S.E. 2d
THE STATE OF SOUTH CAROLINA
In The Supreme Court
Beaufort County Board
of Education, Respondent,
v.
Lighthouse Charter
School Committee and
State of South Carolina
ex rel. Charles M.
Condon, Attorney
General, Appellants.
Appeal From Beaufort County
Howard P. King, Judge
Opinion No. 24950
Heard April 20, 1999 - Filed June 1, 1999
AFFIRMED AND REMANDED
Dalton L. Oldham, of Southeastern Legal
Foundation, of Columbia; and George E. Mullen, of
Mullen Law Firm, of Hilton Head Island, for
appellant Lighthouse Charter School Committee.
Attorney General Charles M. Condon, Deputy
Attorney General Treva G. Ashworth, and Assistant
Deputy Attorney General J. Emory Smith, all of
Columbia, for appellant State of South Carolina.
Kenneth L. Childs, William F. Halligan, and John
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
M. Reagle, all of Childs & Halligan, P.A., of
Columbia; and David T. Duff and Charles J.
Boykin, both of Duff, Dubberly, Turner, White &
Boykin, L.L.C., of Columbia, for respondent.
MOORE, A.J.: This appeal involves the denial of a charter
school application. We affirm and remand to the circuit court for further
proceedings.
FACTS
On December 10, 1996, appellant Lighthouse Charter School
Committee (Lighthouse) applied to respondent Beaufort County Board of
Education (Beaufort Board) for approval of a local charter school under the
recently-enacted South Carolina Charter Schools Act of 1996. The
Beaufort Board found Lighthouse's application failed to meet several
requirements of the Act and denied the application. Lighthouse appealed
to the State Board of Education (State Board) which reversed the Beaufort
Board's denial.
The Beaufort Board filed an appeal in circuit court.1 The parties
consented to the intervention of the Attorney General who challenged the
constitutionality of a provision of the Act requiring that a charter school's
enrollment cannot deviate more than ten percent from the racial
composition of the school district. S.C. Code Ann.59-40-50(B)(6) (Supp.
1998). The circuit court declined to address this constitutional question
and reversed the State Board's order on the remaining issues. Lighthouse
and the Attorney General appeal.
1 The circuit court granted the Beaufort Board's motion for a stay of the
State Board's order and denied Lighthouse's motion to dismiss on the ground
the State Board was a necessary party to the appeal. We dispose of
appellants' appeal of these rulings under Rule 220(b), SCACR. See South
Carolina Tax Comm'n v. Gaston Copper Recycling, Corp., 316 S.C. 163, 447
S.E.2d 843, 844 n. 1 (1994) (appeal of a stay pending appeal is moot upon
disposition of the appeal on the merits); Owen Steel Co. v. South Carolina
Tax Comm'n, 281 S.C. 80, 313 S.E.2d 636 (1984) (ordinarily, absent a
statutory provision, an administrative review board is. not a necessary party
for purposes of judicial review).
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
DISCUSSION
LIGHTHOUSE APPEAL
1. Standard of review
An appeal of a local board decision regarding a charter school
application is to the State Board whose decision may then be appealed by
any party to the circuit court. S.C. Code Ann. 59-40-90(C)(2) (Supp.
1998). In the circuit court, the State Board's order, as the final agency
decision, is subject to review under the Administrative Procedures Act
(APA), S.C. Code Ann. 1-23-380(A)(6) (Supp. 1998), which provides for
reversal only if its findings are:
(a) in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c) made upon unlawful procedure;
(d) affected by other error of law;
(e) clearly erroneous in view of the reliable, probative and
substantial evidence on the whole record; or
(f) arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion.
This Court then reviews the circuit court's order to determine whether it
properly applied the APA standard of review.
In this case, the circuit court cites 1-23-380(A)(6) as the
appropriate standard of review. Lighthouse complains, however, it did not
apply this standard of review and improperly gave deference to the
Beaufort Board's decision rather than the State Board's decision. We
disagree.
This case involves two levels of review. The State Board reviewed
the Beaufort Board's findings under Reg. 43-600.2 This
regulation mirrors
2 Reg. 43-600 provides for the State Board to review a local school board
decision regarding a charter school application to determine if it:
1. violated constitutional or statutory provisions;
2. exceeded the authority of the local board;
3. was based upon an error of law;
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
the APA's limited standard of review. On review of the State Board's
order, the circuit court concluded the State Board should not have
reversed the Beaufort Board's findings under its limited standard of
review because those findings were supported by evidence in the record.
In determining whether the State Board's findings were erroneous, the
circuit court properly applied 1-23-380(A)(6).,
2. Grounds for denial of application
The Charter Schools Act provides for a privately organized school to
be sponsored and funded by the local school district. S.C. Code Ann.
59-40-70(E) and -140 (Supp. 1998). A charter school is exempt from the
laws and regulations applicable to public schools except it must:
(1) adhere to the same health, safety, civil rights, and disability
rights;
(2) meet or exceed student attendance requirements;
(3) adhere to the same financial audits and procedures;
(4) be considered a school district for purposes of tort liability
(specifying that tort immunity shall not include acts of
intentional racial discrimination);
(5) hire non-certified teachers only in specified ratios;
(6) admit all children eligible for public school in that school district
providing (a) that the charter school's racial composition cannot
differ from that of the school district by more than ten percent
and (b) if applications exceed capacity, students shall be accepted
by lot;
(7) show no preference in admission except to siblings and children
of employees;
(8) elect a governing body annually by specified procedure;
(9) be subject to the Freedom of Information Act.
See 59-40-50(B).
A charter school application constitutes a proposed contract with the
sponsor school district. S.C. Code Ann. 59-40-60(F) (Supp. 1998).
Subsections 59-40-60(F)(1) through (15) specify exactly what information
4. is clearly erroneous in view of the substantial evidence on the
record; or
5. was arbitrary or capricious.
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
must be included in a charter school application.
Finally, S.C. Code Ann. 59-40-70 (Supp. 1998) specifies grounds for
denial of an application and provides in pertinent part:
(C) A local school board of trustees shall only deny an
application if the application does not meet the requirements
specified in section 59-40-50 or 59-40-60, fails to meet the
spirit and intent of this chapter, or adversely affects other
students in the district.
Lighthouse submitted an application outlining plans for a year
round, eight-hour-per-day school program. The school would be located on
Hilton Head Island and would accommodate 400 students in grades K-8.
At the Beaufort Board's request, Lighthouse also submitted answers to
eighty-four questions.
a) Section 59-40-50(B)
The Beaufort Board found Lighthouse's application did not meet the
health, safety, and civil rights requirements of 59-40-50(B)(1) and the
racial composition requirement of (13)(6). The State Board reversed,
finding as a matter of law the requirements of 59-40-50(B) need not be
met before an application is approved because this section does not specify
that the applicant must provide evidence of compliance in its application.
The circuit court reversed. Lighthouse contends this was error. We
disagree.
Section 59-40-70(C) specifically states that an application may be
denied if "the application does not meet the requirements specified in 59-
40-50 or 59-40-60 Since the plain language of this statute provides
that denial of an application may be predicated on the failure to comply
with 59-40-50, we affirm the circuit court's ruling that the Beaufort
Board properly considered the requirements of 59-40-50(B) in denying
Lighthouse's application.
Further, as discussed below, the record indicates the Beaufort
Board's findings on the merits are not clearly erroneous or arbitrary
which, under Reg. 43-600, is the applicable standard of review on appeal
to the State Board.
1) Health and safety
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
The Beaufort Board denied Lighthouse's application on the ground it
did not meet the health and safety requirement specified in 59-40
50(B)(1) which requires that a charter school shall:
adhere to the same health, safety, civil rights, and disability
rights requirements as are applied to public schools operating
in the same school district.
Specifically, the Beaufort Board found the schematic drawing of the
proposed building and the description supplied by Lighthouse3 were not
sufficient to determine that an adequate facility would be in existence by
the school's projected start-up time. When the Beaufort Board requested
assurance that Lighthouse facilities would meet state specifications,
Lighthouse responded simply: "Facilities for the Lighthouse Charter School
will be comparable to those of other Beaufort County Schools and will
meet all state health and safety specifications."
We find Lighthouse's summary assurances of compliance do not
constitute evidence of compliance with the health and safety requirement
of 59-40-50(B)(1). No specifications were provided about the proposed
building from which to determine compliance with State requirements for
school buildings. Accordingly, the Beaufort Board's finding of non-
compliance is not clearly erroneous in light of substantial evidence that its
request for assurances of compliance were unmet.
2) Civil rights
The Beaufort Board found the Lighthouse application failed to meet
the civil rights requirement of 59-40-50(B)(1) because it failed to comply
3 The application offered the following information:
The start-up or initial Lighthouse Charter School building
will consist of modular units comparable to those used by public
school districts in South Carolina and the nation. It's anticipated
that within 3 years, i.e. the school year 2000, the Lighthouse
Charter School building will be a state-of-the-art facility of which
Beaufort and all of South Carolina will be justly proud.
Lighthouse Charter School administrative and classroom
equipment will be comparable to that available in other Beaufort
County Schools.
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
with the school district's 1970 desegregation agreement which requires
approval for new school facilities from the United States Department of
Education Office of Civil Rights. In response to the Beaufort Board's
request, Lighthouse asserted simply that it was not required to obtain
such approval.
The record contains a letter from the Director of the Office of Civil
Rights informing the local school district that a charter school must
comply with the reporting requirements under the district's voluntary
segregation plan. There is no evidence Lighthouse has satisfied the
mandates of the Office of Civil Rights. Accordingly, the Beaufort Board's
finding that the Lighthouse application failed to adhere to the same civil
rights requirements applicable to public schools as provided under 59-40
50(B)(1) is not clearly erroneous in light of substantial evidence that
Lighthouse must comply with the desegregation agreement and has not
done so.
3) Racial composition
The Beaufort Board found the Lighthouse application did not meet
the racial composition requirement of 59-40-50(B)(6) which provides in
pertinent part: "under no circumstances may a charter school enrollment
differ from the racial composition of the school district by more than ten
percent." Since Lighthouse failed to identify its prospective students,
racial composition cannot be determined and the Beaufort Board's finding
of non-compliance is not clearly erroneous. As discussed below, however,
the constitutionality of this provision must be determined on remand.
b) 59-40-60(F)
The Beaufort Board found Lighthouse's application did not meet the
requirements of 59-40-60(F)(6) which provides that an application shall
include:
evidence that the plan for the charter school is economically
sound, a proposed budget for the term of the charter, a
description of the manner in which an annual audit of the
financial and administrative operations of the charter school,
including any services provided by the school district, is to be
conducted.
The Beaufort Board found there was no evidence Lighthouse's economic
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
plan was sound because $248,495 of revenue included in its proposed
1997-98 budget was to come from fund-raising with no specific
commitments provided.
The record includes a proposed budget identifying revenue from
fund-raising of $248,495 in the first year and $143,013 in the second year.
Fund-raising revenue represents 12% of total revenue in the first year and
6% in the second year. These amounts are in addition to fund-raising for
school start-up and a permanent facility. The record also includes a letter
from Lighthouse to the Beaufort Board detailing grant applications for the
first year totaling $442,500. The award of these grants cannot be
determined until charter status is finalized. The letter also indicates
$50,000 for the first year from a fund-raising event.
The State Board, citing the same evidence as the Beaufort Board,
concluded the Lighthouse plan with the specified amount of fund-raising
was economically sound. The circuit court reversed.
Again, under Reg. 43-600, the State Board has a limited standard of
review on appeal from a local board's decision regarding a charter school
application. We find the Beaufort Board's decision rejecting Lighthouse's
reliance on speculative revenue from proposed fund-raising is not arbitrary
and is within the Beaufort Board's discretion. Accordingly, the Beaufort
Board's finding the plan is not economically sound should not have been
reversed under the standard of review set forth in Reg. 43-600. The
circuit court properly reversed the State Board's ruling on this issue.
c) 59-40-70(C)
The Beaufort Board found denial was appropriate under 59-40
70(C) which allows for denial of an application if it "adversely affects other
students in the district." It found an adverse effect from Lighthouse's
failure to identify prospective students since the budget impact on public
schools and faculty allocation in the district could not be determined.
Further, it found Lighthouse would be a "racially identifiable" school in
contravention of the desegregation agreement with the Office of Civil
Rights which would adversely effect other students in the district.
The State Board found it was an error of law to require Lighthouse
to identify its prospective students and there was no evidence it would not
be in compliance with the desegregation agreement. The circuit court
reversed.
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
We find the circuit court properly reversed the State Board's ruling.
It is not unreasonable to require Lighthouse to offer conditional enrollment
to prospective students if necessary to provide the Beaufort Board with the
required information. Further, there is evidence in the form of a letter
from the Office of Civil Rights requiring the school district to provide
information not supplied by Lighthouse before approval could be given
under the desegregation agreement. This evidence supports the Beaufort
Board's conclusion that Lighthouse's application did not comply with the
desegregation agreement. Although there is no evidence Lighthouse would
be a racially identifiable school as found by the Beaufort Board, the
evidence of non-compliance with the desegregation agreement supports the
finding of an adverse effect since, at a minimum, the school district would
be required to expend funds defending Lighthouse's non-compliance.4
In conclusion, we find the Beaufort Board's decision to deny
Lighthouse's application is not clearly erroneous or arbitrary under the
applicable standard of review. Accordingly, the circuit court properly
reversed the order of the State Board on these grounds.
ATTORNEY GENERAL'S APPEAL
The Attorney General intervened when this case was pending on
appeal to the circuit court in order to challenge the constitutionality of the
racial composition requirement of the Charter Schools Act found in 59
40-50(B)(6), which provides:
(B) A charter school shall:
(6) admit all children eligible to attend public school in a
school district who are eligible to apply for admission to a
charter school operating in that school district, subject to space
limitations. However, under no circumstances may a charter
school enrollment differ from the racial composition of the
school district by more than ten percent. If the number of
applications exceeds the capacity of a program, class, grade
4 The Beaufort Board also found an adverse effect from the lack of
support for the charter school from African-American parents and students.
The State Board found no such support was required under the Act and
reversed this finding. The State Board's finding was affirmed by the circuit
court and is not challenged here. Accordingly, we do not address it.
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BEAUFORT COUNTY BOARD OF EDUCATION v. LIGHTHOUSE
CHARTER SCHOOL COMMITTEE, et al.
level, or building, students shall be accepted by lot, and there
is no appeal to the sponsor.
(emphasis added).
The Attorney General asserted the underscored provision violates
equal protection. See Adarand Constructors, Inc. v. Pena, 515 U.S. 200,
115 S.Ct. 2097, 132 L.Ed.2d 158 (1995); City of Richmond v. Croson, 488
U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989) (classification based solely
on race is subject to strict scrutiny, even when it is a "benign" or
"remedial: racial classification); see also Wygant v. Jackson Bd. of Educ.,
476 U.S. 267) 106 S.Ct. 1842, 90 L.Ed.2d 260 (1986) (applying strict
scrutiny). The circuit court declined to address the issue for two reasons:
1) the issue was not raised below and 2) the issue need not be addressed
because other grounds for denying the application were supported by the
evidence.
An administrative agency must follow the law as written until its
constitutionality is judicially determined; an agency has no authority to
pass on the constitutionality of a statute. South Carolina Tax Comm'n v.
South Carolina Tax Bd. of Review, 278 S.C. 556, 299 S.E.2d 489 (1983).
Accordingly, neither the Beaufort Board nor the State Board could have
addressed the constitutional issue which was therefore properly raised for
the first time in circuit court.
Further, although technically a ruling on the constitutionality of this
provision was not necessary to the immediate disposition of the case before
the circuit court, we find judicial economy dictates otherwise. Lighthouse
joined the Attorney General in contesting the constitutionality of the racial
composition provision. As acknowledged by the circuit court, Lighthouse
may re-apply for a charter upon correcting the deficiencies noted by the
Beaufort Board. Having raised the issue, Lighthouse is entitled to know
whether it must satisfy the racial composition requirement before re
applying. Accordingly, we remand this issue to the circuit court to address
whether 59-40-50(B)(6) violates equal protection.
AFFIRMED AND REMANDED.
FINNEY, C.J., TOAL, WALLER, and BURNETT, JJ., concur.
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