A new appellate court decision will force local governments on Long Island to pay $10.1 million in back tuition for local students seeking bachelor's and graduate degrees from Fashion Institute of Technology in Manhattan.

The latest ruling reverses a 2010 State Supreme Court decision that freed local governments from having to pay tuition for local FIT students who went beyond two-year associate degrees. Since that decision, Nassau and Suffolk counties have withheld $10.1 million in payments for upper-level FIT students.

The 5-0 appellate ruling last month found that while "FIT is authorized to offer baccalaureate and master's degree programs the institution is to be financed and administered in the manner provided for community colleges," under state law.

All two-year state community colleges have long charged other counties a share of costs for local students who attend schools beyond their borders. While classified as a community college, FIT also has state approval to offer four-year and graduate degrees. The state originally paid counties back for the costs of upper-level programs, but later dropped the aid payments.

Stephen Tuttle, FIT's general counsel, called the appellate ruling "clear and well thought out" for confirming "FIT's status as a community college, entitled to financing" for all its students. He said he is "cautiously optimistic" the ruling "will result in the prompt resumption of charge back payments."

The appellate division ruling on Jan. 16 came in a lawsuit in which the Town of North Hempstead challenged Nassau County's practice of passing the cost of out-of-county FIT tuition to the towns. North Hempstead also claimed Nassau improperly withheld sales tax money to the town when North Hempstead refused to pay tuition charges.

While the appeals court ruled that Nassau has the authority to pass on FIT tuition costs to towns and cities, the panel also ruled that the county legislature should have passed a resolution before imposing the charge. They also found that the county did not have the authority to withhold North Hempstead's sales tax money.

"The lower court split the baby one way, and now the appellate division split it another," said Rich Finkel, former North Hempstead Town attorney who is acting as special counsel. He said North Hempstead is due a refund of at least $2.5 million and other Nassau towns should be eligible to get money back as well. He said the town is weighing whether to appeal.

Brian Nevin, spokesman for Nassau County Executive Edward Mangano, said the county "did not improperly charge back" because the county legislature in 2001 passed a resolution to impose tuition charges on towns and cities.

When the measure was approved, however, town officials say it was accompanied by a memo from budget analysts saying that FIT charges were not included.

Suffolk County Legis. Thomas Cilmi (R-Bay Shore) urged the State Legislature to resume state payments for FIT degrees beyond two years. "We still believe it's important to hold the state accountable," Cilmi said. "We can't afford it and have to pursue every avenue . . . to relieve the taxpayer of the burden."

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