State Ponders How to Pay $700M Owed to Schools

Raleigh, N.C. — State lawmakers have to find a way to pay about $700 million to North Carolina school districts in the coming years after a court ruling last week.

Superior Court Judge Howard Manning decided tax penalties, parking tickets at state universities, vehicle fines and other monies collected from September 1997 to July 2005 should go to the state's Civil Fines and Forfeitures Fund, which would then allocate the money to the state's school districts for technology.

The North Carolina School Boards Association and school boards from six counties, including Wake, Durham and Johnston, sued the state in 1998 to collect the money.

"Whatever is paid will be paid over time," Manning said.

State Sen. Neal Hunt, R-Wake, said he is frustrated the state didn't pass along the fines to schools before, and he said he sees no choice but to find a way to pay now.

"We're just going to have to build it into the budget. We're going to have to cut out some earmarks," Hunt said.

Leanne Winner, director of government relations for the school boards association, said universities have already set aside millions in parking fines to help pay the bill. Lawmakers also have an $800 million rainy day fund for emergencies, she said.

"(Lawmakers) may not get to do some new things that they would like to do, but I don't think there would need to be any substantial cuts," Winner said.

Although state tax revenues are running about $120 million above projections, some analysts are concerned the national housing and credit crunch could send the state's economy downhill.

School officials said their main worry is that lawmakers will use the $700 million from the court case to replace existing school funds.

"Anytime I hear the word 'supplant,' it concerns me," Winner said.