Bell v. New Jersey

LOCATION: Shell Lake, Wisconsin

DOCKET NO.: 81-2125
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 461 US 773 (1983)
ARGUED: Apr 18, 1983
DECIDED: May 31, 1983

Kenneth Steven Geller - on behalf of the Petitioner
Michael R. Cole - on behalf of the Respondent
Margaret Hunting - on behalf of the Respondent

Facts of the case


Media for Bell v. New Jersey

Audio Transcription for Oral Argument - April 18, 1983 in Bell v. New Jersey

Warren E. Burger:

We'll hear arguments next in Bell against New Jersey and Pennsylvania.

Mr. Geller, I think you may proceed whenever you are ready.

Kenneth Steven Geller:

Thank you, Mr. Chief Justice, and may it please the Court:

In 1965, Congress passed Title I of the Elementary and Secondary Education Act for the purpose of expanding and improving programs designed to meet the special educational needs of educational deprived children in low income areas.

Congress chose to accomplish this purpose by use of grants of federal funds to state educational agencies or SEA's which in turn would distribute the money to needy local educational agencies or LEA's, generally school districts.

The respondents in this case, Pennsylvania and New Jersey, have each received over $1 billion in Title I federal funds since the start of this program.

Now, in return for obtaining these massive amounts of federal funds, states must agree to abide by certain conditions written into the Title I statute and regulations.

These conditions are designed to insure that only eligible children receive Title I services and that Title I funds are not used to provide general aid to schools or to replace state and local funds that would otherwise have been spent for participating children.

The issue in this case concerns the authority of the Secretary of Education to recoup federal funds paid to the states under the Title I program in instances where the funds were used in violation of the assurances provided by the states when they received the federal money and contrary to the conditions imposed by the statute.

The facts here can be briefly stated.

As I noted a moment ago, the respondents have participated in the Title I program since its inception in 1965.

In the early 1970's, the Department of Health, Education and Welfare, which then enforced Title I, performed audits of the New Jersey program for fiscal years 1971 through 1973 and of the Pennsylvania program for fiscal years 1968 through 1973.

In the final audit reports, which were issued in 1975, HEW found that both states had misapplied significant amounts of Title I funds.

Specifically the auditors found that New Jersey and Pennsylvania had improperly approved LEA applications for use of Title I funds in school attendance areas that didn't contain a sufficiently high percentage or number of children from low income families and that in a few instances Title I funds had been spent for general aid purposes rather than targeted to meet the special educational needs of educationally deprived children.

Both states challenged these findings by filing applications for review with the administrative boards set up in HEW to consider Title I claims and after extensive administrative hearings, the Educational Appeal Board sustained the auditors findings in large part and ordered New Jersey to repay about $1 million and Pennsylvania about $400,000.

William H. Rehnquist:

At least with respect to Pennsylvania the sum was substantially cut down?

Kenneth Steven Geller:

Oh, yes.

The initial audit report was something like $10 million, I believe, but after Pennsylvania had pursued its rights through the various levels of review, the final recoupment decision was to recoup $422,000 and to pay that money to the Office of Education.

To put that into perspective, by the way, Justice Rehnquist, during the period of the audit here, 1968 through 1973, for Pennsylvania, Pennsylvania received $365 million in Title I funds.

Respondents then sought review of the Education Appeal Board's decision in the Court of Appeals which vacated the Board's decision.

The Third Circuit held that the Secretary lacked statutory authority to order the repayment of this misspent funds because the only express authorization to recoup was included in the 1978 amendments to Title I and relying on what the Court of Appeals called the overarching principle of this Court's decision in Pennhurst State School against Halderman; that is that the terms and conditions of a federal grant must be clearly set forth in the statute and regulations authorizing the grant, based on what it called the overarching principle, Pennhurst case.

The Court of Appeals found that the Secretary could not recoup funds misspent prior to the effective date of the 1978 amendments.

John Paul Stevens:

Mr. Geller, before you get into your argument, could you help me on one thing?

How do you view the order that was entered by the Secretary here?

Was it an order to pay or an order defining the amount that was due to be paid?

Kenneth Steven Geller:

It was an order essentially defining the amount that was due to be paid.

John Paul Stevens:

Because they end us saying this is how much should be paid.

Kenneth Steven Geller:


The Secretary hasn't yet decided what the most appropriate way would be to collect these monies.

Whether if Pennsylvania or New Jersey didn't simply send the check or a portion of the check, a portion of the total amount over several years; whether some sort of administrative recoupment would be feasible.