No. 98 Matter of County of Westchester v Board of Trustees of State University of New York

Westchester County, the local sponsor of Westchester Community College, and the New York
State Association of Counties (collectively Counties) commenced this article 78 proceeding to challenge a series of regulatory amendments adopted by the State University of New York Board of
Trustees in 2003 to increase the fiscal independence of community colleges from their local sponsors, which generally pay one third of a college's annual operating costs and one half of capital costs. Among other changes, the SUNY Board amended 8 NYCRR 600.2(a) and 602.3(b) to provide
that the budget approval authority of local sponsors is limited to the "budget total," or the amount of their contribution, and does not extend to individual line items in the community college budget. The SUNY Board also amended 8 NYCRR 602.9(a) to provide that college boards of trustees have authority to transfer appropriations from one account to another "within the total approved college operating budget" without obtaining further approval from the sponsor. The Counties contend these amendments conflict with Education Law § 6304(6), which states that a college's expenditure of appropriations is"subject to the terms and conditions of such appropriations appearing in such budget and to such regulations regarding the custody, deposit, audit and payment thereof as such local legislative body or board ... may deem proper to carry out the terms of the budget."

Supreme Court granted the Counties' petition to the extent of declaring the amendments to
8 NYCRR §§ 600.2, 602.3 and 602.9 contrary to law, annulling them and directing the SUNY Board to promulgate new regulations in accordance with Education Law § 6304(6). The court held that the
statutory language, making expenditures "subject to the terms and conditions of such appropriations," gives local sponsors line item budget authority and binds community colleges to "the line item budget appropriated by the county." The court said, "The Education Law recognizes [] the County's need to place financial limitations upon the college to protect the public funds that it has a right, duty and obligation to guard.... The community college must balance its educational autonomy within the County's fiscal oversight."

The Appellate Division, Third Department reversed the order and dismissed the Counties'
petition, saying "the phrase 'terms and conditions' does not require the conclusion that local sponsors possess line item approval authority. Instead, the phrase does not address the substance of the sponsor's approval authority at all. In our view, this is an instance in which the Legislature 'after fixing a primary standard, [has] endow[ed] [an] administrative agenc[y] with the power to fill in the interstices in the legislative product by prescribing rules and regulations consistent with the enabling legislation....'" The court concluded the regulations are valid "inasmuch as [they] are not inconsistent with the language of the statute and [the SUNY Board] has 'articulated a rational explanation' of how the regulations further the legislative goal of granting fiscal autonomy to community colleges while maintaining sponsor oversight...."