On September 2, 2017, parents at three New York schools sued the State’s Director of Budget charging that he illegally withheld grant funds appropriated by the Legislature to improve school performance.

In 2015, New York enacted a “school receivership law,” N.Y. Education Law §211-f, which, inter alia, required New York’s Commissioner of Education to designate as “persistently failing,” schools that were among the lowest performing in the state for ten consecutive years, as measured by test scores and other outcome data. The receivership law was supported with a $75 million dollar appropriation, intended to provide the designated schools with two-year “transformation” grants to provide services, such as extended learning opportunities, and professional development. The grants were for the 2015-16 and 2016-17 school years. 

In February 2016, the Commissioner of Education announced that nine schools had improved outcomes and would be removed from the “persistently failing” list effective June 30, 2016. The Commissioner indicated the schools would remain eligible to receive the second year of grant funds. In March 2016, the State Budget Director froze all grant funding, asserting that since the schools had been removed from the “persistently failing” list they were no longer eligible for funding.

Parents from three of the impacted schools filed a petition in the Albany State Supreme Court, naming the State Budget Director and Commissioner as respondents. The petitioners alleged that respondents exceeded their authority in freezing the funds and asked for their immediate release.

Though named as a respondent, the Commissioner supported the petitioners’ claim to have the funds released. On December 28, Judge Kimberly O’Connor issued a decision granting the petition and ordered the State Budget Director to release the funds immediately.

On February 3, 2017, the State Budget Director appealed Judge O’Connor’s decision, triggering an automatic stay under NY law.

On March 6, the parent petitioners filed a motion asking the appellate court to vacate the stay and release the funds. 

On March 23, 2017, the Appellate Division, Third Department granted the parents’ motion to vacate the statutory stay, reinstating Judge O’Connor’s order that the Division of Budget immediately release the $69 million dollars in transformation grants it had previously frozen.  The Court also expedited the appeal, setting a deadline for April 21 for the Division of Budget’s appellate brief.

The Division of Budget subsequently released the funds to the State Education Department, for use by the schools awarded the transformation grants.

On April 21, 2017, the Division of Budget withdrew their appeal.