Report: School boards, counties should stay out of court

RALEIGH (AP) School districts across North Carolina will present next year’s funding requests in the coming weeks to local county commissioners, with the potential for costly and lengthy litigation if they can’t see eye-to-eye on spending.

So the General Assembly’s government watchdog agency recommended to legislators March 26 that they pass a law barring school districts from suing when annual funding disagreements can’t be settled through a joint public meeting and formal mediation.

The report from the Program Evaluation Division suggested the new law create a formula upon which a county commission must fund a district when those remaining avenues to negotiate fail. The default formula would be based on the district’s student population and inflation, with funding increasing at a higher clip if the dispute lingers for three consecutive years.

Associations representing the state’s 100 county commissions and 115 school boards gave their general support to the ideas. Some legislators on the program evaluation oversight committee questioned whether it was worth changing the law, given that impasses rarely reach the legal phase. The committee will decide next month whether to endorse legislation for the legislature’s upcoming session in mid-May.

“What’s the problem we’re trying to solve?” asked Sen. Jeff Tarte, a Mecklenburg County Republican.

Under current law, a school board submits a proposed budget to commissioners annually by May 15. County commissioners then approve a budget ordinance as the fiscal year begins July 1.

If the school board doesn’t like it, they can begin what can become a four-step resolution process. If the public meeting and mediation don’t work, the school board can ask a judge or jury to determine the proper funding level. The trial ruling then can be appealed.

Between 1997 and 2015, the dispute resolution process was used 40 times, and only four of them went to litigation. But the lawsuits constituted close to 75 percent of the $4.5 million in dispute expenses, and those cases took almost 21 months to resolve on average, report author Sean Hamel said.

Johanna Reese with the North Carolina Association of County Commissioners said other school districts have used the “litigation stick” as leverage during negotiations.

“There are times when counties will settle at a higher amount, then they might want to avoid the cost of litigation,” she said in an interview.

Cases over the past decade involving the Beaufort and Union County schools have gotten the legislature’s attention. A 2015 bill that would have barred school districts from suing failed in the House, with some opponents arguing it would cause more parents to sue instead.

Leanne Winner with the North Carolina School Boards Association told committee members the group has concerns about the formula because it doesn’t address capital needs well and could result in less money for districts with declining students.

Still, Winner said, “we do believe that given the contentiousness of this issue, as it has developed over the last few years, that this is probably the best recommendation at this time.”

Local funds appropriated by county commissioners comprised nearly one-quarter of the roughly $12 billion in overall operating funds and more than 90 percent of the $1.3 billion in capital spent by North Carolina public schools during the 2014-15 school year, according to the report.

North Carolina and Tennessee are the only states with elected school boards that are fiscally dependent on county commissioners for funds, the report said, but Tennessee already has a default funding mechanism.