Legal questions haunt Leandro decisions, mire next steps forward

(The Center Square) – Unresolved legal questions about COVID-19 funding and other issues are driving a request to reinstate a North Carolina lower court order blocking a forced money transfer at the center of the Leandro school funding saga.

Controller Nels Roseland and top lawmakers in the General Assembly filed separate motions with the state Supreme Court last week requesting justices restore a previous order from the North Carolina Court of Appeals that blocked the forced transfer of education funds in the decades-long Leandro case.

The motions highlight unanswered questions surrounding the money transfer. The high court last year gave the order. In North Carolina, it is the General Assembly which appropriates money.

The makeup of the justices on the Supreme Court has changed since that order, having gone from a 4-3 majority of Democrats to 5-2 Republicans.

Matthew Tilley, attorney representing lawmakers, noted that while previous decisions found any assessment on whether the state has fulfilled its constitutional commitment to education must take into account federal funds, a trial court neglected to account for billions in federal COVID-19 funding.

“Indeed, the orders ignore the unprecedented sums the Plaintiff school districts have received in the form of COVID-relief funds.” Tilley wrote. “Since the pandemic began, North Carolina’s school districts (including the Plaintiffs in this case) have received more than $6.4 billion in additional federal and State funding, often with the only limitation that the money be used to address ‘learning loss’ – a category that would cover most, if not all, of the 146 action items in the” comprehensive remedial plan.

The motion notes that about $2.2 billion of that money, or about 37%, remains unspent, including $14 million in Hoke County Public Schools, a plaintiff school district.

“Although Legislative-Intervenors presented arguments on this issue, the majority opinion did not answer whether Plaintiffs must first look to their own funds – including those provided for COVID-relief – before demanding additional money from the State,” Tilley wrote.

Justices in November ruled 4-3 – along party lines – to uphold a trial court order that required the state to comply with spending in the multi-year comprehensive remedial plan, and to stay an appeals court order that prevented state officials from transferring the funds.

A new trial judge assigned to the case is now working to determine how much money the state needs to cover the unfunded items from the CRP, while Roseland and Republican lawmakers are requesting the high court review the case.

Roseland and Republicans are asking the Supreme Court to halt the forced money transfer until legal questions in the case are resolved. Other issues cited by Tilley include questions about whether the Leandro funding order violated due process for the state controller and lawmakers, and whether the case applies to schools statewide or only the plaintiff districts.

In a separate motion, Roseland raised questions about whether the Supreme Court has jurisdiction over the controller; whether the order conflicts with state law; whether public officials could face liability for the money transfer; and the rights of “state actors” involved.

Roseland also raised concerns about the actual process for transferring the funds, and whether it would be subject to state laws regarding unspent money.

“The Controller’s function is part of a larger network of safeguards the General Assembly enacted to prevent errors, fraud waste and abuse in government spending,” wrote Robert Hunter, attorney representing Roseland. “The Controller, acting in concert with the Legislative Fiscal Research Division staff and the Office of State Budget and Management, has procedural safeguards built into the distribution process where the recipient of funds does not simply receive a check for the full amount of several years’ appropriation. The money is released as it is needed and applied for. There is a cash flow process the Order as it stands does not recognize.”

In the 1997 case Leandro v. the State of North Carolina, plaintiffs claimed poor school districts were not receiving the same educational resources as wealthy school districts. They argued the state was not doing what it took to ensure it met its constitutional obligation. The court ruled in favor of the plaintiffs and ordered a plan be drafted to meet the state’s requirement. The plan called for $5.6 billion in new K-12 funding by 2028.

Litigation has been ongoing since the turn of the century.

Superior Court Judge David Lee entered a court order Nov. 10, 2021, that directed North Carolina to use unallocated money to fund the first two years of a court-ordered action plan within 30 days.

The Court of Appeals blocked the order saying it oversteps the Legislature’s power.

“Simply put, [Lee’s] conclusion that it may order petitioner to pay unappropriated funds from the State Treasury is constitutionally impermissible and beyond the power of the trial court,” the Court of Appeals said.