Department of Education Cap on School Superintendent Salary is Valid

New Jersey Ass’n of School Administrators v. Cerf, 428 N.J. Super. 588 (App. Div. 2012).  To help reduce property taxes by limiting school district spending, the Department of Education approved, by rule, a regime that includes a cap on the salary that a local school board can pay to its school superintendent.  The cap varied depending on the size of the school district.  In approving the caps, the Commissioner of Education stated that the caps were high enough to attract “high quality” and “talented candidates.”  The caps, he observed, amounted to more than twice the average earned by an individual living in New Jersey, and higher than the median salary for superintendents in New York, Pennsylvania, and Delaware. 

Several cases were brought by plaintiffs who challenged the validity of the caps.  Those cases were all consolidated before the Appellate Division since they challenged administrative agency action.  In an opinion by Judge Grall that addressed all of the cases together, the Appellate Division upheld the caps against various challenges.  The panel did so under the deferential standard of review of regulations promulgated by administrative agencies, a standard that Judge Grall laid out in full.

Plaintiffs first contended that the caps exceeded the Commissioner’s delegated authority from the Legislature.  The panel disagreed.  Judge Grall wrote that the caps “are directly and expressly tailored to address a factor expressly designated as critical in controlling district spending– ‘per pupil administrative expenditures.’  N.J.S.A. 18A:7-1(b).”  There was nothing arbitrary, capricious or unreasonable about that.

Plaintiffs also argued that the caps violated N.J.S.A. 18A:17-19, which states that the board(s) of education that employ a superintendent “shall fix the salar[y] of the superintendent.”  Judge Grall stated that the cap regulation did not “fix the salary.  It sets a cap beyond which the board cannot go in fixing a salary.”  Reading the regulation together with applicable statutory law, the panel held that “a district’s board may fix a superintendent’s salary within the applicable cap.  The effect is wholly consistent with the Legislature’s primary goal in providing oversight of school district spending and not inconsistent with the board’s statutory authority to fix salary.”

Plaintiffs asserted a constitutional argument as well: the regulation violated the Separation of Powers Clause of the New Jersey Constitution, Art. III, ¶1, and Art. IV, §1, ¶1, in that the Legislature allegedly retained for itself, as part of its “essential function,” the right to set salaries.  Judge Grall found that argument without sufficient merit to warrant more than a brief discussion.  She stated that this argument merely recast the arguments of whether the caps set salaries (they did not; they merely set ceilings) and whether the Commissioner exceeded his delegated authority (he did not; he acted in accordance with the Legislature’s mandate to keep school  district expenses down).  The Separation of Powers Clause addresses instances where executive branch action is “so fundamentally incompatible with our existing laws and statutes as to impair the essential integrity of the constitutional powers of the Legislature.”  No such thing occurred here. 

This is the second time this year that our appellate courts have upheld a regulatory scheme that imposes a cap on compensation for local school administrators.  The task of proving the invalidity of such regulation, especially in these challenging fiscal times, is a daunting one.