealth-based      formula      for     funding      regional       districts         was     an

appropriate option, and plaintiffs' arguments should be directed

to that body.          Stubaus, supra, 339 N.J. Super. at 56, 60-61;




                                             62                                      A-0743-10T4
Twp. of Princeton v. N.J. Dep't of Educ., 163 N.J. Super. 389,

396 (App. Div. 1978).         See also Abbott II, supra, 119 N.J. at

304 (court's function limited to constitutional review).

      This    result    is    consistent        with    relevant       precedent.

Specifically, in Township of Princeton, supra, we rejected a

constitutional thorough-and-efficient challenge to the phase-in

of   the   1975   amendment   to   the    method   of   allocating       costs   of

regional     school    districts,        from   per     pupil     to     equalized

valuation, stating:

             Since   the   total   amount   expended   for
             education in the district is determined by
             the regional school district board before
             the apportionment among the municipalities,
             the mere method of apportionment of the
             costs, whether on a per pupil or ratables
             basis, has no effect whatever on the quality
             or opportunity of education of the children
             within that district. It is for that reason
             that the Robinson precepts do not come into
             play.    Although the choice of method of
             apportionment may create an unequal tax
             burden among the municipalities of the
             district, as the record reflects, it does
             not influence the level of expenditures made
             by the district for educational purposes.

             [T]he method of allocation, whether it be on
             the basis of ratables (N.J.S.A. 18A:13-23),
             or the number of pupils enrolled, or on a
             combination of both (N.J.S.A. 18A:13-23.1),
             is a matter preeminently within the power of
             the Legislature and has no bearing upon the
             issue of constitutionality as delineated in
             the Robinson cases.

             [163 N.J. Super. at 396 (emphasis                  added)
             (internal citations omitted).]



                                         63                               A-0743-10T4
    Moreover,       both   the    Supreme    Court     and   our    court     have

rejected other constitutional challenges to equalized valuation

funding.      For   example,     considering    a    challenge     to   the   1956

amendments,    wherein     the   Legislature    moved   from     "ratables"     to

"apportionment      valuations"     for     purposes    of   funding     certain

regional school districts, the Supreme Court spoke in language

that is equally applicable to plaintiffs' claims here:

           In   essence,    we    are   presented    with   a
           situation where Berkeley Heights claims a
           vested right in unequal distribution of the
           burden    [of   funding    a    regional    school
           district], seeking a continuation of the
           prior practice.      It complains that upon a
           per capita student basis the property owners
           of     that     township      are     paying     a
           disproportionate     share    of   the   regional
           burden, thereby subsidizing the education of
           students      from      other      municipalities
           comprising the regional school district.
           The     factor      has    no      constitutional
           implications.      Education is a matter of
           public concern; the expenditures necessary
           to fulfill the responsibility need not be
           met on a basis of direct benefit to the
           property charged.

           [Berkeley Heights, supra, 23 N.J. at 282.]

The Court went on to state that, if Berkeley Heights wished to

move to apportionment of costs on a per pupil basis, it had to

follow the statutory procedures.           Id. at 283-84.

    In Borough of Sea Bright v. State, Department of Education,

242 N.J. Super. 225 (App. Div.), certif. denied, 127 N.J. 320




                                      64                                 A-0743-10T4
(1990), we also rejected an equal protection challenge to the

1975 statutory amendments at issue in the present case, stating:

         We have no doubt that New Jersey's method of
         financing   regional    school    districts    is
         compatible with the equal protection clauses
         of the federal and state constitutions
         . . . .      Plaintiffs do not contend that
         there is any inequality in the school tax
         burden of residents of Sea Bright compared
         with residents of the other constituent
         municipalities in the district.           To the
         contrary, the objective of apportioning the
         costs of a regional school district among
         the constituent municipalities according to
         their   property     values    is    to    impose
         substantially equivalent tax burdens for
         education upon all taxpayers of the district
         regardless of the municipalities in which
         they reside.    Thus, the method of financing
         education in a regional school district is
         substantially the same as in a single
         municipality school district in that school
         tax obligations depend upon the value of
         each      taxpayer's        real        property.
         Consequently,    we   have   no   hesitancy    in
         rejecting plaintiffs' thesis that residents
         of a municipality such as Sea Bright, which
         has higher property values and/or fewer
         children attending public school than other
         municipalities    in    the   regional     school
         district of which it is a part, have a
         constitutional right to pay only the actual
         costs of educating their resident children
         who attend public school.      See Berkeley Tp.
         Bd. of Ed. v. Bd. of Ed. of Union Co., 40
         N.J. Super. 549, 556 (Law Div. 1956), aff'd,
         23 N.J. 276 (1957) (observing that education
         is a public obligation, and that to hold
         that the Legislature could not apportion
         regional district costs among constituent
         municipalities on the basis of ratables
         rather than the number of children sent
         "would erase a concept of the distribution
         of public tax obligation quite essential to



                                65                           A-0743-10T4
             the wellbeing of the public school system
             and of the body politic.").

             [Id. at 231-33 (emphasis added).]

See also Stubaus, supra, 339 N.J. Super. at 61 (rejecting equal

protection     claim        stating,    "[w]e      see   nothing    unconstitutional

about      requiring    greater        local      support   for     the       educational

program from districts that appear able to pay more based upon

the district's property values and average income").

                                             V.

                       A.    Count Two – Contracts Clause

      In     Point     III,     plaintiffs         challenge       summary       judgment

dismissal of count two of the complaint.                    That count alleged the

1975 legislation, mandating that regional school districts be

funded      through    equalized        valuation,       violated       the     contracts

clauses of the federal and state constitutions by substantially

impairing     the     contract    to    form      Central   Regional      under     which

funding was on a per pupil basis, and that by perpetuating the

1975 violation, the 1993 legislation independently violated the

federal and state constitutions.

      Plaintiffs claim the court erred by finding there was no

contract to establish Central Regional, determining the taxpayer

plaintiffs of Seaside Park were not third-party beneficiaries of

the     alleged       contract,        not        addressing      the     "substantial




                                             66                                  A-0743-10T4
impairment" prong of the legal analysis, and concluding the 1975

legislation furthered a legitimate public purpose.

      As    previously          discussed,       Judge     Buczynski      held      that

governmental       entity       parties     lack    standing       to    pursue     this

constitutional claim.             The judge found the taxpayer plaintiffs

failed     to    provide    a     written    agreement      or    evidence    of     the

requisite       elements    for    a   contract     and,    even    if    they    could

demonstrate the existence of a valid contract, failed to prove

they were intended third-party beneficiaries.                     The judge further

found the 1975 and 1993 legislation promoted the "public welfare

and   education      of    the    students       residing    in    regional       school

districts" and thus was not an unconstitutional impairment of

the alleged contract.

      We are convinced Judge Buczynski was correct on all points.

However,    to    resolve       this   appeal,     we    need     only   address     the

contract issue and not the third-party beneficiary issue.

      Both the federal and state constitutions protect against

government impairment of contractual obligations.                        U.S. Const.,

art. I, § 10, cl. 1; U.S. Const. amend XIV; N.J. Const., art.

IV, § 7, ¶ 3.

                 The clauses protect against a change in
            the State's obligations that "operates[s] as
            a substantial impairment of a contractual
            relationship." Allied Structural Steel v.
            Spannaus, 438 U.S. 234, 244, 98 S. Ct. 2716,
            2722, 57 L. Ed. 2d 727, 736 (1978).    "This



                                            67                                A-0743-10T4
            inquiry has three components: whether there
            is a contractual relationship, whether a
            change in law impairs that contractual
            relationship, and whether the impairment is
            substantial."   Gen. Motors Corp. v. Romein,
            503 U.S. 181, 186, 112 S. Ct. 1105, 1109,
            117 L. Ed. 2d 328, 337 (1992).

            [N.J. Educ. Ass'n v. State, 412 N.J. Super.
            192, 205 (App. Div.), certif. denied, 202
            N.J. 347 (2010).]

    "[T]he       legal     standards      for    a   violation      of      the   contract

clause are strict."            State Farm Mut. Auto Ins. Co. v. State, 124

N.J. 32, 64 (1991).            Accord Nobrega v. Edison Glen Assocs., 167

N.J. 520, 538-39 (2001) (contract clause construed narrowly in

modern cases).           Not even a substantial impairment of contract

violates    the    constitution        if    the     governmental        action      has    a

"significant       and    legitimate        public      purpose,"      is    based       upon

reasonable        conditions,       and      is        related    to        "appropriate

governmental objectives."              State Farm, supra, 124 N.J. at 64

(citing Energy Reserves Group, Inc. v. Kansas Power & Light Co.,

459 U.S. 400, 411-12, 103 S. Ct. 697, 704-05, 74 L. Ed. 2d 569,

580-81 (1983)).          Accord Windman v. City of Englewood, 200 N.J.

Super. 218, 225-26 (App. Div. 1985).

    The taxpayer plaintiffs never produced a written contract

between    any    of     the   parties      or   any    other    evidence         that   the

constituent municipalities entered into a contractual agreement.

Thus they failed to establish that an express contract existed




                                            68                                     A-0743-10T4
between       themselves      and   the    remaining      constituents       of    Central

Regional.        The taxpayer plaintiffs similarly failed to establish

a     contract       "implied-in-fact,"        which       they    essentially          argue

exists by virtue of the resolutions passed by the governing

bodies    of     the       constituent    municipalities          acknowledging         their

agreement to create Central Regional and apportion the tax levy

based on pupil enrollment.                  They further argue that in l954,

when the voters approved the formation of Central Regional and

its     tax    allocation        method,     they       ratified     the     contractual

agreement of the constituent municipalities.                            Judge Buczynski

properly rejected these arguments.

       Regional school districts are created solely through the

procedures established by the Legislature, and not through any

contractual agreement between municipalities.                        N.J.S.A. 18A:13-

34.    See also N.J. Educ. Ass'n, supra, 412 N.J. Super. at 206-07

(statute not presumed to create contractual rights unless intent

to do so is clearly stated) (citing Nat'l R.R. Passenger Corp.

v. Atchinson Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465-66,

105 S. Ct. 1441, 1451, 84 L. Ed. 2d 432, 446 (1985) and Dodge v.

Bd. of Educ., 302 U.S. 74, 78-79, 58 S. Ct. 98, 100, 82 L. Ed.

57, 61-62 (1937)).

       The     procedure       established        by    the   Legislature         for    the

formation       of     a    regional      school       district    is    a   referendum.




                                             69                                   A-0743-10T4
N.J.S.A.      18A:13-34.        A    referendum        is     not     a    contract;      it    is

legislation enacted directly by voters.                       See City of Eastlake v.

Forest City Enter., Inc., 426 U.S. 668, 678, 96 S. Ct. 2358,

2364, 49 L. Ed. 2d 132, 140 (1976); Great Atl. & Pac. Tea Co. v.

Borough of Pt. Pleasant, 137 N.J. 136, 144 (1994); 42 Am. Jur.

2d Initiative and Referendum § 1 (2010); 35 N.J. Practice, Local

Government Law §§ 20.1 and 20.3 (Michael A. Pane, Jr.) (4th ed.

2007); Black's Law Dictionary 1285 (7th ed. 1999).

       Thus,    the    resolutions        were       passed      by   each       municipality,

independently, to start the statutory regionalization process

and    Central    Regional      then      was       formed       through     referendum,         a

legislative act by voters from the constituent municipalities.

The    statutory      choices       at   the    time       for    funding        the    regional

school district were average daily attendance or ratables.                                     The

voters    chose       average   daily      attendance.                However,         that    was

subject to change, as there are no vested rights in a statute's

continued existence.            Phillips v. Curiale, 128 N.J. 608, 620

(1992).        Indeed,    as    noted     in        this    opinion,        the    system      for

funding regional school districts has been changed many times

over    the    years;    plaintiffs        complain          about        only    two    of    the

changes.

       Even if there were a contract to form Central Regional,

however, neither the 1975 nor the 1993 legislation violated the




                                               70                                       A-0743-10T4
contracts      clauses      of     the     federal        and    state       constitutions.

Statutes      are   presumed       constitutional,             and       plaintiffs     bear    a

heavy burden in attempting to rebut that presumption.                                    In re

C.V.S. Pharmacy Wayne, 116 N.J. 490, 497 (1989), cert. denied

sub nom. Consumer Value Stores v. Bd. of Pharmacy, 493 U.S.

1045,   110    S.   Ct.     841,    107    L.       Ed.   2d    836      (1990).       This    is

particularly so for economic legislation, which does not warrant

or permit close scrutiny.                N.J. Ass'n of Health Plans v. Farmer,

342 N.J. Super. 536, 552 (App. Div. 2001).

    The       challenged          legislation         served         a     significant        and

legitimate public purpose of addressing the methods for funding

regional      school      districts,       the       legislation           was   based     upon

reasonable      conditions,         and    the       legislation           was   related       to

appropriate governmental objectives in response to an ongoing

legislative     debate       as    to    the    appropriate           method     for   funding

public education.            We may not second-guess the Legislature's

wisdom in allocating tax burdens.                     Simon v. Cronecker, 189 N.J.

304, 337 (2007); N.J. Ass'n of Health Plans, supra, 342 N.J.

Super. at 552.

                       B.    Count III – Property Clause

    In      Point      IV,        plaintiffs         challenge            summary      judgment

dismissal of count three of the complaint, in which they alleged

that the 1975 and 1993 laws are unconstitutional as applied,




                                               71                                      A-0743-10T4
constituting a taking of their contractual right to per-pupil

funding,   and    consequently     a   taking   of    significantly    more   of

their tax monies, without just compensation.                  Judge Buczynski

correctly found the taxpayer plaintiffs had no property interest

in inter-governmental legislation by referendum, and the method

of taxation for funding Central Regional was a valid exercise of

legislative power and did not constitute a taking.

    Both the federal and state constitutions bar the taking of

private property for public use without just compensation.                   U.S.

Const. amend. V and XIV; N.J. Const. art. I, ¶ 20.                      Such a

taking may be accomplished in one of two ways:

            1) via physical taking, in which the
            government takes title to private property
            or "authorizes a physical occupation [or
            appropriation] of property"; or 2) via
            regulatory    taking,   through   which   a
            government regulation deprives the property
            owner of all economically viable use of
            their land.

            [Klumpp v. Borough of Avalon, 202 N.J. 390,
            405 (2010) (alteration in original)(citation
            omitted).]

    As     previously     discussed,     plaintiffs     had   no   contractual

right to per pupil funding.            Therefore, there was no taking of

any such contractual right.            Nor have plaintiffs established a

property interest that has been excessively interfered with as a

result of this regulatory scheme.            See Gardner v. N.J. Pinelands

Comm'n,     125    N.J.     193,       205   (1991)     (holding      that    an



                                        72                             A-0743-10T4
unconstitutional       taking     of    private      property     for   public     use

occurs when a statutory scheme does not substantially advance a

legitimate      public     interest      and    excessively       interferes     with

property rights and interests).

      This is not a takings issue; it is a taxation issue.                         All

the 1975 and 1993 legislation did was alter the allocation of

tax   burdens    for     property      owners    located     in   regional     school

districts.       Following       the   l975     legislation,      regional     school

districts     were   funded      the   same     as   every   K-12   public     school

district statewide, i.e., based on property taxes rather than a

per pupil cost.          The taxes for Central Regional were allocated

as if the District were one community, with a uniform rate of

school taxes charged to the property owners in the constituent

municipalities based on the equalized value of their respective

property.     Under this allocation method, Seaside Park taxpayers

pay regional school taxes at exactly the same rate as property

owners   in   the    other    four     constituent      municipalities       forming

Central Regional.         The l993 law provided circumstances by which

a district could modify the apportionment method and left the

decision of whether to modify to the voters of the constituent

municipalities.            The    fact     that      equalized      valuation       is

disproportionate does not render the tax unconstitutional.




                                          73                                 A-0743-10T4
    "[T]he power of taxation should not be confused with the

power of eminent domain."        Houck v. Little River Drainage Dist.,

239 U.S. 254, 264, 36 S. Ct. 58, 61, 60 L. Ed. 266, 274 (1915).

See also Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211,

223, 106 S. Ct. 1018, 1025, 89 L. Ed. 2d 166, 177 (1986) ("Given

the propriety of the governmental power to regulate, it cannot

be said that the Taking Clause is violated whenever legislation

requires one person to use his or her assets for the benefit of

another."); Penn Cent. Transp. Co. v. City of N.Y., 438 U.S.

104, 124, 98 S. Ct. 2646, 2659, 57 L. Ed. 2d 631, 648 (1978)

("[G]overnment   may    execute    laws   or   programs    that    adversely

affect   recognized    economic   values.      Exercises   of     the     taxing

power are one obvious example."); City of Pittsburgh v. Alco

Parking Corp., 417 U.S. 369, 94 S. Ct. 2291, 41 L. Ed. 2d 132

(1974) (rejecting Fifth Amendment challenge to local tax).                  "Any

tax is a 'taking' in a literal sense, but a bona fide revenue-

raising measure is not a 'taking' in a constitutional sense."

N.J. Ass’n of Health Plans, supra, 342 N.J. Super. at 553.                     As

previously   discussed,     we     have   also    rejected      tax      clause

challenges to the 1975 legislation in Sea Bright, supra, 242

N.J. Super. at 229-30, and Township of Princeton, supra, 163

N.J. Super. at 397.




                                    74                                  A-0743-10T4
       Plaintiffs contend the 1975 and 1993 legislation were not

bona fide revenue-raising measures because they did not generate

additional tax revenue; all they did was reallocate tax burdens.

However,      that    is    a   distinction      without      a    difference.          The

Legislature exercised its authority to apportion the costs of a

regional school system in connection with a comprehensive scheme

for creating and funding a thorough and efficient system of

education.           The   legislation     involved      taxation        and    revenue-

raising measures, while advancing a significant public interest.

                 C. Count Six – Substantive Due Process

       In Point V, plaintiffs challenge summary judgment dismissal

of count six of the complaint, in which they alleged that the

1975    and     1993        legislation,        as    applied,         violated      their

substantive      due       process   rights      by   depriving        them    of    their

property.

       Judge    Buczynski       rejected    this      argument,        concluding       the

taxpayer plaintiffs failed to present either factual or legal

support for his claims of a protected property interest in the

form of contractual rights to per pupil funding or to their tax

dollars; moreover, the challenged laws furthered a legitimate

public purpose.            See Gikas v. Washington Sch. Dist., 328 F.3d

731,    735    (3d     Cir.     2003)   (holding       that       "a   plaintiff       must

establish as a threshold matter that he has a protected property




                                           75                                     A-0743-10T4
interest      to     which    the     Fourteenth           Amendment's          due    process

protection applies") (citation omitted); Greenberg v. Kimmelman,

99 N.J. 552, 563 (1985) (holding that generally "a state statute

does    not    violate       substantive            due    process       if     the    statute

reasonably relates to a legitimate legislative purpose and is

not arbitrary or discriminatory").                     Plaintiffs' argument on this

issue is without merit to warrant further discussion as we are

satisfied     Judge      Buczynski        amply      addressed       and      rejected       this

issue with appropriate legal citations.                      R. 2:11-3(e)(1)(E).

                       D. Counts Six and Seven - Equities

       In Point VI, plaintiffs claim the court erred by failing to

address    (1)      their    equitable         claim      that   the     1975    legislation

frustrated       the    purpose      of    their       agreement       to     form     Central

Regional      and    (2)     their    constitutional             claim     that       the    1975

legislation deprived Seaside Park's parents of their substantive

due process right to direct the upbringing and education of

their     children.           In     Point          VII,    plaintiffs          claim        they

demonstrated good and just cause for the court to exercise its

inherent      equitable      powers       to    address      the    inequities          of    the

current situation.

       Judge Buczynski rejected taxpayer plaintiffs' frustration

of purpose argument and their alternate theory of a substantive

due process violation because these claims were not pled by




                                               76                                      A-0743-10T4
plaintiffs and were not supported by the record.                                  The judge

rejected plaintiffs' general request for equitable relief on the

ground that he had no authority to grant it - the Legislature

had provided statutory means for plaintiffs to pursue the relief

they   sought    and    judicial        override        of   those       procedures     would

violate   the    principle         of    separation          of    powers.        Moreover,

notwithstanding        the    cost       borne     by     Seaside        Park's    property

owners, funding of regional school districts on the basis of

equalized valuation was fundamentally fair.

       We discern no error in the conclusions reached by Judge

Buczynski.      Under Rule 4:5-2, litigants are required to include

in their pleadings "a statement of the facts on which the claim

is based, showing that the pleader is entitled to relief, and a

demand for judgment for the relief to which the pleader claims

entitlement."      Even read indulgently, see Van Dam Egg Co. v.

Allendale    Farms,     Inc.,      199    N.J.         Super.     452,    455   (App.    Div.

1985), the second amended complaint is devoid of any claim of

frustration of purpose, or that the taxpayer plaintiffs have

been    deprived       of    the     right        to     control     their        children's

education.      Therefore, the judge correctly declined to address

these arguments on summary judgment.                      See Jersey City v. Hague,

18 N.J. 584, 602 (1955) (stating that "however liberal pleadings

may be, the requirement still remains that at least the gist of




                                             77                                     A-0743-10T4
a     substantive           ground      of     relief        must   be   set     forth").

Nevertheless,         even       if   addressed,       these    claims   would   fail    on

their merits for the reasons discussed in earlier issues.

       Taxpayer       plaintiffs'           alternative      substantive   due    process

theory       fails    because         the    1975    legislation    does   not   prevent

parents from directing the upbringing of their children.                                See

Troxel v. Granville, 530 U.S. 57, 65-66, 120 S. Ct. 2054, 2059-

60,    147     L.    Ed.    2d   49,    56-57       (2000)   (discussing   the   liberty

interest of parents "in the care, custody, and control of their

children").          Under the 1975 legislation, the funding mechanism

for Central Regional was changed to equalized valuation                                 - a

funding mechanism plaintiffs do not like because it costs them

more than per pupil funding.                         The 1975 legislation does not

affect their ability to raise their children as they see fit.

They     are    not        required     to     send    their    children    to    Central

Regional.           They can send their children to other schools at

their own expense, relocate to another school district, or even

home-school their children.                    Additionally, taxpayer plaintiffs

can lobby other voters in the constituent municipalities to pass

referenda.

       As to taxpayer plaintiffs' request for equitable relief:

               [E]quity    will   generally    conform    to
               established rules and precedents, and will
               not change or unsettle rights that are
               created   and  defined  by   existing   legal



                                                78                               A-0743-10T4
            principles.    This is the basis for the
            equitable maxim "equity follows the law,"
            which instructs that as a rule a court of
            equity will follow the legislative and
            common-law regulations of rights, and also
            obligations of contract.

            [Dunkin' Donuts of Am., Inc. v. Middletown
            Donut Corp., 100 N.J. 166, 183 (1985)
            (internal citations omitted).]

     Here, there is no "wrong" to remedy through law or equity.

The Legislature has declared the rights and responsibilities of

the constituent members of regional school districts.                 Under the

circumstances of this case, the court has no power to override

the Legislature's scheme for funding regional school districts,

or   to     provide    plaintiffs     with      an     alternative     to    the

legislatively created means for withdrawing from or dissolving

Central Regional, or altering the funding mechanism of Central

Regional.

     This lawsuit is an attempt to achieve through the courts a

result that plaintiffs could not achieve pursuant to relevant

legislation or through the Department of Education.                  We discern

no   basis,    equitable     or   constitutional,       to   invalidate      the

challenged     statutes,    reverse       the   decisions    of   either     the

Commissioner    or    the   Board,   or    otherwise    interfere     with   the

legislative and regulatory schemes.

     Affirmed.




                                      79                               A-0743-10T4
