dissenting.
For plaintiffs’ claim for indemnification to be granted, they must demonstrate by a preponderance of the evidence that they meet *435the two-prong test required by our education statutes: (1) that the criminal charges were “dismissed or result[ed] in a final disposition in favor” of the employee, N.J.S.A 18:16-6.1; and (2) that the act or omission upon which the criminal charges were based arose “out of and in the course of the performance of the duties” of the employee, N.J.S.A 18A:16-6. I agree with the majority that the dismissal of Mr. Bower’s second indictment with prejudice satisfies the first prong of the test, because it constitutes a final disposition in his favor. I disagree, however, with the majority’s conclusion that plaintiffs have met their burden of proof with respect to the second prong of the test, because there is no evidence demonstrating that the acts or omissions underlying the criminal charge arose out of and in the course of the performance of Mr. Bower’s duties as a teacher. Accordingly, I dissent.
I
The purpose of school indemnification is to protect school employees from paying litigation costs resulting from civil or criminal actions arising out of the employees’ legitimate employment duties. Educators must be able to discharge their duties freely for the public good without fear of economic loss due to legal actions generated by their official acts. See Powers v. Union City Bd. of Educ., 124 N.J.Super. 590, 594, 308 A.2d 71 (Law Div.1973), aff'd o.b., 127 N.J.Super. 294, 317 A.2d 373 (App.Div.), certif. denied, 65 N.J. 575, 325 A.2d 709 (1974).
Indemnification, however, is based on the assumption that the charges were unjustified and the employee’s actions fell within his or her scope of employment. When the public is asked to reimburse an employee for criminal defense costs, the person seeking such reimbursement must demonstrate by a preponderance of the evidence that the criminal charges arose out of and in the course of the performance of his or her duties as an employee.
Two appellate cases that apply the indemnification statutes to criminal charges deal with the second prong of the test. In the earlier case, Powers, supra, decided under N.J.S.A 18A:12-20, the *436defendant, who worked for the Board of Education, was alleged to have received kickbacks. In addressing the second prong of the indemnification test, the court noted that although the criminal acts were obviously beyond Power’s prescribed duties, that did not immunize the board from statutory liability. 124 N.J.Super. at 595, 308 A.2d 71: The court found that the statute requires that the criminal charge involve an act or omission arising out of the performance of a board member’s duties, and that the act or omission arise in the course of performing those duties. In denying indemnification, the court found that although the alleged criminal conduct may have originated out of Power’s performance of his duties as a member of the board, it could not have been done in the course of carrying out those duties. Id. at 597, 308 A.2d 71.
Likewise, in Scirrotto v. Warren Hills Bd. of Educ., 272 N.J.Super. 391, 394-95, 640 A.2d 302 (App.Div.1994), the Appellate Division denied reimbursement to a teacher who prevailed against bribery and other charges. Scirrotto allegedly sought to bribe the principal in order to be rehired as a teacher at the school. The panel concluded that although the events arose in the course of his employment, they did not arise out of the performance of his teaching duties. Id. at 397, 640 A.2d 302. Both Powers and Scirrotto demonstrate that in evaluating a teacher’s petition for indemnification, a court’s inquiry under the second prong of the test must be whether the acts or omissions, upon which the indictment was based, arose out of the performance of teaching duties rather than merely in the course of employment.
II
In resolving educational disputes, we adhere to the rule that “the ultimate administrative decision-maker in reviewing ... school matters is the State Board, whose final decision will not be upset unless unreasonable, unsupported by the record or violative of the legislative will.” Capodilupo v. Board of Educ., 218 N.J.Super. 510, 515, 528 A.2d 73 (App.Div.) (citation omitted), certif. *437denied, 109 N.J. 514, 537 A.2d 1300 (1987); see also G.E. Solid State, Inc. v. Director, Div. of Taxation, 132 N.J. 298, 306, 625 A.2d 468 (1993) (“Generally courts accord substantial deference to the interpretation an agency gives to a statute that the agency is charged with enforcing.”); Kaprow v. Board of Educ., 131 N.J. 572, 591, 622 A.2d 237 (1993) (“Ordinarily, we will not reverse the determination of an administrative agency unless it is arbitrary, capricious or unreasonable, or is not supported by substantial credible evidence in the record as a whole.”). That rule derives from our recognition that “ ‘certain subjects are within the peculiar competence of the agency.’ ” Dennery v. Board of Educ., 131 N.J. 626, 637, 622 A.2d 858 (1993) (citation omitted).
The Administrative Law Judge (ALJ), the Commissioner of Education (Commissioner), and the State Board of Education (State Board), all found that plaintiffs had not satisfied then-burden of showing that the criminal charges against Mr. Bower originated out of the performance of his duties as a teacher, the second prong of the test. A review of the record demonstrates that none of the three acted arbitrarily or unreasonably in declining to grant plaintiffs’ claim for reimbursement. See, e.g., Kaprow, supra, 131 N.J. at 582, 622 A.2d 237.
As was observed “in Scirrotto, [supra¡\ ‘the facts underlying the criminal charge should be analyzed strictly rather than liberally, so that reimbursement of legal fees and expenses should only ensue when the circumstances are such as to fit clearly within the legislative limitations.’ ” Bower v. Board of Educ., 287 N.J.Super. 15, 34, 670 A.2d 106 (1996) (Landau, J.A.D., dissenting) (quoting Scirrotto, supra, 272 N.J.Super. at 396, 640 A.2d 302). The fact that the criminal charges were resolved in a final disposition in Mr. Bower’s favor is insufficient to establish that the charges arose out of and in the course of the performance of his duties as a teacher. The dismissal of the criminal charges merely fulfills the first prong of the test.
As the State Board correctly determined,
*438the fact that the criminal charges against petitioner were dismissed and the acts giving rise to those charges were alleged to have occurred on school premises is not sufficient to satisfy petitioner’s statutory burden. It was his affirmative burden to demonstrate that the alleged conduct arose out of and in the course of the performance of his duties. He failed to satisfy that burden. Therefore, we find that he has failed to establish that the Board has any responsibility to indemnify him.
No testimony was provided at the administrative hearings. There was a brief stipulation of facts at the second hearing, supplemented by a summary of the abuse allegations against Bower, including copies of the Grand Jury testimony and the police reports that included the statements made to police by three children in Bower’s kindergarten class, who alleged that they were victims of Bower’s sexual misconduct. None of that evidence proved that the charges against Mr. Bower arose out of and in the course of the performance of his teaching duties.
In particular, the State Board was troubled by the children’s consistent statements about Mr. Bower’s presence, with them, in the single-occupancy bathroom attached to his classroom. In its Decision, dated August 13, 1994, the State Board acknowledged that
[petitioner is not required to defend against the dismissed criminal charges in this action for indemnification. However, despite the opportunity to do so, petitioner has not established that the criminal charges arose from conduct occurring at a place where he was entitled to be in the course of fulfilling the duties of his employment or doing something incidental to it. The record, as supplemented on remand, indicates only that the alleged conduct occurred in a bathroom adjoining petitioner’s kindergarten classroom. There is no indication in the record as to whether this facility was for the exclusive use of students or whether teachers also used the facility- See N.J.AC. 6:22 — 5.4(h)(4) (toilet facilities for kindergarten classrooms must be provided in each classroom or adjacent thereto and must be located and equipped so as to ensure privacy for the pupils). Nor is there anything to show that any of his teaching duties required that he accompany the students into the facility.
[Emphasis added.]
The State Board, thus, was concerned that a bathroom was not a place where one would ordinarily fulfill teaching duties, and concluded that no nexus existed between Mr. Bower’s alleged conduct and the performance of his teaching duties. I defer to that agency decision, because it is based on expert knowledge *439concerning kindergarten children and a kindergarten teacher’s duties.
Ill
What plaintiffs and the majority essentially assert is that all a teacher must do to receive indemnification is to satisfy the first prong of the two-prong test. As the majority states,
[i]n the absence of any contradictory evidence in the administrative proceeding, dismissal of the indictment requires the assumption that Bower committed no acts other than to perform his duties as a kindergarten teacher. Thus, the inference is compelling that Bower’s indictment was premised on acts arising out of and directly related to the lawful exercise of his official duties.
[Ante at 431, 694 A.2d at 551 (emphasis added).]
The majority, in effect, holds that dismissal of the criminal charges alone is sufficient to satisfy both prongs of the indemnification test. That conclusion, however, negates the need for the second prong of the test, because the first prong of the test specifically requires dismissal of the charges or some other disposition in favor of the employee.
Moreover, the majority improperly places the burden of proof on the local school board to demonstrate that the acts, on which the indictment was based, did not relate to the lawful exercise of Mr. Bower’s teaching duties. The majority, thus, has created a new standard whereby it will be presumed that a dismissed indictment of a teacher, seeking indemnification, was premised on acts arising out of and directly related to the performance of his or her duties as a teacher. See ante at 431, 694 A.2d at 551. The majority’s reasoning rests on the fact that the local school board failed to provide proof that Mr. Bower accompanied the children to the bathroom, the act forming the basis for the complaint:
The obvious difficulty in applying the State Board’s standard to this record is that no proof exists of any “conduct forming the basis of the charge.” The allegation that Bower engaged in acts of sexual misconduct with students in the bathroom adjacent to the kindergarten classroom is simply unproved. Nor is it established or conceded that Bower ever entered the bathroom when students were present. The only “conduct forming the basis of the charge” that is undisputed is that the alleged events took place in the school, during school hours, and while Bower was required to be engaged in performing his duties as a teacher.
*440[Ante at 432, 694 A.2d at 552.]
However, the Legislature intended that the teacher, seeking indemnification, rather than the local school board, bear the burden of satisfying the two-prong test by a preponderance of the evidence. Mr. Bower failed to meet his burden because he did not produce evidence indicating that he did not accompany his students to the bathroom or that it was part of his duties to do so. Contrary to the majority’s claim, therefore, the State Board’s decision did not require plaintiffs to submit supplementary proofs. See ante at 432, 694 A.2d at 552. The State Board properly required plaintiffs to submit proof establishing the second prong of the two-prong indemnification test — that the criminal charges against Bower arose from his employment as a teacher and in the course of performing his duties.
IV
I agree with the majority and the parties that “indemnification cannot be denied merely because the alleged criminal acts, if committed, would have been beyond the scope of a teacher’s lawful duties.” A teacher seeking indemnification, however, bears the burden of demonstrating that the acts or omissions, upon which the criminal charges were based, arose out of and in the course of the performance of his or her official duties as a teacher.
Plaintiffs have failed to prove by a preponderance of the evidence that the dismissed criminal charges arose from conduct that occurred at a place where Mr. Bower was entitled to be in the course of fulfilling the duties of his employment. Plaintiffs cannot simply point to the charges and the dismissal of the indictments in order to be indemnified. In order to satisfy the second prong of the test, they must establish a nexus between the act or omission, underlying the indictment, and the performance of legitimate job duties. They have failed to do so.
In view of the majority’s decision, I invite the Legislature to consider amending N.J.S.A. 18A:16-6, as it amended N.J.S.A 40A: 14-155, when it determined that our decisions in Moya v. New *441Brunswick, 90 N.J. 491, 448 A.2d 999 (1982) and Valerius v. Newark, 84 N.J. 591, 423 A.2d 988 (1980), were wrong. In those cases we allowed reimbursement for criminal charges arising from a police officer’s acts outside the scope of his police duties, but occurring in the performance of those duties, and for criminal charges arising solely from a claimant’s status as a police officer.
I would reverse the judgment of the Appellate Division.
For affirmance — Justices HANDLER, POLLOCK, O’HERN and STEIN — 4.
For reversal — Chief Justice PORITZ and Justices GARIBALDI and COLEMAN — 3.