On Monday, Judge Arun Subramanian granted summary judgment to the New York City Board of Education (“Board”) in the latest iteration of its ongoing dispute with the U.S. Department of Education (“Department”) over federal grant funding for nineteen public magnet schools. This marks the third time the Board has prevailed against the Department in this litigation.
The dispute traces back to the Department’s earlier attempt to discontinue several grants, which the Court held in April violated the Administrative Procedure Act for failure to follow required Title IX procedures. After that ruling, the Department continued the grants but delayed disbursement, prompting a successful motion to enforce. When the Department finally issued the awards, it withheld all funding for the first nine months of the fiscal year and reduced the remaining three months’ allotment by subtracting carryover funds from the prior year. It also transitioned the grants to “reimbursement” status, which requires the Board to incur costs before seeking repayment, “presumably with defendants having the right to decline their requests for reimbursement.” The Board calculated the resulting deficit at more than $11 million.
Reviewing the Department’s decision to issue the awards in this manner under the arbitrary-and-capricious standard, the Court found the Department’s explanation for its approach insufficient. The Court explained its holding:
Defendants’ grant award determinations are plainly arbitrary and capricious. There is no explanation of why defendants believed the existence of carryover funds from the prior fiscal year warranted the reduced grant awards, and there is no discussion whatsoever of any of the programs and activities that the grants were intended for. Nor is there any reasoning provided for the Department’s change in position from its prior practice, where the existence of carryover funds did not automatically reduce a grant award in a subsequent budget period. . . . The record before the Court certainly does not contain any example of prior practice matching what happened here, as defendants agreed at the hearing.