ITHACA PUBLIC SCHOOLS MA 16-1 05/17/16

Michigan Department of Education

FINAL REPORT AND DECISION
OF
THE SUPERINTENDENT OF PUBLIC INSTRUCTION
In the matter of:
Appeal by Ithaca Public Schools of the
Fall 2014 and Spring 2015 Pupil Membership Counts
Docket No. MA 16-1
BACKGROUND FACTS
In 2015, Gloria Suggitt, pupil membership auditor in the Office of Financial
Management of the Michigan Department of Education (Department), audited the
Fall 2014 and Spring 2015 pupil membership counts of Ithaca Public Schools
(Ithaca).[1] Following the audit, 162 FTEs were deducted from Ithacas Fall 2014
count and 149 FTEs were deducted from its Spring 2015 count.
The disallowed FTEs represented pupils enrolled in Ithacas iSchool program, a
program for grades 9 through 12 for which Ithaca had been granted a seat-time
waiver pursuant to MCL 388.1701(9). Michigan Educational Partnerships (MEP)
operated the iSchool program.
On October 13, 2015, Ithaca, through its counsel, Thrun Law Firm, P.C. (Thrun),
filed a first level appeal with Naomi Krefman, the assistant director of the
Departments Office of Financial Management, challenging all of the deductions. In
the appeal letter, Thrun stated that Ithaca would be submitting additional
documents in support of its appeal and that those documents and any
accompanying brief would be provided by MEP and vetted through this office.

Documents in support of the appeal were submitted by Thrun to Ms. Krefman on

December 8, 2015. The documents included several exhibits and a Legal Analysis
of [sic] Pertaining to the Appeal of the Fall 2014 and Spring 2015 FTE Counts for
Ithaca Public Schools. In its December 8, 2015 cover letter, Thrun informed Ms.
Krefman that the documents had been prepared by MEP and its attorneys and that
neither Ithaca nor Thrun had assisted with their preparation.
On February 11, 2016, Ms. Krefman issued her first level decision, denying the
appeal in its entirety. On March 8, 2016, Ithaca requested final agency review.
In support of that request, Thrun submitted a Supplemental Legal Analysis of the
Fall 2014 and Spring 2015 FTE Counts for Ithaca Schools in Response to the First
Level Decision Denying the Appeal. According to Thrun, MEP and its attorneys
prepared that document and neither Ithaca nor Thrun assisted with its preparation.
Thereafter, Ithaca was given two options: submission of the appeal in writing or
appearance at a review conference convened by a designee of the superintendent
of public instruction. The district chose the first option.
Notwithstanding the opportunity to do so by April 14, 2016, Ithaca submitted no
additional documentation in support of its appeal. On April 29, 2016, the Attorney
General timely filed a brief on behalf of the Department.
DISCUSSION
Consideration of this appeal is guided by several well-established principles. First,
it is the Departments responsibility to administer the distribution of state school aid
funds in full compliance with all applicable statutes and administrative rules and to

ensure that they are applied uniformly to all school districts. Delton Kellogg
Schools (MA 12-4); Galien Township School District (MA 12-1); McBain Rural
Agricultural School (MA 11-1); Port Huron Area School District (MA 10-1);
Parchment School District (MA 08-1). In addition, the Legislature has expressly
mandated that districts comply with the requirements established in the pupil
accounting manual approved by the Department and that, if a district fails to do so,
the Department must withhold state school aid. MCL 388.1618(4)(d) and (10).
Thus, the Departments responsibilities include the uniform application of the pupil
accounting manual and the administration of state school aid funds in full
compliance with it. Galien Township, supra; McBain, supra.
The burden of demonstrating satisfaction of all legal requirements to establish
eligibility for state aid lies with the district claiming such eligibility. Delton Kellogg,
supra; Life Skills Center of Pontiac (MA 12-2); Galien Township, supra; McBain,
supra; Port Huron, supra;Parchment, supra; LAnse Creuse Schools (MA 00-1);
Hamtramck Public Schools (MA 94-1); Bendle Schools (MA 93-2); Coopersville Area
Public Schools (MA 92-10). The Department, which is subject to monitoring by the
Auditor General to ensure compliance with its legal responsibilities, has no equitable
authority to deviate from legal requirements. McBain, supra; Port Huron, supra;
Westwood Community School District (MA 01-3); Beacon International Academy
(MA 01-1); Lansing School District (MA 91-9); Orchard View Schools (MA 90-2).
One of the bases for Ms. Krefmans denial of the appeal was the following
provision of the Revised School Code.

The board of a school district shall hire and contract

with qualified teachers. Contracts with teachers shall be
in writing and signed on behalf of the school district by a
majority of the board, by the president and secretary of
the board, or by the superintendent of schools or an
authorized representative of the board. The contracts
shall specify the wages agreed upon. MCL 380.1231(1).
The plain language of the first sentence of this provision requires a direct
contractual relationship between a school board and teacher. The predecessor of
MCL 380.1231(1), MCL 340.569, similarly required such a direct contractual
relationship. In 1962, the Attorney General found that, pursuant to MCL 340.569,
school boards had no authority to employ teachers indirectly via a contract with a
business organization. OAG 1961-1962, No. 3656 (May 25, 1962). More recently,
the Attorney General found that, in contrast to school districts, public school
academies are not subject to MCL 380.1231(1) and are therefore not prohibited
from contracting with outside companies for the provision of instructional services
by employees of such companies. OAG 1996, No. 6915 (September 4, 1996).
Thus, both the plain language of MCL 380.1231(1) and the binding authority of
Attorney General opinions compel the conclusion that a direct contractual
relationship between a school district and its teachers is required. See also Section
5-O-B of the pupil accounting manual (2014-2015 edition) (teacher of record must
be a Michigan certified teacher employed by the district). In this case, the district
itself has denied a contractual relationship with the iSchool teachers. (November 2,
2015 letter from Corinne Netzley, interim superintendent of Ithaca Public Schools,
to Phil Chase, supervisor of the professional accountability unit of the Departments

Office of Professional Preparation Services; December 8, 2015 letter from Jennifer

K. Johnston of Thrun Law Firm, P.C., to Ms. Krefman; December 17, 2015 letter
from Ms. Johnston to Mr. Chase).[2]
In the supplemental legal analysis (p 13) prepared by MEP attorneys and
submitted by Thrun on March 4, 2016, MEP contended that further proceedings
are required if there is a factual dispute about who employed the iSchool teachers.
However, Ithaca clearly waived the right to a review conference. MEP is not a party
in this matter.
Relying on the second sentence of MCL 380.1231(1), MEP asserts that it was an
authorized representative of the Ithaca board of education for purposes of
contracting with teachers. This argument fails in two respects. First, the cited
language refers only to those allowed to sign teacher contracts on behalf of a school
board. It does not confer on outside entities the authority to contract on behalf of
school boards. Second, even assuming arguendo that MEP could be considered an
authorized agent of Ithaca for any purpose under MCL 380.1231(1), there is no
factual support for the allegation of such authorization in this case. Exhibits 2 to 5,
which are cited in support of this allegation, do not provide such support. Exhibit 2
includes a master schedule that lists six names; Exhibit 3 is a list of five of those
names and three additional names, with a certificate number or permit number
associated with some of the names. Nothing in those exhibits establishes the
asserted authorization. Nor is such authorization established by Exhibit 4, which
consists of minutes of July 22, 2013 and August 26, 2013 meetings of the Ithaca

Board of Education that contain no mention of MEP or the iSchool program. Exhibit
5 is entitled Seat Time Waiver Implementation Plan. That document does not
address the issue of whether there was ultimately a contractual relationship
between Ithaca and iSchool teachers.
One teacher whose name is advanced in support of the assertion that there was no
violation of MCL 380.1231(1) is Terre Smith. It is not disputed that Ms. Smith is a
certificated teacher who was employed by Ithaca during the 2014-2015 school year.
It is asserted in the legal analyses prepared by MEP that she was the teacher of
record for the iSchool program. There is no factual support for this assertion.
Indeed, the sole documentation submitted in this matter that squarely addresses
Ms. Smiths status vis--vis the iSchool program is her April 29, 2016 affidavit
submitted by the Department. Therein, she stated that she was employed by
Ithaca as a school counselor during the 2014-2015 school year, that she had no
involvement with or responsibility for the iSchool program operated by MEP during
the 2014-2015 school year, that she was not the teacher of record for the iSchool
program during the 2014-2015 school year, and that it was not until the fall of 2015
that she learned that she had been designated as the teacher of record for the
iSchool program for the 2014-2015 school year.[3] The accuracy of this affidavit is
not called into question by any other documentation presented in this matter.
For all these reasons, I find that the required contractual relationship between
Ithaca and the iSchool teachers was not established in this case. Denial of this
appeal in its entirety is therefore proper.

An additional reason for denial is the absence of documentation of pupils required

participation. According to the pupil accounting manual in effect at the time in
question, the requirements for counting a seat-time-waiver pupil in membership
included two-way interaction between the pupil and the teacher of record at least
once during each of the four weeks of the count period. The teacher of record was
required to be an employee of the district. (Pupil Accounting Manual (2014-2015
edition), Section 5-O-B). As noted above, the only individual identified in this
matter who was employed by Ithaca was Terre Smith. There was no documentation
of any specific interaction between Ms. Smith and any involved pupil.
For all of these reasons, I affirm the first level decision.

ORDER
Based on my review of this matter and for the above reasons, I deny Ithaca Public
Schools appeal of the first level agency decision and I order the following.
I uphold the deduction of 162 FTEs from Ithaca Public Schools Fall 2014 pupil
membership count and I uphold the deduction of 149 FTEs from Ithaca Public
Schools Spring 2015 pupil membership count.
This decision is being transmitted to the director of the Office of State Aid and
School Finance of the Department of Education for implementation.

___________________________________
Brian J. Whiston
Superintendent of Public Instruction
Dated: May 17, 2016

[1] Ms. Suggitt conducted the audit because the Gratiot-Isabella Regional Education
Service District auditor was not available. See also MCL 388.1615.
[2] In the exercise of my discretion in this matter, which is not a contested case as defined
in section 3 of the Administrative Procedures Act, MCL 24.203(3), (seeGalien Township
supra at n 1; LAnse Creuse, supra), I have considered documents that were submitted to
the Department by Ithaca in the matter involving imposition of a state aid penalty under
MCL 388.1763.

[3] It is not clear from the affidavit who designated Ms. Smith as the teacher of
record or when that designation occurred, but she clearly denied that she was the
2014-2015 iSchool teacher of record.
This is a publication of the Michigan Department of Education. The written
document, as issued, is the authoritative source of the content and format of
the decision.